Forget Bitcoin! I’d rather buy FTSE 100 shares and aim for decades of passive income

To invest in FTSE 100 Stocks are not going to make me a millionaire overnight. Equally important, however, is that London’s blue-chip index will not disappear in a puff of smoke as some cryptocurrencies have.

To me, that makes it an ideal vehicle for building growing passive income over the long term.

My problem with Bitcoin is that it produces nothing. Sure, I can make money trading it – the digital coin is up 75% this year – but it doesn’t generate any cash flows. Therefore, it cannot pay me an income.

As Warren Buffett noted: “Bitcoin has no unique value at all… You can stare at it all day and no little Bitcoins come out“.

The test of time

I have absolutely no idea what cryptocurrencies (if any) will still be around in a few decades. But I can make some assumptions about the types of businesses that will still be relevant.

For example, I think it’s safe to assume that people will still drink alcohol. Humans invented it in separate places thousands of years ago – ancient China, the Caucasus and pre-Columbian America.

Now we don’t know for sure which types of alcohol will remain popular. Take mead, the ancient drink created by fermenting honey with water, as an example. It was one of the world’s most consumed alcoholic beverages for centuries. Today, however, I don’t see much mead down the drinking aisle Tesco.

Still, I’ll stick my neck out and say that gin, rum, vodka and whiskey will remain popular for quite some time to come. That leads me to believe that the FTSE 100 drinks giant Diageo will likely stand the test of time.

A quick glance at some of the 200+ brands reinforces my belief.

The share has a return of 2.1% today. Although below the FTSE 100 average, Diageo has been increasing its dividend for over two decades now.

In the short term, the spirits producer may experience a decline in sales as the global economy weakens. But in the long term, I expect the company to have enough pricing power and untapped growth potential to continue rewarding shareholders for many years.

The story continues

Increasing passive income

No single dividend payment is ever guaranteed. But it is reassuring to me when I consider the recent increases in dividends per share for my own top four FTSE 100 stocks.

The fact that these payments continued to flow during the turbulent years of the pandemic is impressive. It reveals the resilience and, I would argue, the importance of each company.

For example, BAE Systems produces weapons and provides defense capabilities, which is unfortunately very relevant today. And National Grid is a regulated monopoly that operates the UK’s energy transmission networks.

In the meantime, Legal & General manages pensions and assets and provides insurance. The stock is yielding a massive 7.8% right now!

I’d much rather have these FTSE 100 stocks in my portfolio than Bitcoin for the next few decades.

The content of this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which have several risks, including total loss of invested money. Readers are responsible for performing their own due diligence and for obtaining professional advice before making investment decisions.

The post Forget Bitcoin! The post I’d Rather Buy FTSE 100 Shares and Aim for Decades of Passive Income appeared first on The Motley Fool UK.

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Ben McPoland has held positions at BAE Systems, Diageo Plc, Legal & General Group Plc and National Grid Plc. The Motley Fool UK has recommended Diageo Plc and Tesco Plc. Views on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we provide in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2023