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Many passive income stocks look attractive right now. As a result of economic uncertainty, valuations have fallen and yields have increased.
The thing is, these low valuations and high yields may not last for long, as the financial landscape can change quickly. With this in mind, here are three stocks that investors should consider buying ahead of 2024.
HSBC
One of my top ideas for passive income right now is HSBC (LSE: HSBA). It is currently expected to pay 64 cents per share in dividends by 2023, putting the stock’s yield at around 8.4% at the current share price and exchange rate.
Like many bank stocks, HSBC is really cheap right now. It currently trades at an earnings multiple of around six.
This strikes me as an opportunity given the bank’s exposure to high-growth markets such as Asia and India.
It’s worth noting that the weak economic environment is a risk here. China’s commercial real estate market, in particular, is a factor that cannot be ignored.
However, I like the risk/reward setup at the current share price. And I’m encouraged by the fact that the bank is buying back its own shares.
GSK
Next is the pharmaceutical giant. GSK (LSE:GSK). It is expected to pay 57.5 cents per share in dividends by 2023, putting its yield at around 4.1%.
Healthcare stocks have been in serious trouble in 2023 and GSK is no exception. This year, its share price has fallen.
However, I think 2024 could be a better year for the sector. It is an industry with several long-term growth drivers, including the growing global population and the increasing prevalence of cancer.
It is also a very resilient sector and is generally not affected by economic weakness.
Now, GSK has some risks specific to its stock. Zantac litigation is one. This has added some uncertainty to the investment case.
However, I think there are already a lot of risks built into the stock price and valuation. Currently, the price-to-earnings (P/E) ratio here is just nine. That’s not much for a well-established global pharmaceutical company.
Coca-Cola HBC
Finally, I like the look of Coca-Cola’s bottling partner. Coca-Cola HBC (LSE: CCH). It currently has a P/E ratio of about 12 and a yield of just under 4%.
This stock has seen a pretty significant pullback (around 15%) since mid-May and I see an opportunity. Recent results were strong, with third-quarter revenue up 4% year over year.
Meanwhile, the company reiterated its full-year guidance (it expects organic revenue growth in the mid-teens for the full year) and said it has a high degree of confidence in its broad beverage portfolio.
Of course, consumer tastes and preferences could change, impacting the growth story here.
However, with a diverse portfolio that includes a wide range of beverages ranging from soft drinks such as Coke and fantasy to alcoholic beverages such as Aperol and FinlandI believe this company is well positioned for long-term success.
