Why these 5 FTSE 100 shares are on my 2021 income investing watchlist

first_img Image source: Getty Images Our 6 ‘Best Buys Now’ Shares Why these 5 FTSE 100 shares are on my 2021 income investing watchlist FTSE 100 banking stocks have been among the worst hit from the coronavirus crisis. But I reckon that 2021 is set to bring them cheer. Here are two reasons why that could happen:#1. Green light for dividendsOne of the big blows to FTSE 100 banking stocks came when the Bank of England (BoE) asked them to hold back on dividends. It was of the view that in an uncertain climate, it’s a good idea to maintain banks’ cash buffer. Already impacted by the stock market crash of March, this further exacerbated their share price declines. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…One example is Lloyds Bank, whose share price fell sharply after the announcement. With its indifferent stock price movements, its unique selling point was its hefty dividend yield, which explains investor disappointment. It has started recovering in earnest only since the stock market rally of last month.In good news, however, last week BoE decided to greenlight dividends once again. FTSE 100 banks like Standard Chartered have already indicated that they could initiate dividend payouts by as early as February next year. Similarly, Barclays’ return to profits after a loss last year bodes well. The bank has said that it will make a decision on dividends only in 2021, but its results give hope. HSBC is also contemplating re-starting dividend payouts. #2. Hopes of better economic times2021 also looks better from an economic perspective. Some improvements are already visible, forecasts for UK’s economic growth are positive and, with Covid-19 vaccinations underway, it appears that it will only be a matter of time before we put the pandemic behind us. Banks’ performances are closely linked to the economy. A growing economy demands greater credit and gives banks the flexibility to increase interest rates. As it is, the UK economy has responded to the government’s fiscal stimulus. The stamp duty waiver has been a particular success. Banks like NatWest and Barclays have had to tighten lending conditions to meet the growing demand for home loans as housing demand rises, according to a Financial Times report. This is expected to continue until at least the end of March next year. The downside for FTSE 100 stocksHowever, there’s a downside too. We don’t know how the bad loan situation will turn out. If the economic damage turns out worse than was initially anticipated, banks’ financials could suffer. Or a hard Brexit could be a blow to the economy. And the pandemic really isn’t over until it’s over. Banks could continue to reel under adverse new developments. The takeawayStill, I’d wait and watch for now. First, I’d look out for their dividend payout announcements. I’d also wait for at least one more set of results to see if their performance improves further, especially since we’ve been in a second lockdown recently and restrictions continue. How Brexit plays out is another immediate concern to me. But with an improving outlook and more certainty, I think FTSE 100 banks like Lloyds, HSBC, NatWest, Standard Chartered, and Barclays are worth being on the income investor’s watchlist.  Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays, HSBC Holdings, Lloyds Banking Group, and Standard Chartered. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make 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. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your free copy of this special investing report now! Manika Premsingh | Monday, 14th December, 2020 center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. 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See all posts by Manika Premsingh Markets around the world are reeling from the coronavirus pandemic…And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.last_img read more