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There are people talking about a new stock market crash coming. But I won’t let that discourage me from my passive income stakes.
I see a lot that are cheap now and I don’t think they will be that cheap forever.
So why risk missing the boat in the hope that a better one will arrive soon?
30% drop?
One headline suggests we could have a 30% drop right around the corner.
It is based in the United States. But what if I buy? Lloyds Banking Group at a price-to-earnings (P/E) ratio of six, and it falls to 4.2?
EITHER Aviva stock with a P/E of 14, and it falls to less than 10?
I’ll buy more, that’s what. As many as I can afford.
And, if cash remains the same, a 30% fall in the share price would lift Lloyds’ dividend yield to 8.4% and Aviva’s to 10.7%.
Returns like that could be great for passive income.
my rule
However, I don’t think we’ll see a decline in the UK. He FTSE 100 It just looks too cheap, with earnings and dividends on the rise.
And I have a general rule that I always follow.
Never put off buying cheap stocks today in the hope that they will be cheaper tomorrow. On average, they won’t.
If we look at the graph of the UK stock market over the last century, we will see constant growth. Past falls are barely visible. That’s what we’d bet on if we waited for the next accident.
Other cheap stocks
What other FTSE shares do I think are so cheap now that I don’t care about the downside risk?
I’m going to stay away from financial stocks and look for something different. With the current banking risk, I need some diversification.
And in the short term, I think banking and insurance stocks could continue to disappoint.
Well, disappointing those who want rapid growth, of course. If they stay low so I can buy cheaper and make better passive income, I’ll love it.
Hmm, most of the lowest P/E FTSE stocks at the moment are banks, of course.
American growth
But I like some others.
Scottish Mortgage Investment Trust The stock has plummeted in recent years and I think it’s still too cheap.
It’s all due to the decline of the US tech-heavy Nasdaq stock index. But the fund’s shares fell even further and the Nasdaq regained ground more quickly.
I would say there is a real possibility of a new Nasdaq crash. But the 14% discount on the stock makes it look cheap to me.
The world could be moving away from oil and gas. But ShellThe P/E is less than nine, with PAIt’s only six. Dividend yields are only around 4% to 4.5%, but growth is on the cards.
Perfect time to buy?
There are plenty more cheap UK shares out there. And FTSE 100 dividends look set to hit a new record of around £90bn by 2025.
This certainly seems like a good time for passive income investors.
