Image source: Getty Images
Volatile Bitcoin and solid, blue-chip FTSE 100 dividend stocks are about as different as two investments could be.
Last year, they performed very differently, too, with Bitcoin plummeting 60% while the FTSE 100 withstood the global stock market crash. This year, both are climbing. Bitcoin is up 39.77% year to date, while the FTSE 100 is up 2.74% and just short of its all-time high.
I’d buy FTSE 100 shares over Bitcoin
I still hold one legacy Bitcoin but I will never buy more. Alt-coins are pure speculation. Investors buy them in the hope that another bout of crypto mania will afflict investors, sending prices to the moon. Some will no doubt enjoy short-term trading gains, but I want nothing to do with it. Prices will only crash again.
I’m looking to build a solid, long-terms portfolio of investments that will give me a rising income in retirement, rather than leap on a roller-coaster ride to nowhere. These two stocks will serve me very nicely.
Gas and electricity utility National Grid (LSC: NG) couldn’t be more different to Bitcoin. Few investors buy it hoping for much in the way of share price growth. It’s the dividend that counts here. This is one of the most reliable income payers of all, with a forecast yield of 5.2%. The payout is only covered 1.2 times by earnings, which seems thin, but management can afford to be generous because those earnings are strictly regulated. Being a monopoly helps.
Yet the stock has shown some growth potential lately, with November’s half-year results showing a 50% rise in interim operating profits to £2.1bn. Management said this reflects the “strength and resilience” of the business.
Another reason I like National Grid stock is that it has exposure to the northeastern US energy market, giving it diversification from the UK. Its shares are down 3.88% over one year, but have risen 29.78% over five, so investors can hope for some growth after all.
National Grid must invest heavily in green infrastructure, and its debt jumped more than 45% to £45.5bn in March last year, which is one concern. Also, its shares aren’t particularly cheap, trading at 16.82 times earnings. I’d still buy them, though.
I like dividends for income
I’d combine that with a slightly riskier FTSE 100 dividend income stock, housebuilder Taylor Wimpey (LSE: TW). Now this is cheap, trading at just 6.5 earnings, while yielding more than National Grid at 7.34% a year.
The risk here is obvious. Taylor Wimpey builds houses, and property prices are expected to fall this year, possibly by double digits. Yet I think some of the doom and gloom has been overdone. The UK still has a massive property shortage, mortgage rates are falling, and prices may not drop as fast as many think.
A sell-off has already been largely priced in, as the company’s share price fell 20% over the last year and is down 40% over five years.
Taylor Wimpey’s sales have dipped “significantly”, as has its order book, while volumes are also set to slip in 2023. I am braced for all of that to happen. My outlook stretches far beyond the next year, and Taylor Wimpey looks like a chance worth taking. In contrast to Bitcoin.
Read More: Forget Bitcoin! I’d much rather hold top dividend stocks like these 2