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He FTSE 100 It's a great place to find stocks that provide a juicy second income. It's packed with high-quality companies that want to reward loyal shareholders.
I've been scanning the index for stocks that I see great value in. And while it may be difficult to narrow it down, I have my eye on one pair in particular. I would love to buy these two today if I had the cash.
HSBC
First is HSBC (LSE: HSBA). The stock has had a volatile 2024. After falling 8% in February following the announcement of its annual results, which left investors disappointed, its shares have recovered strongly. With that, HSBC is up 6.7% so far this year.
My main draw for Footsie Bank is its 7.2% yield. It is the sixth highest in the index and doubles its average payout.
While this is quite impressive, this year the company will pay shareholders a special, one-time dividend following the sale of its Canadian unit. Taking this into account, your performance will be close to 10%.
The bank is very exposed to Asia and, in my opinion, that is a double-edged sword. On the one hand, the weakened Chinese economy, and more specifically its real estate market, has seen HSBC suffer in recent months. I expect more volatility in the coming months, so it's something I plan to monitor closely.
On the other hand, I am excited about the growth opportunities that the region can bring to the business in the coming years. Asia is home to some of the world's fastest growing economies.
Additionally, the stock appears to be good value for money. It trades on a price-to-earnings (P/E) ratio of just 7.4. That's below the Footsie average of 11.
Legal and general
Like HSBC, Legal and general (LSE: LGEN) has also experienced an up and down 2024. Year to date, the stock is down 8%.
But with its share price falling, that means the financial services giant now has a whopping 9% payout, the third-highest on the index. What I also like about Legal & General is that its performance has been increasing steadily over the last few years. This has been driven by management's eagerness to give back.
More recently, the company has laid out its five-year cumulative dividend plan, which will end this year. During that time it would have returned just £6bn to shareholders.
In the short term, I think we may continue to see stocks go through bouts of volatility. Inflation and high interest rates remain a problem. The current economic uncertainty is a great detriment to the company's operations. It can lead to clients withdrawing money from funds.
But long term, I think Legal & General is well positioned to excel. For example, with the UK's population aging, demand for business services will naturally increase.
Like HSBC, the stock also appears to be a good value, trading on a forward P/E of just over nine.
