2 stocks to buy in February for lifelong passive income

Investing for passive income requires a long-term mindset. The returns from dividend stocks start small, get bigger, and eventually add up to a lot.

All of that takes time. But that means it’s important to start as soon as possible – if the right opportunity is available.

I aim to build an investment portfolio that can generate passive income for my life. With that in mind, here are two stocks on my list to buy in February.

Move right

The best option for passive income may seem like an odd choice. At 1.3%, Move right (LSE: RMV) does not have an attractive dividend yield.

The company’s dividend is growing fast, though. Over the past 10 years, Rightmove has grown by an average of 15% per year.

If it continues, then after 25 years, I will earn 45% per year on the initial stock. In other words, an investment of £1,000 can now pay you £450 a year in passive income.

It is important to note that the company’s dividend growth has not been linear. In 2020, Rightmove cut its dividend and there is always a risk that this could happen again.

A weak UK housing market – such as the one we’re experiencing now with house prices falling since last August – could cause this to happen. But I see this as an opportunity.

I think that Rightmove has a strong balance sheet, good cash generation metrics, and a buyback program that can help boost the shares going forward. So this month I’m going to buy it.

Citigroup

Todd Combs (a Berkshire Hathaway investment manager) recently gave an interview where he talked about how Warren Buffett found stocks to buy. That leads me to Citigroup (NYSE:C).

According to Combs, three things are important. One is the forward price-to-earnings ratio (P/E) below 15, the other is a business that will be stronger five years from now, the third is a company that can increase earnings at 7%.

I think Citigroup is checking the box here. Let’s start with the simple – the stock is currently trading at a forward P/E ratio of just under 8.

Will the business be in a better position five years from now? I think it will.

Citigroup is currently restructuring its operations. The process may take some time, and there is a risk that it may be expensive in the short term, but I expect it to be completed by 2028.

The end result should be a stronger business than it is today. The company wants to become more efficient by focusing on its core strengths and shedding peripheral operations.

Finally, I think that the business can achieve an annual return of 7%. Citigroup currently has a return on equity of 8%, and I think this will only increase as the company becomes more efficient.

Citigroup’s stock may be out of whack these days. But I want to buy the stock for the 4% dividend yield and the opportunity for future business improvement.