I’ve bought these dividend-paying blue-chips for lifelong passive income

Retirement’s edging a little closer by the day and, in preparation, I’m nudging my portfolio away from growth and towards passive income.

I plan to generate that income by investing in a spread high-quality dividend-paying blue-chip stocks. These are companies with strong balance sheets, reliable earnings and a history of rewarding shareholders. 

By carefully selecting shares with sustainable and growing dividends, I’m hoping to build a portfolio that should provide a steady stream of income for the rest of my life. It’s not without challenges though.

Can these FTSE 100 shares secure my retirement?

I’m not sure I’ve got the balance quite right. I’ve a spread of FTSE 100 dividend stocks, including Lloyds Banking Group, Legal & General Group, Unilever, M&G, BP, Taylor Wimpey and GSK. In my view, these companies offer solid yields and potential long-term share price growth as well. 

Yet I’m over-exposed to the financial sector, with Lloyds, Legal & General, and M&G all falling into this category. Oh, I also hold insurer Phoenix Group Holdings. 

I’ve found FTSE 100 financials difficult to resist, given their ultra-high yields and low valuations, but I might have overdone it. To reduce risk and enhance stability, I need a bit more diversification across different industries.

With that in mind, I recently bought oil and gas giant BP (LSE: BP). Its shares looked brilliant value, trading at less than six times earnings. Its dividend yield of 5.36%’s also highly attractive. Better still, the board has been serving up a heap of share buybacks.

But I have worries. The BP share price has struggled as energy prices retreat. It’s down 8% over one year and 7% over five.

While long-term investors will still be comfortably ahead, thanks to those dividends, it’s a disappointing showing.

BP shares have jumped 7% in the last month as energy prices pick up, but it faces a world of uncertainty right now. What impact will Donald Trump’s tariffs have? How will UK windfall taxes and Labour energy secretary Ed Miliband’s stance towards fossil fuels affect the sector?

The BP share price isn’t my only concern

We’re also waiting to see what Trump will do about war in Ukraine. If there’s a peace deal and gas starts flowing back into Europe, energy prices could retreat again. So could BP earnings.

My biggest worry is that BP can’t seem to decide how to tackle the renewables transition. Can it afford those share buyback and dividends while it pumps money into green energy?

While I’m not selling, these uncertainties mean I’ll be keeping a close eye on its performance before increasing my exposure.

BP isn’t the only FTSE 100 stock with risks. Every single company I’ve mentioned in this piece comes with risks and rewards. That’s why diversification’s important.

Some of those risks may come through, others may not. But by investing in a spread of high-yielding dividend shares, and allowing compounding to work its magic, I’m hopefully setting myself up for financial security and a growing second income for life.