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20 June 2021
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5 UK shares I’d buy for a passive income

The Motley Fool UK

16/05/2021 - 08:58

This Fool highlights five UK shares he'd buy for his passive income portfolio today, considering their improving prospects. The post 5 UK shares I’d buy for a passive income appeared first on The Motley Fool UK.


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  1. How to use ETF’s for passive income? (10/06/2021 - Reddit Stocks)
    So I recently have gotten a good chunk of money and want to invest it into an etf so I can start to earn passive income and just keep reinvest and let it snowball into a nice nest egg, my question though is am I suppose to keep switching between etfs or just pick one and hold out on it for as long as it shows promise?   submitted by   /u/DilpickleOriginal [link]   [comments]
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  2. Should I drop my 401k with Amazon for stocks in KO? (25/03/2021 - Reddit Stocks)
    I have a lot I could say but I'd like to keep it brief as I can. I make only a fair income and I would like a long term solution for a nice retirement through stocks that will pay big in the long run. My problem with my 401k is it can't make me passive income. Ideally I would have passive income through dividends and retire before 64. If you are knowledgeable about the KO stock, what advice would you give me about this?   submitted by   /u/STRAIGHT_BI_CHASER [link]   [comments]
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  3. How I’d aim to make £90 a month in passive income by buying dividend shares (16/06/2021 - The Motley Fool UK)
    Passive income is money one receives without working for it. Passive income isn’t necessarily about funding a luxurious lifestyle of beach holidays and Ferraris. It can be as simple as a little more money each month to help pay a mobile phone bill or cover a fancy meal out with a loved one. Here’s how I would plan to make £90 a month in passive income, by investing in dividend shares. What are dividend shares? Shares are effectively fractions of a company. When I buy a share, I basically own a tiny bit of that company. If the company generates profits, it can choose to distribute them as dividends. That doesn’t always happen. Companies may keep some funds back to use in their business. But dividend shares are ones that often pay out dividends. Dividends are never guaranteed, which is one reason I try to diversify my portfolio across a variety of shares and business sectors. Dividend shares as passive income I like dividend shares as a form of passive income. Unlike some passive income ideas, there really is little effort involved for me. Once I buy a share, I can sit back and watch the money come in when dividends are paid. I don’t have to set up an online shop. I don’t have to find customers. I don’t have to chase unpaid invoices. Unlike some passive income sources, though, I can’t start earning passive income with no money upfront. To buy dividend shares for passive income, I’ll need to have some money. This can be a lump sum, or it could be something I build up over time by putting a little money each month into a Stocks and Shares ISA. Doing the maths How much would I need to invest to try and generate £90 a month in passive income? That depends how much the shares I buy ‘yield’ – in other words, what percentage of the share price the dividend represents. If I buy shares with a yield of 1%, I’d need to invest £108,000 to generate £90 in monthly passive income. But if the shares yield 5%, I’d only need £21,600. Higher yields aren’t necessarily better, though. They can also be a danger signal that the market is worried a company’s payout level is unsustainable, for example, due to future profit declines. I never buy shares based on yield alone. I do some research to help me understand a company’s future prospects. Choosing the passive income ideas I’d try to reduce my risk by diversifying my share picks. But I would focus firmly on dividends. So, for example, there may be shares I think have growth prospects but don’t pay dividends. For passive income, I wouldn’t buy them. By contrast, I’d be willing to invest in companies that I think have limited growth prospects, such as National Grid and Imperial Brands, because of their attractive dividend yields. Using the average yield of 5% example above, I’d be looking to buy less than £22,000 worth of shares. I’d split the money between at least five business sectors for diversification, and choose no more than two companies in any one sector. Here’s an example of a passive income portfolio I could build on that basis. The post How I’d aim to make £90 a month in passive income by buying dividend shares appeared first on The Motley Fool UK. One FTSE “Snowball Stock” With Runaway Revenues Looking for new share ideas? Grab this FREE report now. Inside, you discover one FTSE company with a runaway snowball of profits. From 2015-2019… Revenues increased 38.6%. Its net income went up 19.7 times! Since 2012, revenues from regular users have almost DOUBLED The opportunity here really is astounding. In fact, one of its own board members recently snapped up 25,000 shares using their own money… So why sit on the side lines a minute longer? You could have the full details on this company right now. Grab your free report – while it’s online. More reading Here’s why I’m not buying Lloyds shares What’s going on with the Sareum Holdings share price? What’s going on with the Synairgen share price? What’s behind the Bitcoin price boost? Are BT shares worth buying? Christopher Ruane owns shares in Imperial Brands. The Motley Fool UK has recommended Imperial Brands and National Grid. 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.
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  4. Passive income opportunities: how I choose (24/02/2021 - The Motley Fool UK)
    There are all sorts of passive income opportunities, from setting up an Etsy shop to investing in property. But not all passive income opportunities are created equal. How I explain my approach to assessing and ranking passive income opportunities. Looking at income potential Different passive income ideas dangle anything from a few extra pennies a month to life-transforming riches. But it is worth looking at the actual income potential in detail. Just because someone else has got an idea to work doesn’t mean that anyone can. So while I admire people who can set up successful online stores selling clothes, for example, I don’t think I would make a good income on it myself. Instead I would rather invest in a company like Associated British Foods, which owns Primark. They have the experience and know how to profit from clothes retail. By buying shares and receiving any future dividends, I would be able to gain income from that without having to sell the clothes myself. I also look at the question of when I might receive income. Many shares pay out income quarterly. If I buy shares in British American Tobacco today, for example, I would expect to start receiving income in May, with a dividend due on 12 May. After that I would expect a dividend each quarter. By contrast, if I set up new passive income opportunities like online shops, I may need to pay out capital now to get it going I may then have no idea of when to expect any income – if ever. Passive income opportunities ranked by time investment There’s no such thing as a free lunch, goes the saying. I think the same is true of passive income ideas. To start with, one usually needs to be willing to invest time or money. So it’s possible to use passive income ideas which don’t require money – but often they will take a lot of time. But that’s not really passive. The whole point of passive income is that the money comes in without having to work long hours for it. If the passive income is a side hustle eating into my spare time and weekends, I wouldn’t say it’s really passive. That’s another reason that shares are one of my passive income opportunities. By investing in a diversified portfolio of large, reputable companies, I don’t need to spend a lot of time monitoring my investments. In fact, I would feel comfortable going months or even years at a time without checking how they are doing, just enjoying the income rolling in. While I might be able to get higher returns actively trading faster growing companies, I am happy to have a genuinely passive income.  British American Tobacco, for example, yields 8%. While tobacco usage may decline in many markets, I don’t feel the need to monitor my investment in BAT closely. But that’s partly because I make sure to diversify my holdings so I am not too reliant on one stock for income. That way, even if a company suspends or cuts its dividend, I can still receive passive income.   There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Don’t miss our special stock presentation. It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about. They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market. That’s why they’re referring to it as the FTSE’s ‘double agent’. Because they believe it’s working both with the market… And against it. To find out why we think you should add it to your portfolio today… Click here to get access to our presentation, and learn how to get the name of this 'double agent'! More reading Is Moneysupermarket stock a buy after its recent jump? UK investors: you can buy into this US billionaire’s hedge fund with just £25! Covid-19: what to know about 2021 weddings from the PM’s four-step plan What to look for when investing for income Here’s why I’m bullish on Argo Blockchain shares christopherruane owns shares of British American Tobacco. The Motley Fool UK has recommended Associated British Foods. 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. The post Passive income opportunities: how I choose appeared first on The Motley Fool UK.
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  5. How I’d create a passive income with £500 a month (22/05/2021 - The Motley Fool UK)
    I firmly believe that buying stocks and shares is one of the most straightforward ways to generate a passive income. Indeed, unlike other passive income strategies, investors can buy dividend shares with just a few pounds. This could allow virtually anyone to start generating income with just a few clicks.  And this is the approach I would use to generate a passive income with an investment of just £500 a month starting today.  Passive income investments Using dividend shares to generate a passive income can be a good strategy. However, dividend income is never guaranteed. This became painfully apparent last year when many companies had to scrap their dividend payouts as revenues plunged during the pandemic.  The risk of a dividend cut is always going to be present with income stocks. As such, this passive income strategy might not be suitable for all investors. Nevertheless, I’m comfortable with this uncertainty, which is why I’m happy to use the process.  I also think I can reduce the risk of being exposed to a dividend cut by using a fund. There are a couple of options investors can choose from when looking for income funds. These include the iShares UK Dividend UCITS ETF, the SPDR S&P UK Dividend Aristocrats UCITS ETF, and the WisdomTree UK Equity Income UCITS ETF. All of these ETFs follow a slightly different investment strategy but have one overriding aim. That is to invest in a diversified portfolio of dividend stocks to produce a steady dividend income for their investors.  At the time of writing, the funds offer dividend yields of between 3% and 4%. It all adds up  By investing £500 a month, I think I can use these funds to generate a passive income. A monthly deposit of £500 will yield a total pot of £6,000 after a year. A dividend yield of 4% could provide an annual passive income of £240.  That may not seem like much at first, but this income will compound with additional contributions providing a virtuous cycle. Of course, returns of 4% per annum indefinitely are by no means guaranteed, but over five years, even with no capital growth, this could produce a pot of £33.1k with an annual passive income of £1,324.  The one significant risk of using this strategy is the risk of a capital loss. Stocks can go up but also down, which is one of the biggest challenges of relying on income from dividends. A sudden market decline could cause capital losses, which may exceed dividend income. In addition, if there are widespread dividend cuts in the market, the funds listed above may also have to reduce dividend distributions. These are the most significant risks and challenges investors following this passive income strategy face.  Still, I think this approach is a great way to generate income. That’s why I am using it myself, despite the risks outlined above.  The Motley Fool UK's Top Income Stock… We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading 3 FTSE 250 dividend stocks to buy Lower returns beckon: here’s how to avoid them Can the stock market rally continue? Why now is a great time for me to buy Cineworld shares The easyJet share price is falling: should I buy now? Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post How I’d create a passive income with £500 a month appeared first on The Motley Fool UK.
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  6. My passive income list right now would have these 2 ideas on it (12/03/2021 - The Motley Fool UK)
    Coming up with ways to earn money without working doesn’t have to be hard. A passive income list can contain simple, practical ideas that are immediately actionable. A key part of my approach to passive income is putting away spare money in a Stocks and Shares ISA, then investing it in income generating shares. Sometimes shares which generate income can cut or cancel their dividends. That would impact my passive income. That’s why I always try to have more than one stock idea on my passive income list. The link between free cash flow and passive income Looking at earnings can tell a lot about a company’s financial success. However, earnings are an accounting measure. Free cash flow is the surplus money the company generates. That matters when looking at passive income ideas, as paying out juicy dividends for many years requires the right level of free cash flow. That’s why one of my passive income ideas is Imperial Brands (LSE: IMB). I already own it, but would consider buying more at the current price. The owner of brands such as John Player Special and Lambert & Butler is a cash generation machine. However, its policy of growing dividends by 10% each year meant that dividend coverage from free cash flow slipped. While the difference between earnings and free cash flow may seem academic, that illustrates why it’s worth understanding it when looking for passive income ideas. The upshot was that Imperial cut its dividend by a third. So, you may wonder, why is it still on my passive income list? The City has apparently cooled on Imperial, which means its share price has fallen compared to recent years. At its current price, the shares yield 9.9%. That means that, for every £100 I put into Imperial, I would expect £99 in passive income each year. If the company raises the dividend, that could increase. Dividends aren’t guaranteed and as tobacco consumption is falling in many markets, free cash flows could be affected down the line. Basing my passive income list on what I know I don’t think passive income should require a lot of work. That is why it is called passive, after all. So that influences me to stick to my circle of competence when assessing passive income ideas. Instead of trying to understand industries or companies I don’t know, I often start by thinking about companies which seem to be well-regarded by my social circle. Then I look into whether they are listed. Sometimes, well-known, well-run companies are already fully priced by the market. But not always. Consider Direct Line for example. The insurer is a household name with an iconic brand. Yet these FTSE 250 shares come with a 7% yield. That makes it worth considering for me as a passive income idea. Insurance can be cyclical, though, which can negatively impact pricing. That could affect the dividend, and indeed last year it cancelled its final dividend amid the pandemic, although it did later pay a special dividend. I also find it discouraging that over the past year, directors have sold but not bought shares with their own money. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading A UK share I’d buy to double my money in the next decade The Imperial Brands share price has fallen. Here’s why I’d still pick its 10% yield Two passive income streams I use 2 cheap UK shares to buy now 2 UK dividend stocks with 9% yields I’d buy today christopherruane owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands. 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. The post My passive income list right now would have these 2 ideas on it appeared first on The Motley Fool UK.
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  7. How I’d earn passive income for the price of a bus ticket each day (28/02/2021 - The Motley Fool UK)
    Working for one’s money can be hard. Between long hours, demanding deadlines, and managing workplace politics it’s no surprise a lot of people aren’t missing the daily grind right now. But work is an important source of income for most people. That’s why a lot of people now are keen to set up passive income streams – ways of getting money without having to work for it. Some of these are capital intensive, like buying a property and renting it out. But some passive income streams can be built for just a couple of pounds a day, the price of a bus ticket. Here I explain how. Why I like shares for passive income My own approach to passive income is that shares can be a good way for me to earn it. If I just tuck away a couple of pounds each day into a Stocks and Shares ISA, I will hardly miss it. But over time that can help me build a tax-efficient savings pot with which to invest in shares for passive income. Not all shares generate income. Some companies are in growth mode, so prefer to reinvest their profits in the business. That is why companies like The Hut Group wouldn’t be on my passive income list. While their shares may grow, I don’t expect them to pay dividends soon. Indeed, their boss said last month that he has no plans to start paying dividends and will instead focus on building the business. So for passive income I would look for a share I expect to pay dividends consistently in the future. Dividend policies can change, but a helpful starting place is the company’s payout history. Have they paid out dividends regularly in the past and do they look likely to have the financial means to do so in the future? Utilities are often a popular pick for this reason. Not only are they often substantial dividend payers, but a regulated pricing regime can provide forward earnings visibility which many non-utility companies don’t have. So, for example, the near-5% yield of United Utilities looks like an attractive passive income source. Keeping it passive One mistake many people make when seeking passive income is investing in shares and then spending hours every week monitoring them. That is a mistake in my view not because it isn’t right, but because it means the income isn’t passive. I’ve learnt that truly passive income should keep flowing in even if I go away for months or years and pay no attention. That’s why a popular passive income pick is old blue chip companies with fairly steady markets, such as Unilever, Diageo, and Morrison’s. Their fortunes may ebb and tide but in general, long-established companies which are cash generative are the sort of passive income pick which let me sleep at night without thinking about them. If markets change, for example, because shopping habits shift or alcohol consumption falls, the companies’ fortunes could change. However, one technique I have selected to help manage such risks is diversification. As I put a little money away often, I can invest in different companies on my passive income list. That way, even if one company I’ve discovered does badly, I would still expect to be earning passive income overall. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading How to prepare for divorce The DS Smith share price is rising! Here’s what I’d do now The Avon Rubber share price has fallen 40% in 3 months. Should I buy now? Passive income ideas I’d use for the price of car insurance premiums What might this director sale mean for the Judges Scientific share price? christopherruane owns shares of Unilever. The Motley Fool UK has recommended Diageo, Morrisons, and Unilever. 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. The post How I’d earn passive income for the price of a bus ticket each day appeared first on The Motley Fool UK.
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  8. How I’d earn monthly passive income from just 3 dividend shares (30/03/2021 - The Motley Fool UK)
    Every month I receive passive income. That’s money I earn without having to work for it. My approach to this monthly passive income stream has been very simple. I don’t spend time setting up wacky or unproven income streams. Instead, I have set up a monthly passive income stream by investing in FTSE 100 shares. That involves shares in a variety of companies. But here’s how I could receive monthly passive income by investing in just three different shares. Dividend timing Companies do not pay out dividends at the same time. Some pay none, some pay annually, and many pay twice a year, with an interim dividend followed later by a final one. However, some UK shares pay on a quarterly basis. By investing in three of those, I should be able to receive monthly passive income. It just requires a bit of research on my part. For example, tomorrow Imperial Brands will pay out a quarterly dividend. Its payouts are scheduled for March, June, September, and December. I’m looking forward to receiving passive income from Imperial tomorrow. Last month, I got income for no work from Imperial’s tobacco rival British American Tobacco. Its dividend calendar runs a month before Imperial’s. Next month I could receive a dividend from GlaxoSmithKline if I held its shares. The GSK dividend calendar foresees payouts in January, April, July, and October. With those three choices, I would hope to receive passive income on a monthly basis. Risk diversification for passive income To be clear, I wouldn’t choose a share based on its payout date – I would assess a company’s business potential and likely ability to generate passive income. Dividends are never guaranteed. GSK has already said its dividend will likely be cut following a demerger of its business. For my own portfolio, I would want to spread my risk across more than three shares. Holding two-thirds in one sector, as in this example, heightens my risk. For example, the tobacco industry could be hit by declining numbers of smokers. That would reduce the companies’ ability to pay dividends. That’s why I have chosen to invest in a broader portfolio of companies and sectors. The point of my example is to highlight that the timing of dividend payments could have a significant impact on my passive income streams. If I only wanted to put money in shares and wait for long-term capital appreciation, that might not matter. But with an objective of earning passive income, a monthly stream could match more neatly to my regular outgoings. By contrast, investing in some shares could mean receiving  no passive income for months on end and then suddenly getting a pile of dividends all in one month. Into action Based on this thinking, there are a couple of action steps I would take. First, I’d consider what my passive income goals are. Does it matter if money arrives unevenly or would I prefer to target a regular income goal? Secondly, I’ll continue to bear this in mind when constructing and adjusting my portfolio. I wouldn’t buy a share just because of its payout schedule. But instead of focusing just on how much passive I’d hope a share would produce, I’ll also look into when it might be paid. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading 3 reasons the stock market rally has stalled (and what I’d do now) GSK share price: a bargain for my ISA? These cheap FTSE 100 shares are at bargain prices — should I buy? 5% dividend yields! Should I buy these 2 UK property shares for my ISA? These were the 5 best shares to buy 6 months ago, before the FTSE 100 soared! christopherruane owns shares of British American Tobacco and Imperial Brands. The Motley Fool UK has recommended GlaxoSmithKline and Imperial Brands. 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. The post How I’d earn monthly passive income from just 3 dividend shares appeared first on The Motley Fool UK.
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  9. How I’d earn passive income for £100 a month (15/05/2021 - The Motley Fool UK)
    Passive income is exactly what it sounds like. Money that comes in – without having work for it. That might sound too good to be true. But examples of passive income abound, from inheritance trusts to people who rent out their empty parking places. Here is my plan to earn passive income by putting aside just £100 a month. Shares as passive income ideas With £100 a month, I’d start saving regularly in a Stocks and Shares ISA. £100 a month might not sound that much. But it adds up to a four figure sum each year. That’s enough for me to start generating passive income streams. Just putting money away wouldn’t earn me passive income, though. That’s why I’d start to invest in shares. To maximise my passive income streams, I would look for high yielding shares. These are stocks where the dividend is large relative to the share price. Passive income example For example, today I could buy a share of British American Tobacco for around £28.32. This year its dividend payout is 215.6p. That equates to a dividend yield of 7.6%. In other words, if I put £100 into BAT shares this month, I would expect to receive £7.60 over the coming year. I’d also receive any dividends declared in future after that. I’d still own the shares. I could sell them in future if I wanted, though might not recoup my purchase price. Risks But things might not work out that way. For example, BAT has paid out a growing dividend since the turn of the millennium – but that is no guarantee of future dividends. Dividends are funded by cash flows. While BAT’s brands such as Lucky Strike allow it to generate meaty cash flows, smoking is declining in many markets. BAT also has a lot of debt it needs to service, eating into free cash flows. To help lower risk in my passive income plan, I’d diversify. That involves spreading my risk by investing in different shares, across a range of sectors. Identifying high yield shares How can I discover high yield shares? A lot of information sources publish historical share yields. But to generate passive income my interest is in what a share’s future dividends might be. Past dividends are not a reliable guide to future ones. Take GlaxoSmithKline, for example. The pharma company currently yields 5.8%. For a blue chip name that is attractive. But a little research reveals that GSK has already indicated a likely reduction in its overall dividend level when it splits into two companies soon. I try to avoid what might be a ‘value trap’. A value trap can be dangerous for unwary investors. Historical data can make it look attractive, but future prospects can be sharply different. That is why I always research my income picks, to try and identify any signs of a possible value trap. I focus on future passive income prospects, not purely historical data. Compound effect and passive income Over time, if I keep putting £100 each month into new passive income ideas, I will add more shares to my portfolio. But I would also hope for regular dividends. Instead of spending this income, I could combine it with my monthly £100 when buying more shares. That compound effect should help my portfolio grow over time – and the passive income will hopefully also increase. CEO’s £500,000,000 Stake on Industry’s “Uber” Revolution We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading I like these FTSE 100 shares with 5%+ yields for passive income Beyond Meat isn’t the only ‘green’ stock I’d buy for my ISA today! Responsible investing: a stock I might buy for the ‘green revolution’ 2 of the best cheap UK shares to buy now! As the Rolls-Royce share price remains cheap, I’d invest £3k christopherruane owns shares of British American Tobacco. The Motley Fool UK has recommended GlaxoSmithKline. 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. The post How I’d earn passive income for £100 a month appeared first on The Motley Fool UK.
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  10. Here’s how I’d use £500 a month to create passive income investments (12/05/2021 - The Motley Fool UK)
    I think sometimes people can get a little confused about the effort needed regarding passive income investments. Although the money made from it should be easier to come by than active investments, I still need to put in effort. Most of this effort comes at the initial stage, when I research what my strategy is and what money I can afford to invest. As this is the key part of the process, it’s worth discussing it in more detail.  Using dividend shares for passive income Clearly, there are many different investments that can be classified as generating passive income. As a stock investor, the main one I’m focused on is dividend shares.  Dividend shares offer me passive income via the quarterly, semi-annual, or annual payments to shareholders. By investing in the stock, I become a shareholder of the company. In this way I have a right to receive a part of the distribution of the profits. This is known as a dividend.  It’s passive simply because the directors of the business are the ones that put in the effort to try and make a profit. I don’t have to get involved in the day-t0-day running of operations. Yet by stumping up my cash and investing, I am entitled to whatever dividend is paid out. Naturally, like any passive income investment, dividend shares do have risks. The income payout is not guaranteed, and depends on how the company has performed in the past year. Dividends also vary from year to year. This can make it hard to accurately forecast how much income I could receive in the future. Putting my £500 a month to work The thing I like about dividend stocks is that there is no minimum investment size to get the ball rolling. This allows me to start generating passive income this year, even if I don’t have a large lump sum available right now.  For example, the FTSE 100 average dividend yield is just under 3%. By putting in the research I mentioned at the beginning, I’ll aim to target sustainable dividend paying firms with above average yields. I think I can target 5% yields at present. So with my £500 a month, at the end of the first year I’d have an investment pot of £6,000 generating passive income of £300 into year two. Over time, the dividends really start to add up. After 10 years, I could have a pot of £60,000 and accrued dividends worth about £17,500! Logically, the amount of passive income I’ll have earned in year 10 is much higher than year one. This shows to me the value in being patient and not trying to chase things. £500 a month is plenty to get me started on my passive income investments, as it’ll really add up (as shown above). One stock for a post-Covid world… Covid-19 is ripping the investment world in two… Some companies have seen exploding cash-flows, soaring valuations and record results… …Others are scrimping and suffering. Entire industries look to be going extinct. Such world-changing events may only happen once in a lifetime. And it seems there’s no middle ground. Financially, you’ll want to learn how to get positioned on the winning side. That’s why our expert analysts have put together this special report. If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains… Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge! More reading Furlough figures fall by 500,000: what happens now? My 5 UK shares to buy now with £5,000 The TUI share price is up 162% in a year. Do I see it rising higher? The Diageo share price is climbing in 2021. Here’s why I’d buy now FTSE 100 shares: the Compass share price slips despite sales improvement jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post Here’s how I’d use £500 a month to create passive income investments appeared first on The Motley Fool UK.
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  11. How achievable is passive income? (06/03/2021 - The Motley Fool UK)
    Earning a decent level of passive income is a great financial goal to set for yourself. I’m going to break down all you need to know about making money this way and how you can make it an achievable goal. [top_pitch] What is passive income? Passive income involves making an income with little direct effort or energy in maintaining the flow. Ideally, it’s a way of making money while you sleep! Our lives shouldn’t just be about making money. Earning this way means it happens in the background of your life so you can prioritise more important things. In an ideal passive situation, there’s no direct relationship between the amount of time you work and the amount of money you make. It’s not a get rich quick approach, but it is a realistic way to earn on autopilot. How can I earn passive income? There are loads of different ways to start earning some passive income. Depending on your situation and skill set, routes to consider include: Renting out your property or even just a room in your house Sharing your skills by creating online courses or content for platforms such as YouTube Selling your own creations, such as stock photos Writing and self-publishing a book straight to Amazon Creating a blog or website to monetise through advertising or affiliate links Investing in stocks and shares that pay dividends Whichever route you choose, it will probably take some initial work to get things rolling. Although there are plenty of tried and tested ways to create passive income streams, thinking outside the box could also work in your favour. [middle_pitch] What is an easy way to earn passive income? This is where things get exciting. There are plenty of things that you can do to help build up some passive income. You don’t have to be an entrepreneur or even be on a high salary to get started. Investing is a great place to start because you can kick things off with a relatively small amount. So could find yourself earning a small passive income almost immediately. However, it’s probably not going to be enough to live on. So you’ll need to consider what you want your passive income to cover. How do I earn passively with investments? Here are two great ways to begin earning some passive income with investments: 1. Stocks and shares ISA This is a great account for investors because growth and proceeds from aren’t subject to further tax. You can put up to £20,000 into a stocks and shares ISA each tax year. Proceeds from investments in a stocks and shares ISA are not classed as part of your yearly income. So if you invest wisely, you can gradually build up a bigger stream of passive income that’s shielded from tax. If you want a more stable source of income from your investments, you could look at something like dividend investing. This means picking companies that pay dividends to their shareholders. Investing this way can be less volatile when you’re no longer looking for growth and want a more steady stream of passive income. 2. Investing solutions Although the option above is good for selecting your own investments, it can be time-consuming. An investing solutions platform can be a way to create passive income. Instead of spending lots of time researching and maintaining your portfolio, you can let the experts do it for you. Some accounts also give you the benefit of including ISAs. This way, you don’t have to put in lots of effort or time managing your investments and passive income. Investing in this way used to be really expensive, but that’s changing. For example, InvestEngine has lowered its minimum investment amount from £2,000 to £100 and they’re currently offering a £50 welcome bonus. So you can get set up with an immediate boost on your way to earning some passive income. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading The Restaurant Group share price: is now the time to buy? AstraZeneca share price: back to sub-£70 levels. Should I buy now? The Rolls-Royce share price: is this best investment for 2021 and beyond? 1 FTSE small-cap biotech stock I’d buy now Women vs men: who’s investing in what? The post How achievable is passive income? appeared first on The Motley Fool UK.
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  12. Passive income ideas I’m using now (22/02/2021 - The Motley Fool UK)
    The idea of passive income is attractively simple. Rather than having to work for every pound, at least some income comes in ‘passively’ – for little or no work. From rent on a let property to a royalty payment for creative work, there are lots of practical examples of passive income. But I find a lot of passive income ideas also quite wacky. Setting up new business doesn’t sound passive to me at all! That’s why I prefer to put some money in a Stocks and Shares ISA and choose shares as passive income ideas. Why I like shares as passive income ideas I think one thing a lot of people overlook about passive income is that it’s meant to be passive. For example, I’ve noticed a lot of people are starting to eat meat alternatives. I could set up my own business selling alternative meat online to try and monetize this trend. But why go to all that work? A company like Unilever has vast food experience and marketing expertise. They already have distribution and sales networks. With their ‘Future Foods’ initiative, they are aiming to sell a billion euros a year’s worth of plant-based meat and dairy alternatives. Simply by buying Unilever shares, I hope to benefit from their success, without having to do any work for it myself. Plus the company has a range of well-known cleaning and beauty brands, so it’s not just a speculation on the growth in meat alternatives. With a yield close to 4%, Unilever is among the income investing ideas that let me sit back and get passive income every quarter. I’m not guaranteed such income, though.  It’s not yet known whether Unilever’s push into areas like meat alternatives will be as rewarding as its wider portfolio. Some analysts also worry that the cleaning product sales boom engendered by the pandemic will tail off and hurt profits. That’s why, as with any share, I diversify so that my Stocks and Shares ISA isn’t overly reliant on one company. How I choose shares  Lots of shares may seem like attractive passive income shares at first glance. So how do I decide which ones to buy? First it’s helpful to distinguish between growth and income shares. Growth names like S4 Capital are expected by many investors to grow. They tend to be early-stage companies with a lot of market space still left open to them. They can be attractive – but not as passive income ideas. For passive income, I would focus on income shares. Often in more mature markets, these companies generate money and pay some of it out to shareholders as dividends. A highly cash generative business like tobacco can equate to a strong income stream. Tobacco company Imperial Brands is paying out 10% right now, for example. But tobacco faces an uncertain future. So while I do hold Imperial, I’d also limit my exposure to it. Looking at the likely future demand for a company’s products and indeed a whole industry is one way I assess a share’s attractiveness on my passive income list. Instead of just looking at historical dividend data, I dig in to available information and try to understand whether the company is likely to continue paying dividends in future. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading The ULVR share price is under 4,000p. Here’s what I’d do Rolls-Royce share price is around 100p. Here’s what I’d do The ITM share price is up more than 250% in the last year! Should I buy the shares now? A UK share I’d buy in my ISA in March for the new bull market These 12 shares are the FTSE 100’s dogs since 2016. How many do you own? christopherruane owns shares of Imperial Brands, S4 Capital plc, and Unilever. The Motley Fool UK has recommended Imperial Brands and Unilever. 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. The post Passive income ideas I’m using now appeared first on The Motley Fool UK.
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  13. How I’m investing in dividend stocks to aim for £100 a week in passive income (07/06/2021 - The Motley Fool UK)
    Dividend stocks are one avenue that I like to use to generate passive income. Passive income enables me to earn money without having to put high levels of effort in. So I can continue to try to make profits from more active stock picking that require more research. When I blend the two together, my overall pot should be able to work harder for me than just doing one or the other. Passive income from dividend stocks One element that makes dividend stocks appealing for passive income is the yield. Technically I make passive income from my Cash ISA, but the amount is negligible. For companies that pay out a dividend, the income can be generous.  The way I calculate this is by looking at the dividend per share paid out relative to the price of the share. This is known as the dividend yield. The higher the yield, the more I’m squeezing the lemon.  I do need to be careful about high yields, as sometimes it can be too good to be true. A falling share price might inflate the dividend yield for a period. But the struggling company (hence the share price fall) might have to cut the dividend in the future. This would then reduce the dividend yield. So to make sure I get sustainable passive income from dividend stocks, I want to be sensible. The FTSE 100 average dividend yield sits just below 3%, which I think is still attractive. By being selective, I’d be happy targeting a yield of 5% without having a very high overall risk level. Crunching the numbers With a sustainable dividend being paid out into the future, I can now turn my mind to thinking of numbers. Let’s say that I want to make £100 a week on average in passive income from dividend stocks. It has to be an average as dividends often get paid once or twice a year. Even if I bought a dozen stocks, I’d struggle to get a payment each week! From here I just need to plug in the numbers and work backwards. I know my yield is 5% and my end goal is £100 a week (£400 a month). For a lump sum investment, I’d need to buy shares totaling £104,000. This sounds a lot to buy in one go. An alternative way could be to build up to the passive income target from dividend stocks. I could invest £1,000 a month, reaching my end goal just after seven years. From my point of view, working away at my goal for a few years to avoid a huge drain on my liquidity makes sense. So I’d prefer to do the second option. Either way, I can show that making good dividend income in a passive way is possible.  One FTSE “Snowball Stock” With Runaway Revenues Looking for new share ideas? Grab this FREE report now. Inside, you discover one FTSE company with a runaway snowball of profits. From 2015-2019… Revenues increased 38.6%. Its net income went up 19.7 times! Since 2012, revenues from regular users have almost DOUBLED The opportunity here really is astounding. In fact, one of its own board members recently snapped up 25,000 shares using their own money… So why sit on the side lines a minute longer? You could have the full details on this company right now. Grab your free report – while it’s online. More reading American Express Shop Small is back: how can you make the most of it? Property prices are soaring! Should I buy top UK property stocks now? Where will the Shell (RDSB) share price go in June? The 2 best dividend stocks paying 7% today 2 hot UK mining stocks to buy today jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post How I’m investing in dividend stocks to aim for £100 a week in passive income appeared first on The Motley Fool UK.
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  14. Passive income ideas I’d use with £500 a month (09/03/2021 - The Motley Fool UK)
    Passive income ideas can help one get money without having to work for it. From letting property to owning shares, there are lots of ways in which one can supplement actively earned income. Putting aside some money each month to invest in a passive income idea can help create a revenue stream. That is because a lot of shares pay dividends, which are payments to shareholders while they hold the shares. It’s basically like becoming a part owner of the business, and getting a slice of the profits several times a year without having to do any of the work. With £500 a month invested in a Stocks and Shares ISA, I think it should be possible to create a passive income stream in a matter of months. Finding passive income ideas When scanning the stock market for passive income ideas, I look at how much income I expect a company to generate in future. A company which is still investing heavily in new technology or building its business, such as Ocado, may not produce enough income to pay dividends. That doesn’t necessarily make it a bad investment. But it does mean that it isn’t likely to supply me with passive income any time soon. By contrast, a well-established company in a mature industry may be able to generate substantial surplus profit. It can return that profit to shareholders as dividends. For example, Imperial Brands is mostly focussed on selling cigarettes. While it does have some next gen products, cigarettes don’t require large research or capex investment at this stage in their product cycle. So the company can pay out a lot of money as dividends – last year, Imperial paid out £1.3bn in dividends to shareholders. But one of the downsides of a mature industry is that it could decline, or returns could shrink. For example, in many of Imperial’s key markets, cigarette consumption is set to fall. It can compensate to some extent with price increases. But over time, falling demand could equal falling profits. Pick and mix That is one reason I try to spread my investments over multiple shares. That provides some diversification, so that even if one share performs worse than I hoped, I can still hope my passive income ideas will pay out over all. Some companies in the same industry may be better than others, but all could be affected by a downturn. So I don’t just diversify between companies, I also make sure to use passive income ideas in more than one sector. £500 a month is substantial enough to enable me to diversify between different passive income ideas before long. Future income growth Any passive income is welcome for me. But if I was looking at different jobs, I’d consider whether the wages might rise in future or would stay the same. I think it makes sense to do the same with passive income. For example, some companies have a long history of increasing their dividends. DCC has raised its dividend annually for over a quarter of a century. Dividend history doesn’t necessarily indicate future payouts. But a company with an ethos of growing dividends often prioritises dividend payouts and considers how to grow dividends into the future. That is why companies with long dividend growth histories rank highly among my passive income ideas. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading The Royal Mail share price is soaring in 2021. Should I buy now? 3 UK shares I’d buy before the Stocks & Shares ISA deadline! Will the stamp duty holiday be extended further? ISA deadline: 1 FTSE 100 stock I’d buy before April 2 of my top share picks for March and beyond christopherruane owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands. 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. The post Passive income ideas I’d use with £500 a month appeared first on The Motley Fool UK.
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  15. Help a newbie out (09/03/2021 - Reddit Stock Market)
    Greetings fellow humans I am a med student so i don't have time to make money (start a business or have a job) i want something with a passive income and i have some money accumulated and i always hear from people that the worst thing to do with your money is not investing it i was wondering what to invest that money in and i did some research and found a company called PGI global that you get a passive daily income of 0.5-3% of your investment so i thought that is too good to be true So long story short should i do it or are there better places to invest my money in? Whats your advice? What do you suggest? Thank you for your time   submitted by   /u/Mstafa-K [link]   [comments]
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  16. Passive income ideas I’d start using with £10 a day (03/03/2021 - The Motley Fool UK)
    Passive income ideas range from buy-to-let property to setting up an online business. Some appeal to me but require a lot of time or effort so don’t really seem passive. That is why I prefer passive income ideas which require as little of my time as possible. By putting a little money aside regularly into a Stocks and Shares ISA, I am able to build up a nest egg that generates passive income. With £10 a day, I can accumulate over £3,600 a year which I could invest. Why I like blue chip shares for passive income There is an intuitive allure to get rich quick schemes, but a lot of passive income ideas leave me cold. Either they seem far-fetched to me, or I don’t think they are really passive. That’s why I prefer to invest in blue chip companies such as Unilever or Diageo. With business expertise and armies of talented professionals, they are in a position to generate surplus cash. If that gets paid out as a dividend, then as an investor I can gain passive income from the companies’ efforts without scrabbling round trying to earn it myself. Unilever, for example, is the powerhouse behind familiar brands such as Dove and PG Tips. Diageo owns brands such as Guinness and Johnnie Walker. Sure, I could set up my own online business to try to generate passive income. But I would happily let these established companies take the strain instead. £10 a day on Diageo shares would be a more rewarding use of my money than £10 a day on the company’s whisky! A good brand portfolio and experienced management can help a company to prosper, but things don’t always go according to plan. For example, reduced demand for cleaning products after the pandemic could cut Unilever’s revenue. Similarly, if healthy lifestyles lead to people drinking less beer, that could mean a revenue hit for Diageo. A well-rounded company will already have some diversification itself, but spreading one’s portfolio over a number of companies helps with this too. How much income and when Some passive income ideas are speculative, so it’s unclear when income will come in – if it ever does. By contrast, many companies pay out dividends on a set schedule, annually, biannually, or quarterly are the most common frequencies. A dividend typically reflects the company’s recent business performance, so they are not guaranteed. For example, a company may decide to stop dividends due to a change in business prospects. Again, though, a diversified portfolio should help here. When looking at shares, a big consideration for me is how much income they offer. For example, while I like Diageo as a company, its current yield of 2.4% pales next to Imperial Brands, which yields 10%. With passive income as my objective I would look to maximize income by hunting for higher yielding shares. But if I am looking for a future passive income stream, I would also think about a company’s future prospects. For example, Imperial has a lot of debt. Its core product of cigarettes is in decline in many markets. Will it therefore be able to maintain its current dividend level? The answer is always that nobody knows for sure. But in hunting for passive income ideas, I try to focus on shares whose free cash flows look set to cover their dividends. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading The Cellular Goods share price slips. Is this Beckham-backed cannabis stock a buy? The Aston Martin share price: will it be a 2021 winner? The Renishaw share price is rising! Should I buy the shares now? Should couples split bills 50/50? Why the Yu Group share price soared over 10% today christopherruane owns shares of Imperial Brands and Unilever. The Motley Fool UK has recommended Diageo, Imperial Brands, and Unilever. 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. The post Passive income ideas I’d start using with £10 a day appeared first on The Motley Fool UK.
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  17. How I’d aim to earn a rising passive income from dividend stocks (30/05/2021 - The Motley Fool UK)
    One of the best things about FTSE 100 shares is that they can help investors to generate a rising passive income for retirement. During the wealth-building phase, I would reinvest my dividends for growth. After I stopped working, I would draw them as income. Given that most companies aim to increase their dividends every year, that income should rise over time. I would then use it to top up other sources of retirement income, such as my State Pension and workplace one. That income may be ‘passive’, but it should allow me to enjoy an active retirement, by generating income to spend on the activities I enjoy. I’d buy FTSE dividend stocks for my retirement Dividend income is not guaranteed, of course. As we saw last year, companies are free to scrap or suspend their payouts at any time. That is why I would invest in a spread of stocks, to reduce the risk to my income stream from one or two doing this. Investing in top FTSE 100 dividend stocks is particularly attractive right now, when the average savings account pays 0.06%. It is possible to generate a passive income of 5% a year, and more than 7% on one or two companies. That is quite incredible, when I consider the alternatives. I don’t just look at the headline yield when buying dividend stocks. Sometimes a really high yield can be bad news, rather than good. Yield is calculated by dividing the dividend per share by the company’s share price. So if the dividend is 5p and the stock trades at £1, the yield is 5%. If profits slump and the share price crashes to 50p, that yield leaps to 10%. That looks great, but the company may struggle to fund shareholder payouts from shrinking profits. I plan to live on a rising passive income One way to work out if that passive income stream is sustainable is to examine the company’s dividend payout ratio. This is calculated by dividing the last full-year dividend by net profit. A number below 100% suggests payouts are affordable. I also examine dividend cover, and feel far more confident when the payout is covered twice by profits. Forward earnings projections (and recent growth) may also indicate whether the company can continue to generate the cash it needs to deliver the rising passive income I crave. Another way of seeing whether the passive dividend income is secure, is to examine prospects for the company’s sector. BP and Royal Dutch Shell have been a tremendous source of dividend income, but oil companies may struggle as competition from renewables grows. Every company is exposed to unexpected shocks, as we have seen in the pandemic. I would improve the odds by targeting companies with loyal customers, strong balance sheets, minimal debt, and a defensive ‘moat’ against competitors. Cash is 100% safe but is being eroded by rising inflation. By investing in top FTSE dividend stocks, my passive income will hopefully rise in real terms. This stock tempts me. The Motley Fool UK's Top Income Stock… We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading What’s happening to the Cineworld share price? 2 UK shares I’d buy in my Stocks and Shares ISA in June 2 UK shares I’d buy in June 2 UK penny stocks I’d buy for my ISA in June 5 UK shares I’d buy with £5k Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post How I’d aim to earn a rising passive income from dividend stocks appeared first on The Motley Fool UK.
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  18. Here’s how much passive income I’d have made over 5 years from BP shares (12/03/2021 - The Motley Fool UK)
    I spend a lot of time looking into the future when thinking about making passive income from shares. I often think about how much I’d need to make over a period of time in order to generate X pounds in my account. This is the way most people look at it, but I wanted to flip it and think about it by looking backwards. For example, BP (LSE:BP) shares have paid out some form of dividend for many years. So let’s see how much income I could have made over the past few years. Looking back at passive income Firstly, let me run through a little about BP as a company. It’s a well known oil and gas company that’s involved in all of the different stages of production. As such, it owns oil fields and has exploration efforts. At the same time, you can find a BP fuel garage in a location not too far from your current location. BP has been a favoured stock to buy to make passive income from shares for a long time. One of the reasons for this is that the oil and gas industry is mature. It’s dominated by a handful of large companies that share out the majority of the market. As such, it’s unlikely (but not impossible) that BP would want to retain all profit to reinvest into growth projects. The company sees better value in paying out some profit to shareholders as a dividend. Let’s say I’d invested £1,000 into BP shares five years ago. The dividend yield at that time was 8%, using the nearest dividend payout of 24 March 2016 of 7p per share. It’s difficult for me today to track the dividend yield perfectly, but I can get a good idea as I would have locked in the share price when I initially bought the stock.  As it happens, six months later the dividend increased 7% to 7.55p per share. So my dividend yield at that point would have been 8.56%.   If I take a measure of the yield every six months this gives me 10 yields over the five-year period. According to my calculations, the average yield over this period was 8.06%. If I’d reinvested my dividends, that would give me a total value of £1,473.41. The passive income from the shares alone would amount to £403, but the benefit of reinvesting these dividends and compounding it gives me the additional £70.41. What does looking back tell me? A good point this shows me is that it’s much easier to look forward than to look backward! The maths is a lot easier to project how much I could make from passive income from shares than to look at historic numbers. But projections might not always be correct. For example, the BP dividend payment last September was halved, to 4p. If I was trying to forecast this, I probably would have got it wrong. Looking back also shows me how quickly passive income can start to stack up over time. By locking in the share price when I buy a stock, I can then accumulate income. If I was sitting on the £1,000 worth of BP shares, I’d be looking forward to the next five years based on the above! There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Don’t miss our special stock presentation. It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about. They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market. That’s why they’re referring to it as the FTSE’s ‘double agent’. Because they believe it’s working both with the market… And against it. To find out why we think you should add it to your portfolio today… Click here to get access to our presentation, and learn how to get the name of this 'double agent'! More reading The BP share price is rising. Should I buy now? Saudi Arabia was attacked. Here’s what I think it means for the RDSB share price and BP share price What I think this US government agency’s predictions mean for the RDSB and BP share prices Oil stocks are rising! What am I doing with BP and Shell shares? Hargreaves Lansdown investors are buying BP shares. Is it the best UK stock to buy now? jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post Here’s how much passive income I’d have made over 5 years from BP shares appeared first on The Motley Fool UK.
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  19. Strategies on cash backed put options (31/03/2021 - Reddit Stock Market)
    I’m reading up on options writing and learning from various yt channels. So as a result, my somewhat newbie kind of mindset makes me believe that writing cash backed puts is the way to go for steady income generating, as compared to a more passive income and dividend focused portfolio approach. Armed with this semi-knowledge, I’m now wondering how to best build a strategy around this. What kinds of patterns to look for in a stock, for example. I also think timing is important. Would really like to find out what others are doing in this area and how it compares to their passive long term allocations.   submitted by   /u/Timstertimster [link]   [comments]
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  20. 2 stocks and shares for a passive income (11/06/2021 - The Motley Fool UK)
    I believe investing in stocks and shares is one of the best ways to earn a passive income. However, this strategy might not be suitable for all investors.  If a corporation’s profits suddenly slump, management may have no choice but to cut the dividend. This, unfortunately, happened to many firms last year.  Still, I’m comfortable with the level of risk involved in buying stocks and shares for a passive income. And with that in mind, here are two income stocks I’d buy today.  Stocks and shares The first company on my list is financial services enterprise CMC Markets (LSE: CMCX). The group’s profits have exploded over the past year as it’s benefited from an influx of customers. The number of clients trading CFDs on its platform rose 34% in its financial year ending 31st March. Meanwhile, the number of stockbroking clients increased by 28%.  Overall profit increased 127% to £224m year-on-year. Off the back of these results, management hiked the company’s ordinary dividend for the year by 104% to 30.6p, from 15p last year. These numbers suggest the stock offers a yield of 6.3%, at current levels.  Based on these numbers, I’d buy CMC for my passive income portfolio of stocks and shares.  However, while the company benefited from an explosion in business last year, it may not last. Clients may spend less time on CMC’s platforms as the economy reopens and lockdowns are eased. This may lead to reduced trading activity and, as a result, profits.  If profits do decline, CMC may reduce its dividend next year.  Passive income Alongside CMC, I’d also buy the oil giant BP (LSE: BP) for my passive income portfolio of stocks and shares. Last year, the company announced one of the most considerable losses in British corporate history as falling oil and gas prices inflicted pain on its portfolio. That led to a 50% cut in the group’s dividend as management pulled out all the stops to conserve cash.  BP’s fortunes have improved dramatically over the past six months. It reported underlying first quarter profit of $2.6bn, up from $791m a year ago. What’s more, strong underlying free cash flow and asset sales have cut $18.1bn off net debt in 12 months. In my opinion, these figures suggest management has stabilised the business, which should support the company’s dividend. At the time of writing, the stock supports a dividend yield of 6.2%. That’s why I’d buy the stock for my passive income portfolio.  Unfortunately, the company faces some unique risks not applicable to other stocks and shares. The global transition away from oil and gas towards renewable energy threatens its existence. While BP is planning to spend more over the next few years on renewable projects, this might not be enough.  As such, the stock may not be suitable for all income investors. The post 2 stocks and shares for a passive income appeared first on The Motley Fool UK. The Motley Fool UK's Top Income Stock… We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading 3 high-yielding FTSE 250 shares What am I doing with my BP shares? Could BP shares be the investment of the decade for me? My top FTSE 100 stocks to buy in June 3 high-profile UK shares I’m avoiding Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
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  21. Passive income investing: 3 common mistakes I’m trying to avoid (03/05/2021 - The Motley Fool UK)
    Using dividend stocks as part of passive income investing is becoming increasingly popular. It’s something that I do and something I should really do more of with my cash! In a low-interest-rate environment, there’s a high opportunity cost of not making my money help make me more money. But the rush to simply find a home for my cash via dividend stocks can lead me to make unnecessary mistakes. This is something I need to be careful of. Having the right expectations for income investing One of the common mistakes I see with passive income investing is simply trying to target the highest possible income payment from a stock. Simply looking at the highest dividend per share as a monetary figure is not always wise. For example, if I buy a stock with a share price of 100p and a dividend per share of 10p, my yield is 10%. But what if the dividend per share is 10p, but the share price is actually 1,000p? Then my yield is only 1%. So just looking at the dividend per share isn’t a true reflection of the overall return for this part of my passive income investment. A better way is to look at the dividend yield, which factors in the share price to provide a percentage yield. This yield still changes every day, but gives me a better comparable number to work with compared to other dividend stocks. A second common mistake I could make would be to think that all the future dividend income is guaranteed. As much as I’d like to plan for years ahead how much passive income my stocks will definitely make me, it’s not always possible.  I do always try to find dividend stocks that historically have been paying out regular dividends. Yet unexpected company-specific events, or a wider problem (like Covid-19), can impact things. This could cause the dividend to be reduced, lowering my income in this regard.  By knowing that this can happen I can reduce the surprise here, and ensure that any projections I do take into account a margin of error. Diversifying my stocks The final mistake I’m wary of making is putting all my eggs in one basket. I might find a company with a great outlook and a strong track record of paying dividends. Even in this case, I’d be making a mistake to just buy this one stock in my portfolio for passive income investments.  Buying multiple shares helps to spread out my risk and also my overall yield. For example, I might decide to buy a slightly-high-risk stock with a generous yield of 8%. If I supplement this with a low-risk, stable stock offering a yield of 4%, then it enables me to reduce my risk. At the same time, my yields blend together, giving me a higher yield than just picking low-risk companies. The more money I’m looking to invest, the more stocks I’d look to buy to spread the risk. Overall, passive income investing isn’t a new concept, and so hopefully I can learn from these mistakes going forward. CEO’s £500,000,000 Stake on Industry’s “Uber” Revolution We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading How I’d double my money investing in stocks and shares Forget the Lloyds share price. These FTSE 100 shares can make me a passive income Shares to watch in May Should I buy these FTSE 100 shares in my ISA in May? Which are the highest dividend yield stocks to buy right now? jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post Passive income investing: 3 common mistakes I’m trying to avoid appeared first on The Motley Fool UK.
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  22. 3 steps I’d take before buying UK shares for a passive income today (20/02/2021 - The Motley Fool UK)
    Buying UK shares to make a passive income can be a sound long-term move. After all, they’ve historically offered higher return potential than other income-producing assets. This point may be increasingly relevant in the current low interest rate environment. However, there are risks involved in buying UK stocks for a passive income. As such, investors may wish to ensure they’ve sufficient cash on hand in case of emergency. It may also mean them having enough capital available to diversify, and check any potential holdings can afford their dividends due to the uncertain economic climate. Holding cash as well as UK shares Buying UK shares to make a passive income can be a wise move while interest rates are low. They offer significantly higher returns than savings accounts at the present time. However, investing all of the capital available in shares and holding no cash may be a risky move. After all, the 2020 stock market crash showed that difficult periods for investors can happen at any time. Furthermore, personal financial challenges such as losing a job can happen to anyone at any time. Especially in the current economic climate. Therefore, it may be prudent to always ensure there’s enough cash on hand to deal with possible financial ‘speed bumps’. Beyond this amount, UK shares can provide a worthwhile passive income over the long run. Diversifying to make a worthwhile passive income While it can be a good idea to focus on the most appealing UK shares when seeking to make a passive income, diversifying is likely to be a necessity for all investors. Otherwise, they may have a concentrated portfolio that carries too much company-specific risk. That is the potential for one or more companies’ poor performance to negatively impact on portfolio returns. Clearly, a portfolio needs to be large enough to diversify. Therefore, before buying UK stocks for a passive income, it could be prudent to ensure an investor has sufficient capital to buy a wide range of shares. Otherwise, using tracker funds until that point is reached may be a sound move. Ensuring dividends are affordable Before buying UK shares to make a passive income, it could be a good idea to check they can afford their shareholder payouts. There’s little point in buying companies with high yields only for their financial performance to deteriorate so they have to cut, or even cancel, their dividends. Clearly, dividend affordability is especially relevant at the present time due to the uncertain economic outlook. By taking simple steps such as comparing a company’s dividend payouts to its net profit and cash flow, it may be possible to buy the most resilient and robust dividend shares. Over time, they could offer a more dependable income stream that grows at a brisk pace to produce a worthwhile passive income. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading The best FTSE 100 stocks to buy right now Lloyds’ share price could make it one of the best dividend shares to buy now Lloyds share price: will it rise if the dividend makes a comeback? A high-growth UK share I’d buy in my ISA and hold for 10 years 2 of the best UK dividend-paying stocks to buy right now 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. The post 3 steps I’d take before buying UK shares for a passive income today appeared first on The Motley Fool UK.
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  23. My ‘best stocks to buy’ list: I think these 2 UK shares could have passive income potential (13/02/2021 - The Motley Fool UK)
    Some UK shares are yet to return dividend payouts to their previous levels. Others continue to offer a relatively high passive income. Certainly, there’s no guarantee dividends will ever be paid by any company. And, with the global economy’s outlook being very uncertain at the present time, this risk is perhaps amplified. However, these two UK stocks could offer growing dividends over the coming years. As such, they could be among the best stocks to buy now. They could generate a worthwhile and rising income stream in the long run. A high passive income relative to other UK shares Financial services company Legal & General (LSE: LGEN) recently laid out its plans to deliver a rising dividend over the coming years. It estimates it’ll be able to deliver a rise in its passive income in the low to mid-single digits in the period between 2021 and 2024. This could mean its payout grows at a faster pace than inflation. And that may make it increasingly attractive should a loose monetary policy prompt a faster-rising price level. With a dividend yield of over 7%, the stock is already one of the highest-yielding shares in the FTSE 100. When coupled with its dividend growth rate, as well as a forecast dividend cover of 1.5 times in the current year, its passive income investing potential seems to be high. Certainly, Legal & General’s passive income prospects could be dealt a blow by a weak economic performance. This means that its future payouts are by no means guaranteed. However, its high yield suggests there’s a wide margin of safety on offer. And could lead to impressive income returns for investors in the long run. One of the best UK stocks to buy now? Another FTSE 100 stock that could offer a strong outlook when it comes to making a passive income is Berkeley (LSE: BKG). The housebuilder recently updated the market on its performance. It added four new sites to its development pipeline in the first half of the year. Meanwhile, it remains on track to return £280m per year through dividends and/or share buybacks. In the current year, Berkeley’s dividend yield is forecast to be around 4.4%. Its financial position is relatively secure, owing to its net cash position of £954m. This should mean it’s able to maintain its dominant market position in London through the market cycle. This could lead to a more robust and reliable passive income than many of its sector peers can offer. Of course, the company’s future prospects are very dependent on those of the UK economy. As such, it could produce disappointing returns at times. However, with a generous passive income and a solid market position, it appears to offer a relatively attractive passive income for the long term. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading UK share investing: one of the best FTSE 100 shares I’d buy in my ISA right now 2 FTSE 100 shares I’d buy today for passive income 2 FTSE 100 UK shares I’d buy for 2021 Cheap UK shares with high dividend yields: 2 FTSE 100 stocks I’d buy today Why I’m avoiding the Reddit trader frenzy and buying this top UK stock instead Peter Stephens owns shares of Berkeley Group Holdings and Legal & General Group. The Motley Fool UK has no position in any of the shares mentioned. 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. The post My ‘best stocks to buy’ list: I think these 2 UK shares could have passive income potential appeared first on The Motley Fool UK.
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  24. 3 UK shares I’d buy for a passive income (09/05/2021 - The Motley Fool UK)
    I firmly believe buying UK shares is one of the best ways to generate a passive income. With that in mind, here are three UK shares I’d buy for my passive income portfolio today. UK shares to buy  Before I begin, I should note that one of the big drawbacks of buying shares for income is that dividends are never guaranteed. There’s always going to be a risk that companies might have to cut their payouts to investors if profits fall. That’s just what happened at the height of the pandemic last year. When company profits collapsed, many businesses eliminated their shareholder payouts.  As such, I’ll only include companies in my portfolio that have strong balance sheets, wide profit margins, and competitive advantages. While it’s never going to be possible to remove the risk of being subject to a dividend cut entirely, I believe I can improve my odds by focusing on the market’s best income stocks.  And I believe two of the market’s best income stocks are Assura (LSE: AGR) and Primary Health Properties (LSE: PHP).  Both own and manage healthcare facilities. This has to be one of the country’s most defensive industries. There’ll always be a need for healthcare in the UK, and sector professionals can’t just operate from any building. They need the proper facilities, and this is where Primary Health and Assura come into play.  In my opinion, the defensive nature of the healthcare industry means both firms fit my dividend criteria. That’s why I’d buy both for a passive income today. Assura currently supports a dividend yield of 3.8%, and Primary Health yields 3.9%.  These UK shares appear to be good income investments, but they’re not risk-free. There’s always going to be a risk that the government might take over these facilities and bring management in house. That would leave Both Assura and Primary Health with no income. If interest rates rise, these firms may also face higher borrowing costs, which could also curb shareholders returns.  Despite these risks, I’d buy both UK shares for my passive income portfolio right now.  Passive income buy  The other company I’d buy for my passive income portfolio is Moneysupermarket.com (LSE: MONY). This one of the UK’s top tech companies. It’s revolutionised the market for financial services in the UK, giving consumers a vast amount of power. In times of economic turmoil, consumers tend to spend more time shopping around for better deals. That could benefit Moneysupermarket.  The company may also benefit from the economic recovery. If the recovery results in higher wages for consumers, they may be willing to spend more on services like pet and life insurance. There may also be a higher demand for borrowing, which Moneysupermarket can help with.  The main risk the company may have to deal with is the possibility of additional regulation. This could restrict the services it’s allowed to offer to customers, and that would hurt profits. Moreover, if profits decline, Moneysupermarket may have to cut its dividend.  Nevertheless, with the above tailwinds, I think it has a bright outlook. That’s why I’d add it to my portfolio of UK shares for a passive income. At the time of writing, the stock offers a yield of 4.2%.  CEO’s £500,000,000 Stake on Industry’s “Uber” Revolution We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading 2 UK penny stocks (and a FTSE 100 share) I’m thinking of buying right now Here’s why I still like the Moneysupermarket share price 2 of the best UK high-dividend shares Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Moneysupermarket.com and Primary Health Properties. 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. The post 3 UK shares I’d buy for a passive income appeared first on The Motley Fool UK.
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  25. Why I’d buy dividend shares in 2021 for growth and passive income (26/02/2021 - The Motley Fool UK)
    Buying dividend shares has been a popular means of generating a passive income for many years. They provide a relatively high yield, as well as dividend growth potential. However, their appeal could increase significantly over the next few years. A lack of income opportunities elsewhere may mean demand for dividend stocks rises rapidly. This may push their prices higher, and provide investors with capital growth. As such, now could be the right time to build a diverse portfolio of income shares. Their total return prospects over the long run seem to be very attractive. The passive income appeal of dividend shares From a passive income perspective, dividend shares could be more attractive than ever. Despite the recent stock market rally, it’s possible to buy a wide range of dividend stocks that can provide a high, and growing, passive income over the long run. While this situation may be no different than in the past, what has changed over recent years is the difficulty in generating an income from other mainstream assets. Low interest rates mean cash savings accounts offer sub-inflation returns in some cases. Meanwhile, rising bond prices prompted by lower interest rates mean that yields on many investment grade bonds have been squeezed. As such, from an income perspective, dividend shares offer a significantly higher return than other income-producing assets. This may mean many investors have little option but to use dividend stocks to provide them with a worthwhile passive income in 2021 and, potentially, in the coming years. Capital growth opportunities from dividend stocks A rise in demand for dividend stocks could push their prices higher. As ever, the performance of any stock is based on supply and demand among investors. Should there be a consistent period of buying among today’s high-yielding shares, they could deliver attractive capital returns. The result of this may be a potent mix of a high passive income and market-beating capital appreciation. As such, dividend shares could have a broader appeal than they have done in the past, with investors focused on capital returns potentially purchasing them. Their appeal is further enhanced because of the high valuations present among many growth stocks after the recent market rally. By comparison, dividend stocks may offer wide margins of safety that translate into high returns. Managing risk within an income portfolio Despite their return potential, dividend shares aren’t without their risks. As with any company, they could experience further disruption from coronavirus. Meanwhile, an uncertain economic environment may create tough operating conditions for many businesses that ultimately lead to lower levels of sales growth and profitability. Therefore, it remains important to diversify among income shares in 2021. Doing so could reduce overall risks, and allow for a broader range of opportunities to deliver impressive total returns in the long run. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading No savings at 40? I’d build a passive income for retirement in a Stocks and Shares ISA Rolls-Royce share price: what I’d do given the upcoming full-year result US stocks: 2 NASDAQ companies I’d buy as a UK investor Two passive income streams I use FTSE 100 investing: 2 bargain buys I’d consider today 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. The post Why I’d buy dividend shares in 2021 for growth and passive income appeared first on The Motley Fool UK.
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  26. Passive income ideas I’d use to try and earn £100 a month (19/05/2021 - The Motley Fool UK)
    Passive income is money that comes in without needing work. The concept sounds attractive to me – but passive income ideas are not always as easy as I’d like. I don’t fancy the potential hassle of setting up a drop shipping scheme or devising a digital course. Instead, I simply invest in shares. Targetting £100 a month Let’s say I wanted to earn £100 a month. That would need dividends of £1,200 or so a year. As dividend payment times vary, I’m talking about £100 as a monthly average, not a payment of £100 each and every month. The FTSE 100 yield has hovered around 3.5% on average over the past couple of decades. At that rate, I’d need to invest around £34,000 to generate £100 of dividends per month. That is quite a large capital outlay upfront. However, some shares offer a higher yield than this average. By investing in such passive income ideas, I could try to generate £100 a month using less capital upfront. Balancing risk Sometimes, shares offer a high yield for a reason. Maybe the market doesn’t think they can sustain their payout levels, for example. When picking my passive income ideas, I wouldn’t just focus on historical dividends. I’d look at what I thought a company could pay in future. Additionally, I’d seek to diversify across different companies and sectors. High-yield tobacco Tobacco shares often have high yields. Partly that reflects the strongly cash generative business model. But I think it does also point to concerns about the durability of customer demand. Lower cigarette sales risk smaller revenues and profits. I’d still pick British American Tobacco for my passive income stream, though. The company offers a strong brand portfolio, massive cash flows, and a progressive dividend policy. It currently yields 7.6%. So putting in £6,150 should generate almost £39 of dividends per month for me. Financial services Next on my list of passive income ideas is financial services name M&G. The well-known financial services brand grew its dividend this year. With a yield of 7.7%, £6,150 invested in M&G shares would give me a prospective yield of around £39.50 monthly. One risk is any financial downturn, which could reduce demand and profitability in the business. Passive income ideas on my shopping list My third passive income idea would be supermarket operator Tesco. At 4.3%, its dividend yield is lower than my other two choices. That would still come out to about £22 a month on average from dividends. Tesco has the largest market share of any UK supermarket. As well as an extensive store estate, it has been building its online operation rapidly. But an intensely competitive market risks lower profit margins in future. Putting my passive income ideas into action For £18,450 today, I could set up a passive income stream equivalent to £100 a month. What’s more, I only need to pay once for the shares. But if the companies keep paying out dividends in future, my passive income stream could continue indefinitely. Dividends are never guaranteed, though. There is a risk that they could be cut or cancelled. Imperial cut its last year, and Tesco stopped dividends for several years before restarting them in 2018. Dividends are often paid quarterly or biannually, so I wouldn’t expect the passive income to be received every month. If monthly timing is important, I could set up a passive income stream designed around that objective. The Motley Fool UK's Top Income Stock… We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading 1 FTSE 100 investment trust from my best stocks to buy now list I was right about the Lloyds share price. Here’s my outlook now How I’d invest £500 in UK shares How much can you earn on Universal Credit 2 UK shares to buy now for June christopherruane owns shares of British American Tobacco. The Motley Fool UK has recommended Tesco. 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. The post Passive income ideas I’d use to try and earn £100 a month appeared first on The Motley Fool UK.
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  27. My plan to earn passive income for a pound a day (26/03/2021 - The Motley Fool UK)
    Passive income is money that comes in without having to work for it. From dividends to online sales royalties, passive income can be a helpful source of extra funds. I really think it’s possible to start earning passive income without doing much if any work. Having money to start with would help. But even starting with no money, putting aside just one pound a day could start to build passive income streams. Below I explain how I’d put that approach into action. Saving funds to invest Putting aside a pound a day, I’d build up an investment pot. This could be invested in shares. This pot would grow slowly at first. But the key thing is that even small daily contributions mean it would indeed grow. It would likely take a few months before there was enough capital to start investing efficiently. I’d want to minimize my risk if I was starting with a single company. So, I’d concentrate on blue chip names. For example, National Grid is an energy company. As its name suggests, National Grid owns a large part of Britain’s electricity transmission infrastructure. Its shares yield 5.6%. So just over three months into saving £1 a day, let’s say I’d amassed £100. Putting that into National Grid shares, I’d hope to earn £5.60 in passive income each year. That doesn’t sound like a lot. But I’d remember a couple of things. First, the dividends would hopefully keep coming in. So, that passive income stream might continue each year just from my initial investment. It could even increase over time, although utility dividend rises tend to be regulated. Note that dividends come from cash flows, so are never guaranteed. If grid operation costs unexpectedly push the company into a loss, for example, it could suspend dividends. Secondly, I would now own the shares. So at some stage in the future, I could sell them again. If the price had fallen, I might make less than I paid. But if the share price had risen, I could recoup more than the initial £100 outlay. The passive income during my holding period would be a sort of bonus. Higher yield for passive income Within a few months more, just £1 a day would let me start to diversify my holdings. I would do this because diversifying across companies is a way to reduce risk. For example, tobacco company Imperial Brands is yielding 9.3%. So putting my next £100 into that would provide close to a double-digit return in passive income. Cigarette sales are under threat from falls in demand and regulatory controls, though, so I would try to keep diversifying. At the moment I quite like Tesco for its yield of 5.1%. Changes in the retail market could affect its success. But I do see some defensive qualities in its brand name and customer relationships. In less than a year, on just a pound a day, I’d own three blue chip names, with a projected passive income of £20 each year, based on current prices. That’s just the beginning. If I kept saving, as well as holding these shares and collecting future passive income, I could buy more. Or I could find new companies in which to invest, to try to build my passive income stream more and more over time. All on a pound a day! “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading The Tesco share price looks great value to me Why hasn’t the Tesco share price risen more? National Grid share price: I think this is one of the best FTSE 100 stocks out there 2 side hustle ideas I would consider using – without the hustle Why I think Tesco’s share price is set to rise christopherruane owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands and Tesco. 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. The post My plan to earn passive income for a pound a day appeared first on The Motley Fool UK.
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  28. How I’d invest £5k in UK shares to earn a passive income (14/02/2021 - The Motley Fool UK)
    A passive income is an earning stream that doesn’t have to be worked for. There are many ways to create a passive income. From buy-to-let property to book royalties, passive income streams aren’t the exclusive right of the wealthy. I believe one of the best assets to buy for a passive income is UK shares. Indeed, unlike other assets, investing in shares is relatively straightforward. What’s more, it doesn’t require a massive amount of initial capital, like buy-to-let investing. This strategy might not be suitable for everyone. After all, profits are never guaranteed in the stock market. Nonetheless, with an investment of just a few thousand pounds it’s possible to generate an income stream from the market. Although it may not be a revolutionary amount of money, it will still qualify as a passive income.  That’s why I’ve a portfolio of UK shares designed with a single goal in mind. Generating a passive income.  Passive income portfolio  There are two strategies investors can use to generate a passive income from stocks and shares. Either buying stocks directly, or acquiring funds. Both approaches have their benefits and drawbacks.  For example, buying funds can be a straightforward way to build a passive income portfolio quickly. However, many fund managers lag the market in the long term. What’s more, there’s always going to be a chance that a manager ends up causing investors losses. This is rare. But the Neil Woodford saga showed it could happen. Investment trusts are similar to equity investment funds. But, as they’re managed as companies, they’re also allowed to hold back a percentage of revenue every year to cover dividends in times of uncertainty. This proved to be incredibly useful last year. As UK shares across the markets slashed their dividends, many investment trusts maintained their dividend commitments by dipping into dividend reserves. This quality will not eliminate the risk of a dividend cut altogether, but it could minimise it. Two of my favourite dividend trusts, which I currently own, are Murray Income and Scottish Investment.  UK shares for income  The other investment strategy is to buy shares directly. This process can be a bit more challenging. Selecting individual dividend stocks isn’t easy. Last year, many companies that had been considered dividend champions for decades were forced to cut their payouts. That was a potent reminder to investors that nothing is ever guaranteed when investing. Still, I’m comfortable with this potential risk. One of the companies I own in my passive income portfolio is British American Tobacco. This company has one of the highest dividend yields on the market. It currently stands at 8%. This reflects the fact the company operates in the tobacco sector, which is seeing declining revenues. As such, the distribution is by no means guaranteed in the long term.  The bottom line  A portfolio of £5,000, comprised of the three investments outlined above, could yield 5.3%. That could give me a potential annual passive income of £263. It’s not much, but it is a start. Over time, thanks to the power of compounding, this figure should continue to grow as I reinvest my dividends.  One stock for a post-Covid world… Covid-19 is ripping the investment world in two… Some companies have seen exploding cash-flows, soaring valuations and record results… …Others are scrimping and suffering. Entire industries look to be going extinct. Such world-changing events may only happen once in a lifetime. And it seems there’s no middle ground. Financially, you’ll want to learn how to get positioned on the winning side. That’s why our expert analysts have put together this special report. If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains… Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge! More reading Will the TUI share price ever return to pre-pandemic levels? Does jewellery appreciate? Stock market rally: why I’d invest money slowly in UK shares I think these are some of the best FTSE shares for the 2021 stock market rally What does flood insurance cover? Rupert Hargreaves owns shares in the Murray Income Trust, Scottish Investment Trust and British American Tobacco. The Motley Fool UK has no position in any of the shares mentioned. 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. The post How I’d invest £5k in UK shares to earn a passive income appeared first on The Motley Fool UK.
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  29. 4 common mistakes I’d avoid when trying to make passive income from dividend stocks (19/03/2021 - The Motley Fool UK)
    Generating passive income from dividend stocks might sound quite simple. After all, if I buy a stock and become a shareholder, I’m entitled to some of the dividends that are paid out. As long as I hold on to my investment, I should be guaranteed a regular stream of income. I don’t need to actually run the business (this is left to the directors), so it’s passive income by its very nature. All of that is true, but I don’t want to be fooled. There are still several common mistakes I need to look out for when becoming an income-driven investor. Dividends and yields can change First up is the misconception that the dividend is guaranteed. It’s not. Unlike a bondholder who needs to receive the coupon otherwise the bond is in default, shareholders aren’t certain that a dividend will be paid. A dividend is usually paid out from the profits from the previous year. So it all depends on how well the company has done during that period.   Over the course of the last year, this common mistake has been flagged up. A lot of large FTSE 100 companies had to cut or axe dividends, as the impact of the pandemic saw high losses generated. So my passive income from stocks can fluctuate. Another mistake I need to watch out for is getting too attached to a dividend yield. The dividend yield is the ratio of the dividend per share relative to the share price. It works out to be a percentage, which I can then easily use to compare to alternatives when thinking about the passive income from stocks. However, even after I buy a stock, the dividend yield can change.  So if I buy a stock and the current dividend yield is 5%, this is great. But if the dividend amount changes (as mentioned above) or the share price fluctuates, the yield also changes. Therefore, it’s not accurate to say that I’ll get a 5% yield all the way into the future (but hopefully, my yield gets better and the passive income actually increases!) Looking beyond the passive income from stocks I also need to make sure that my focus on making passive income doesn’t leave me blind to the actual company I’m buying in to. I want to do my research so that I’m happy with the outlook for the business. That way, even if something happens to the dividend, I’ve got some potential growth from the share price to look forward to. In some cases, I can get the best of both worlds. This is when I buy into a company that’s got a rising share price and is also paying out a generous amount in dividends. One final common mistake I’m careful of is what to do with the passive income initially. If I don’t need to spend it straight away, I’m much better off reinvesting the dividend as soon as I get it. This will allow my money to compound over time. It’ll give me a much larger pot that’s generating income for when I need it in the future. If I just take the income now and leave it in my bank account, I’ll be losing out on this benefit. One stock for a post-Covid world… Covid-19 is ripping the investment world in two… Some companies have seen exploding cash-flows, soaring valuations and record results… …Others are scrimping and suffering. Entire industries look to be going extinct. Such world-changing events may only happen once in a lifetime. And it seems there’s no middle ground. Financially, you’ll want to learn how to get positioned on the winning side. That’s why our expert analysts have put together this special report. If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains… Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge! More reading Rolls-Royce shares are nudging higher. Should I buy now? ITM Power’s share price has pulled back. Should I buy the stock now? 3 UK shares to protect against inflation Will penny share Premier Oil make an enticing investment as Harbour Energy? Why I’d avoid the Shell share price and buy these UK stocks instead jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post 4 common mistakes I’d avoid when trying to make passive income from dividend stocks appeared first on The Motley Fool UK.
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  30. Passive income ideas I’d use now with £50 a week (15/03/2021 - The Motley Fool UK)
    Sometimes it takes money to make money. Passive income that takes a lot of time doesn’t seem passive to me – but to be honest the alternative is often putting some sort of capital to work. The good news is that I think it’s possible to activate some passive income ideas starting with just £50 a week. Putting a small amount of capital to work each week can be very income-generative. Here’s how. Saving a little regularly is habit forming Putting aside £50 a week on a regular basis is a way of getting into the saving habit. £50 a week would be a couple of hundred pounds within a month. After three months, the pot would already be £650. That is a decent amount, in my view, and I’d be happy to start buying ‘passive income’-generating shares within a Stocks and Shares ISA. If I wasn’t charged dealing fees, I’d start buying almost immediately. But if fees were levied on each transaction, I’d wait a little while to put more money to work at once. That would give me time to look at the market and decide what sort of shares to buy. Passive income ideas in the stock market Not all shares are a good source of income in the short term. Shares that are focused on growth such as The Hut Group or rebuilding their business like Saga often don’t plan to pay out dividends any time soon. For passive income ideas, I would instead look for companies that generate substantial amounts of free cash with which to pay dividends. In many cases, they might not be fast-growing businesses. That is why they are able to pay out the money as dividends instead of investing it in their own future growth. For example, one of my favourite passive income ideas currently is Imperial Brands. The tobacco giant is able to throw off a lot of cash from its portfolio of cigarette brands. Consumption in many markets is set to decline, which could affect this. But pricing power will hopefully allow the company to mitigate some of that impact. Tobacco stocks seem to be fairly out of fashion. With its share price languishing, Imperial currently yields 9.8%. So putting just £50 into the stock ought to generate me a future annual passive income stream of around £4.90 every year. The power of saving every week suddenly becomes clear – every week of putting £50 away adds another possible £4.90 of future annual passive income. Diversifying spreads risk But what if Imperial doesn’t successfully navigate the challenges in the tobacco market? A high yield is sometimes an indicator that analysts worry about a company’s future performance. I don’t know whether such fears will turn out to be justified. Spreading my passive income ideas across different sectors therefore helps me sleep more easily. So, for example, as well as Imperial I hold Unilever. The food to detergents powerhouse yields 3.7%, which is a lot less than Imperial. But holding different blue-chip names is part of my strategy of spreading my risks across different passive income ideas. Finding the right names and sticking to my strategy, I feel confident there are lots of rewarding passive income ideas even if I just put away £50 a week. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading Should I buy these cheap FTSE 100 stocks before the ISA deadline? How to shop ethically and sustainably The ITV share price is recovering. Should I buy now? The Roblox share price surged 60% in its first day of trading! Should I buy the US stock? How old is too old for life insurance? christopherruane owns shares of Imperial Brands and Unilever. The Motley Fool UK has recommended Imperial Brands and Unilever. 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. The post Passive income ideas I’d use now with £50 a week appeared first on The Motley Fool UK.
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  31. Two passive income streams I use (25/02/2021 - The Motley Fool UK)
    Passive income is money one receives without working for it. Its popularity has grown, in part due to the increase in digital nomads seeking lifestyle independence. But the idea isn’t as daft as it might sound – all sorts of people have earned passive income for centuries, from landowners collecting rent to shareholders receiving dividends. Shares are a classic form of passive income provider. Here are two shares I hold as passive income streams. The economics of passive income streams I like tobacco shares to generate passive income for a specific reason. Industries that are young and growing often have high capital expenditure, research, or sales costs. That can mean that instead of distributing profits to shareholders, they need to plough them back into the business. By contrast, tobacco is a highly cash generative, mature industry. So instead of needing to put profits into building the business, they can be shared with shareholders. One of my own passive income streams is thus my shareholding in British American Tobacco (LSE: BATS). This is a large tobacco company with a worldwide footprint. It is the owner of iconic cigarette brands such as Lucky Strike and Camel. But the company also has an eye on the future, with its vaping brand Vuse and heated tobacco brand Glo. BAT has raised dividends each year for over 20 years, and last week announced that it would again raise its dividend, this time by 2.5%. The dividend remains covered by the company’s earnings, although its debt pile of almost £40bn could act as a limiter on its ability to keep increasing its dividend in future. Despite the dividend increase, the market didn’t respond well to the results. The shares have drifted down to the point where they yield over 8%, which is one of the highest yields among FTSE 100 shares. That is why it is one of my passive income streams – the quarterly dividend payouts come my way without me having to work for them. The company does face business headwinds, including tobacco declining in many markets, and the growing popularity of ethical investing. As a result, I don’t know how much longer the dividends will continue at their current level. Another passive income stream One tobacco company that did cut its dividend, last year, is Imperial Brands (LSE: IMB). Despite that, this British company is yielding 9.9%. That is why it is one of my passive income streams. Imperial recently unveiled a new strategy focused on shoring up its cigarette business in its five biggest markets. So while like BAT it is also developing what it calls next generation products, its focus is more clearly on making the most of cigarettes while they last. That means it has more eggs in one basket, which could explain why the City did not respond enthusiastically to the new strategy. Imperial also doesn’t have quite as attractive a mix of brands as BAT in my opinion. BAT’s acquisition of Reynolds several years back gave it massive scale in the high margin American business, which Imperial lacks. Nonetheless, the shares are offering close to a double-digit yield to shareholders for no work at all – that’s real passive income. Diversification helps lower my risk, so tobacco is just one part of my portfolio. But both these tobacco shares are agreeable passive income streams for me. There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Don’t miss our special stock presentation. It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about. They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market. That’s why they’re referring to it as the FTSE’s ‘double agent’. Because they believe it’s working both with the market… And against it. To find out why we think you should add it to your portfolio today… Click here to get access to our presentation, and learn how to get the name of this 'double agent'! More reading 2 cheap UK shares to buy now 2 of the best growing dividend stocks to buy now 2 UK dividend stocks with 9% yields I’d buy today British American Tobacco looks to expand into cannabis. Is BATS a good investment? An 8% dividend yield and rising profits! Would I buy this FTSE 100 share now? christopherruane owns shares of British American Tobacco and Imperial Brands. The Motley Fool UK has recommended Imperial Brands. 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. The post Two passive income streams I use appeared first on The Motley Fool UK.
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  32. 5% dividend yields! 2 UK shares I’d buy now for passive income (16/02/2021 - The Motley Fool UK)
    Since many UK shares are yet to recover from the 2020 stock market crash, it is possible to earn a relatively generous passive income. In fact, a number of FTSE 100 shares have dividend yields in excess of 5% at the moment. Clearly, there are no guarantees that any dividends will be paid in future. However, the past performance of the economy suggests that a recovery is likely. This may improve the chances for rising shareholder payouts in the coming years. With that in mind, here are two UK shares that offer 5%+ forecast dividend yields for 2021. They may offer a rising income stream in the long run. An improving passive income outlook Housebuilder Taylor Wimpey (LSE: TW) could offer a relatively attractive passive income opportunity compared to other UK shares. It announced in its latest trading update that it expects to recommence dividend payouts in the current year. As such, for 2021 it is due to yield just over 5%. The company’s dividend is expected to be covered 1.9 times by profit this year. As well as its net cash position and solid balance sheet, this suggests that it is relatively sustainable at current levels. There may also be scope for a rising dividend in the coming years as the UK economy experiences a likely recovery from its current woes. Clearly, Taylor Wimpey’s capacity to pay a passive income to its investors may be negatively impacted by risks such as changes to the Help to Buy scheme and rising unemployment. However, its recent updates suggest it is in a strong position to adapt to changing market conditions, such as through buying land should asset prices fall. A high dividend yield relative to other UK shares While many UK shares offer appealing dividend yields at the present time, the passive income opportunity available from FTSE 100-listed Vodafone (LSE: VOD) is relatively generous. The telecoms company currently yields just over 6%, which could realistically increase in the coming years. Its latest results showed increased customer engagement via digital channels that could strengthen the company’s market position. This contributed to a reduction in mobile contract churn among customers in Europe of 1.1 percentage points. It also posted a relatively resilient financial performance in the most recent quarter. This suggests that Vodafone could have defensive characteristics that make it a more appealing income share. Of course, the company’s passive income level could change over time. It may experience tougher operating conditions should current economic woes continue for longer than is widely anticipated. This would negatively impact on its financial prospects. However, the stock’s high yield and recent performance suggests that it could offer a relatively appealing dividend outlook. As such, it may be worth buying in a portfolio of UK shares at the present time. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading 2 FTSE 100 shares I’d buy now and hold for 10 years UK investing: why I think the Taylor Wimpey share price is a buy Why I’m still avoiding these 3 popular FTSE 100 stocks 2 FTSE 100 shares I’d buy today for passive income Stock market rally: 2 UK dividend shares I’d buy now to make a passive income Peter Stephens owns shares of Taylor Wimpey and Vodafone. The Motley Fool UK has no position in any of the shares mentioned. 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. The post 5% dividend yields! 2 UK shares I’d buy now for passive income appeared first on The Motley Fool UK.
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  33. Passive income investing: 2 ways I can make £450 a month (02/04/2021 - The Motley Fool UK)
    To supplement the stocks that I own for the purpose of capital growth, I like to hold stocks that generate income. In this way, I can focus most of my efforts in trying to generate outperformance on the active side of my investing ideas. The passive-income investing side (once up and running) should require only a little attention to work well for me. Here’s a few ways that I can get dividend stocks to help me out. A lump sum The first way I can go about passive income investing in via a large lump-sum investment. For example, let’s say I get an inheritance windfall or have sold my house and am downsizing. This surplus amount can go straight into dividend shares that can offer me regular income.  Making £450 a month this way would be fairly simple. If I assumed I could get an average dividend yield of 6%, then I’d need to make £5,400 a year. To generate this, I’d need to invest a lump sum of £90,000.  This probably isn’t the most popular way to go about passive-income investing, as such events to accumulate a large amount of money in one go are slim. But if this happens to me, it’s definitely a viable way to make things work. The benefit of this idea is that I get to put all the money to work in one go. The downside is that I’m overly concentrating my focus purely on dividend stocks. A wiser idea in my opinion if I had such a lump sum would be to put half of it in dividend stocks, and use the other half for other ideas. Passive income investing in chunks A second way I can get to £450 a month via passive income investing is by buying dividend stocks each month. I won’t be able to generate sizeable dividend income straight away, but it will build up over time. For example, let’s say I invest £1,000 each month into stocks I am positive on. I’ll assume again that I can get around a 6% dividend yield on average. I’ll also presume that I reinvest any dividends I get paid. In this case, it would take me just over six years to achieve my goal. At this point, my investment pot would be at that £90,000 figure, allowing me to then enjoy the £450 a month on average from passive-income investing. The benefit of this idea is that I can manage my cash flow better. Putting away a chunk every month is an easier way for me to manage my finances, and puts less stress on it. The downside is that I will need to wait for several years before I get to start enjoying the passive income.  I can solve for this by not reinvesting the dividends, but this will lengthen the time by a year and a half.  Whichever way I decide to invest, it’s clear that I can make a success of passive-income investing, and make it work for me. 5 Stocks For Trying To Build Wealth After 50 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. Click here to claim your free copy of this special investing report now! More reading 5 penny stocks to buy for a Stocks and Shares ISA 2 UK dividend stocks I’d buy to try and average £200 a month in passive income What is a store credit card? Why I’d buy Next shares now Why the easyJet share price doesn’t tempt me Jonathan Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post Passive income investing: 2 ways I can make £450 a month appeared first on The Motley Fool UK.
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  34. My passive income list really is this simple (23/02/2021 - The Motley Fool UK)
    The appeal of passive income is easy to understand. Rather than working hard for every pound, sitting back and letting money come in without effort sounds alluring. While passive income is appealing, a lot of passive income ideas don’t make my list. I keep things simple by making sure my passive income list follows these rules. A list needs more than one thing on it A single idea doesn’t make a list. So, for example, although I look to make passive income from shares, I always make sure that I have multiple shares on my list. It can be tempting to look at a share like Imperial Brands, whose yield has touched 10% this week, or Vodafone with a 6% yield, and imagine the income from concentrating in one such share. But investing in only one company is a risky strategy, no matter how good the company seems. Market demand can change, or a company can have bad luck. Both Imperial and Vodafone have cut their dividends in recent years, for example, and could do so again in the future. What’s interesting is that some of the possible negative factors they face – such as declining tobacco use or the cost of mobile licenses – are industry wide. That’s why I don’t just diversify my passive income list across different companies, but also between industries. No matter how high yielding an industry may be, it is risky to put too much of one’s assets into it. The sleep easy passive income list Another thing about my passive income list is that I want it to be genuinely passive. I want to invest some money, sit back, and receive dividends regularly. That means that I don’t invest in companies that require a lot of monitoring. Instead, I prefer companies in established industries with fairly predictable results. Consider for example, McBride and Unilever. While the detergent maker McBride looked cheap to me a few months ago, its small size and limited pricing power mean it has struggled to grow profits in recent years. A new chief executive unveiled a focused strategy, which could change the results. For a growth pick, that might be attractive. But for a regular source of passive income which I don’t need to spend time thinking about, it seems like too much monitoring the company news for my liking. So it doesn’t make my passive income list. By contrast, consumer goods behemoth Unilever has been growing its dividend for years and paid out all the way through the pandemic. That doesn’t mean Unilever is worry–free: a sustained fall in demand for its products could affect dividends, as for any company. While it is adding new business areas whose long-term results are as yet unproven, the bulk of its revenues are derived from well-established business franchises such as Dove and Ben and Jerry’s. So I feel comfortable putting some money into Unilever and expecting passive income from it, without having to worry about its short-term business results impacting payouts. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading HSBC share price: can it bounce back? The Ocado share price is around 2,300p. Would I buy now? ‘Covid passports’ back on the table The Synairgen share price: here’s why I’d buy and hold this stock Cineworld and easyJet shares: should I buy the reopening trade? christopherruane owns shares of Imperial Brands and Unilever. The Motley Fool UK has recommended Imperial Brands and Unilever. 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. The post My passive income list really is this simple appeared first on The Motley Fool UK.
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  35. What are examples of passive income? (22/03/2021 - The Motley Fool UK)
    Passive income is key to building wealth and increasing financial security. Bestselling author and financial expert Tom Corley spent years looking into the habits of self-made millionaires. Among other things, he found that two in three millionaires have several streams of income. This means they’re making money not only from their main job or enterprise but also from passive income. [top_pitch] What exactly is passive income? Passive income is income that doesn’t require active participation to maintain. Some forms of passive income require an investment of time and effort at the beginning, but they eventually ‘run themselves’ with little effort. What are examples of passive income? Businesses and trades Any business activity that doesn’t require regular involvement could be considered passive. For example, let’s say you invest £100,000 into a business and become a silent partner. This would mean you regularly receive a percentage of the business’s earnings but don’t have any direct participation in the running of the business. Royalties Royalties from the sales of books, videos or music. Digital sales Selling digital products on platforms such as Etsy. This could be anything from patterns to printables to ebooks that are uploaded once and can be sold indefinitely. Dividends Dividend-yielding stocks are those that pay cash to all shareholders on a regular basis (usually several times per year). Because dividends are paid based on shares, the more stocks you buy from a specific company, the more you’ll receive in dividends. To reduce risk, you’ll have to do your homework early on to see which stocks are worth buying. But once you’ve invested in them, you can just wait for the passive dividend income payments. Many well-known companies, including PepsiCo, IBM and Johnson & Johnson pay dividends. To reduce the risk even more, you should look into exchange-traded funds (ETFs). This is a group of stocks, commodities and/or bonds grouped under a single name. They are more liquid and less expensive than single stocks. Rental properties  Rental activities aren’t always considered passive. If you’re in charge of the property, you will have to deal with repairs, talking to tenants and cleaning when somebody moves out. That’s a lot of time and effort invested in the business. However, if you hire a property management company to deal with the property, your rental income can become passive. [middle_pitch] Can passive income make you rich? Even if you love your career, jobs are dependent on other people. Companies close and bosses change. Having a passive source of income can not only keep you safe in times of financial instability but can also help grow your wealth and fund your retirement. Other reasons to work on building passive income are to: Create an opportunity to retire early, if that’s what you want Provide an additional source of income for financial emergencies  Break the cycle of living paycheck to paycheck Offer freedom to pursue your passions Become location independent. If you’re not tied to a job, you’re free to travel, work on the go or move to another city at any time. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading Despite a rising Natwest share price the government has been selling at a loss. Here’s how I’d react. Interest rates maintained at 0.1%: what this means for your money 2 of the best cheap penny stocks I’d buy for the new bull market Best stocks to buy now: is this dirt-cheap FTSE stock a top pick for my ISA? Taylor Wimpey shares: here’s what I’d like to do The post What are examples of passive income? appeared first on The Motley Fool UK.
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  36. Passive income ideas I’d use to generate £100 a week (17/04/2021 - The Motley Fool UK)
    Investing in stocks and shares is, I believe, one of the best ways to generate a passive income. Indeed, it’s possible to start investing in shares with just £50 a month. Other strategies to generate a passive income require tens of thousands, or even hundreds of thousands, of pounds upfront investment.  Investors also have lots on offer when it comes to choice. For example, I can choose to own a portfolio of income funds, or single stocks in different sectors.  And with that in mind, here are several passive income ideas I think would be great ways to invest £100 a week.  Passive income ideas I believe the renewable energy industry is one of the most exciting areas of the market right now. There are a couple of businesses in the sector I’d buy to generate a passive income. The first is the Gore Street Energy Storage Fund. This is unlike any other business on the market. The company buys and builds facilities to help the electricity grid manage renewable energy supply and demand. Some of the profits are reinvested back into the business, with the remainder returned to investors. At the time of writing, the stock supports a dividend yield of 6%. A company following a similar strategy is Greencoat Wind. However, rather than investing in energy storage facilities, this business buys and builds wind farms. It currently offers a dividend yield of 5%. Both of these stocks are changing hands for around £1 each. That means investors can buy these passive income investments with just a few pounds. Of course, they aren’t risk-free. As the renewable energy industry grows, companies are throwing money at new projects. This suggests Gore Street and Greencoat will see lower returns on their assets going forward if they have to pay higher prices. This could have a knock-on effect on profit margins and cash returns to investors. Still, as a way to generate a passive income and invest in the renewable sector at the same time, I’d buy these stocks.  Funds for income  An alternative way to generate passive income is to invest in income funds and investment trusts. I believe this allows me to access the best of both worlds. I can own funds managed by some of the City’s best fund managers, which control a diversified portfolio of income stocks, as well as picking my own favourite income plays.  There are a couple of funds I’d buy to generate a passive income. The City of London investment trust currently offers a dividend yield of 5%. Meanwhile, the Murray Income Trust yields 4%. Both of these trusts own a diverse portfolio of income stocks, which removes the need for me to pick individual investments. The downside of these trusts is investors have no control over the companies they own, and management fees can be high. These two trusts charge 0.4% and 0.6% in annual management fees respectively.  These downsides aside, I’d buy both stocks for my passive income portfolio today.  One stock for a post-Covid world… Covid-19 is ripping the investment world in two… Some companies have seen exploding cash-flows, soaring valuations and record results… …Others are scrimping and suffering. Entire industries look to be going extinct. Such world-changing events may only happen once in a lifetime. And it seems there’s no middle ground. Financially, you’ll want to learn how to get positioned on the winning side. That’s why our expert analysts have put together this special report. If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains… Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge! More reading 2 things more important to house hunters than location now 5 passive income streams I’d consider using now I think these 2 FTSE 100 stocks might be among the best shares to buy today The Lloyds share price is rising, but I’d buy these stocks instead The Tesco share price is falling: should I buy now? Rupert Hargreaves owns shares in the Murray Income Trust. The Motley Fool UK has recommended Greencoat UK Wind. 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. The post Passive income ideas I’d use to generate £100 a week appeared first on The Motley Fool UK.
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  37. Realistic passive income ideas I use (16/02/2021 - The Motley Fool UK)
    Passive income is money one receives without working for it each time. Writing a novel, producing a movie, or owning thousands of acres of farmland could all generate passive income. But these aren’t realistic passive income ideas for a lot of us. Similarly, for a lot of people, setting up an online business or becoming a digital nomad aren’t realistic passive income ideas. I prefer passive income ideas that require very little of my time and are genuinely passive. How I earn passive income My favourite way to earn passive income is putting some money regularly into a Stocks and Shares ISA and using it to invest in dividend yielding companies. That really is passive. I can just sit back and wait for dividend income to start rolling in. My approach to realistic passive income ideas extends to my choice of shares too. While emerging technologies could do well in the future, they could also flop. So for income, I prefer to focus on companies that operate in well-established markets. With fairly predictable cash flows and proven business models, they are more likely to provide the sort of income stream I am looking for. An example is Diageo. Its portfolio of drinks brands offers some diversification. Meanwhile, its finely honed business model has seen it raise its dividend each year for over three decades. The yield of 2.3% isn’t great – but with the company’s strong cash generation and dividend history, I think it is fairly secure. Of course there are risks, such as a downturn in alcohol consumption by health-conscious consumers. But for now, Diageo is the sort of passive income pick I’d be happy to hold. Realistic passive income ideas can be simple Passive income ideas don’t need to be sophisticated or hard to copy. For example, buying shares in British American Tobacco is not exactly a novel idea. But it is still one of my favourite passive income ideas. The tobacco giant owns brands such as Lucky Strikes and Gauloises. That gives it a lot of free cash flow and helps support a dividend yield of over 7%. No dividend is ever guaranteed. But with over twenty years of dividend increases behind it, BAT is one of the realistic passive income ideas that clicks with me. In terms of risks, tobacco usage is going down in some markets, and the stocks does not align with the growing trend toward ethical investing. The insurance business is straightforward and unexciting. But that can be good for its reliability as a source of passive income. Legal & General shares yield 6%, which would be a very agreeable passive income for me. They continued to pay throughout the pandemic. The company has also set out a policy to keep increasing dividends for the coming few years. That depends on performance ultimately, but I feel confident in L&G’s expertise. Some of the most realistic passive income ideas can be some of the most ordinary and dull. That isn’t a bad thing in my opinion. Rather than rely on hare-brained or unproven schemes, getting regular passive income from stable, well-established companies strikes me as an easy step to more financial success. A Top Share with Enormous Growth Potential Savvy investors like you won’t want to miss out on this timely opportunity… Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!). Not only does this company enjoy a dominant market-leading position… But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks! And here’s the really exciting part… While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes. That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021. Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge! More reading Should I buy airline stocks today? Here’s my view on the struggling sector What is a double-dip recession? The Royal Mail share price is rising – should I add the stock to my portfolio? Stock market rally: should I buy Vivo Energy shares? Stock investing: one of the best FTSE 100 shares I’d buy today christopherruane owns shares of British American Tobacco. The Motley Fool UK has recommended Diageo. 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. The post Realistic passive income ideas I use appeared first on The Motley Fool UK.
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  38. Why I’d invest £5,000 now in UK shares in an ISA to make a passive income (16/02/2021 - The Motley Fool UK)
    Making a passive income from UK shares has become more difficult over the last year. The coronavirus pandemic prompted financial uncertainty for many companies across the FTSE 350. This resulted in reduced dividend payouts, or even a cancellation of dividends in some cases. However, the economic outlook is set to get better. This may mean improved performances for many businesses that lead to higher dividend payouts. Alongside the capital growth potential of UK stocks, this could make now the right time to invest £5,000, or any other amount, in a diverse selection of income shares in an ISA. Buying UK shares to make a passive income Despite many UK shares cutting their dividends, it is still possible to make a generous passive income from FTSE 350 shares. In fact, both the FTSE 100 and FTSE 250 trade lower than they did a year ago. As such, some of their members have share prices that are down on their previous highs. This could mean that they now offer higher yields than they did a year ago – as long as they have been able to maintain their dividend payouts. This could mean that it is possible to obtain a 4% or 5% average yield from a portfolio of UK stocks. In a low-interest-rate environment, this could be a relatively high income return. It also has the capacity to rise at an above-inflation pace over the coming years. The world and UK economies are widely forecast to recover strongly as vaccine rollouts continue. This could prompt improving operating conditions for many UK shares that allow them to pay higher dividends over the long term. UK stocks could offer capital growth Investing £5,000 in UK shares could also be a shrewd move because of their capital growth prospects. Many FTSE 350 shares trade on valuations that are significantly below their historic averages. This could signal that they offer wide margins of safety that produce relatively high returns. Since the stock market has historically reverted to its long-term average values, buying today’s cheap shares may be a profitable move. Doing so through a tax-efficient account such as a Stocks and Shares ISA could offer further improvements to returns. The lack of capital gains tax or dividend tax charged on investments in an ISA may widen the gap in total returns versus a bog-standard share dealing account. Risk management Of course, there is never any guarantee of a passive income or capital growth from a portfolio of UK shares. They could experience very tough operating conditions in future that are not fully reflected in their current valuations. However, with dividends forecast to grow in the coming years, yields being high in a low-interest-rate environment and the economic outlook expected to improve, UK stocks could offer impressive total returns in the long term. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading 5% dividend yields! 2 UK shares I’d buy now for passive income UK investing: why I’d buy FTSE 100 shares today The Tesco share price: here’s what I’m doing now UK stock investing: 3 growth shares I’d buy right now Which UK and US stocks should I buy in February? 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. The post Why I’d invest £5,000 now in UK shares in an ISA to make a passive income appeared first on The Motley Fool UK.
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  39. Stock market rally: why I’d invest in shares to make a passive income (03/03/2021 - The Motley Fool UK)
    Despite the recent stock market rally, buying shares to make a passive income could be a logical strategy. In many cases, they offer high dividend yields versus other assets. They may also be able to deliver dividend growth, as well as capital growth, as the world economy likely recovers from its present woes. As such, now could be the right time to buy a diverse range of income shares and hold them over the long run. A generous passive income from shares Many shares now trade at significantly higher prices than they did following the 2020 market crash. However, a number of companies offer high yields relative to other assets. Certainly, a low interest rate environment makes this task easier for equities. But some stocks have dividend yields at the present time that are higher than their historic averages. This suggests they could offer an attractive income stream over the long run. Of course, there’s never any guarantee that a company will maintain recent dividend payouts in future. A whole host of challenges can crop up that causes them to reduce or even cancel shareholder payouts. However, by purchasing a wide range of dividend shares with high yields, it may be possible to build a resilient and generous passive income stream at the present time. Dividend growth opportunities As well as high yields, a number of shares could offer a growing passive income in the coming years. The world economy has always recovered from its declines to post positive growth in the past. Although the same outcome can never be assumed, the scale of monetary policy stimulus already announced suggests a return to growth is likely to be ahead. Through buying companies with affordable dividends and the potential to deliver rising profitability in the coming years, it’s possible to obtain a growing income return. This may become increasingly important over time. Certainly since low interest rates and quantitative easing in some major economies could spark a period of higher inflation in the long run. Capital growth opportunities As well as the potential for a high and growing passive income, dividend shares could deliver capital growth in the coming years. They could experience high demand as a result of limited opportunities to make a worthwhile income in other mainstream assets. This may drive their prices higher. Furthermore, a high yield can indicate that a stock offers good value for money and a wide margin of safety. Buying undervalued shares has been a relatively sound means of capitalising on the stock market’s long-term growth potential. As such, now may be the right time to buy dividend shares, since they could produce higher total returns than the wider stock market over the long run. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading A UK share and a US stock I’d buy in my Stocks and Shares ISA today 2 UK shares I’d buy for my ISA right now UK share investing: a cheap FTSE 250 stock I’d buy and hold until 2030 How I’d aim to find top shares to buy in March 2021 Do the highest-yielding dividend shares offer the best passive incomes? 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. The post Stock market rally: why I’d invest in shares to make a passive income appeared first on The Motley Fool UK.
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  40. I like these FTSE 100 shares with 5%+ yields for passive income (15/05/2021 - The Motley Fool UK)
    I like the idea of generating passive income from investing in shares that can pay a sustainable dividend yield. Companies with strong business models and a history of returning money to shareholders fit the bill.  Sustainable passive income Aviva (LSE: AV) has been guilty of cutting its dividend. Although in the most recent case, it was told to by its regulator because of the pandemic. The dividend has been reset at a lower level than in 2019. From a passive income point of view, sustainable dividends are good, so this might be no bad thing. A smaller dividend that is less susceptible to being cut is, better than a higher yield that needs cutting back in future, I feel. Anyway, with a yield of 5.2% based on the last two dividend payments, Aviva is still a strong dividend payer. Along with the reorganisation of the business, which has seen the insurer sell off many international operations to focus on the UK, Ireland and Canada, I think Aviva is well positioned to deliver ongoing passive income to investors.  The risk is that as a smaller, leaner business it’ll generate lower earnings per share, which could put pressure on the dividend. Reliable and regulated National Grid (LSE: NG) did not cut its dividend at all during 2020. The steady nature of its mostly-regulated business means its revenues and profits were largely unaffected by the pandemic. Indeed, the dividend went up 2.6%, which against a backdrop of many companies cutting their dividends is no mean feat. The company is, I think, very serious about transitioning into and supporting the green economy. By that I mean energy generated by renewables, such as wind power and solar. For example, this year it has announced it will be acquiring Western Power Distribution (WPD), focusing it more on electricity over gas. WPD is the UK’s largest electricity distribution business. In line with that, National Grid will also look to sell a large stake in National Grid Gas during the course of this year. As with previous large disposals this could lead to a special dividend for shareholders – potentially. That would be good from a passive income point of view. National Grid’s Ventures business, which is unregulated and is building interconnectors between the UK and Europe, could provide growth, alongside the acquisition of WPD. The company’s main attraction, for me, is the dividend. It currently has a dividend yield of around 5.2%. The downside is that most of National Grid’s income is regulated. That makes it harder to raise prices, it has a lot of debt and the WPD acquisition means its UK assets make up more of its portfolio than the US, making it potentially vulnerable to UK-specific issues. National Grid, in my opinion, is a leading FTSE 100 share for providing passive income. That’s why I’ll hold on to my shares.  CEO’s £500,000,000 Stake on Industry’s “Uber” Revolution We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading 3 UK income shares I’d buy The Aviva or Prudential share price: which is more attractive right now? Best UK stocks to buy in an ISA The best shares to buy now: 3 FTSE 100 bargains As the FTSE 100 stays above 7,000, Aviva and Pearson shares rise Andy Ross owns shares in National Grid. The Motley Fool UK has no position in any of the shares mentioned. 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. The post I like these FTSE 100 shares with 5%+ yields for passive income appeared first on The Motley Fool UK.
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  41. Passive income investing: 2 pieces of advice from Warren Buffett (20/04/2021 - The Motley Fool UK)
    Generating income via dividends from stocks is one of the most appealing ways for me to build wealth. There are plenty of ideas out there to look at for passive income investing. And in this regard, I often listen to Warren Buffett’s pearls of wisdom. I tie his ideas in to dividend stocks and income investing, to help me hopefully pick the best ones to reach my goals. Playing the long game As someone who has been investing successfully longer than I’ve been alive, Warren Buffett is clearly someone to listen to. As it turns out, longevity is one of the things that makes passive income investing work. Buffett once said that “someone’s sitting in the shade today because someone planted a tree a long time ago.” What he meant by this is that good things can take time to happen, but the end result is well worth the time. It’s the same with getting dividends from stocks. For example, I might be aiming to make £1,000 a month in passive income. With a small pot to begin with, this isn’t going to happen overnight.  I’ll have to regularly invest small amounts so that over several years, my investment pot will be large enough to give me a yield to equate to £1,000 a month. But once I’ve got there, it’ll be worth the wait. Looking for sustainable passive income  Warren Buffett once commented that “risk comes from not knowing what you’re doing”. This can be applied to many situations in investing, especially when targeting passive income.  The tendency for a new investor might be to simply buy shares in companies that have the highest dividend yields. If it was me, I might reason that I’d  get the highest income that way.  In reality, companies with the highest dividend yields often carry the highest level of risk of a dividend cut. This is because the yield could look high just because the share price is falling. After all, a lower share price makes the dividend per share a larger proportion overall. If I didn’t know this or hadn’t done my research on the share price, I could make a bad call here. To deal with this, I just need to make sure I’m not focused solely on the monetary dividend values for passive income investing. It also needs to be about the company. What are the prospects for 2021? How has the business coped with the pandemic? In this way, the dividends I get paid will be more sustainable, even if it means taking a slightly lower dividend yield. Overall, by looking at the thoughts of Warren Buffett, I can give myself a better shot at making my passive income investing strategy a success. One stock for a post-Covid world… Covid-19 is ripping the investment world in two… Some companies have seen exploding cash-flows, soaring valuations and record results… …Others are scrimping and suffering. Entire industries look to be going extinct. Such world-changing events may only happen once in a lifetime. And it seems there’s no middle ground. Financially, you’ll want to learn how to get positioned on the winning side. That’s why our expert analysts have put together this special report. If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains… Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge! More reading Can I get a mortgage without a deposit? Should I buy Argo Blockchain shares at the current price? The FTSE 100 has hit 7,000. Here are 4 reasons I think it could rise further 2 cheap penny stocks and 1 FTSE 100 share to buy in my ISA! 2 penny stocks to buy in a Stocks and Shares ISA today jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post Passive income investing: 2 pieces of advice from Warren Buffett appeared first on The Motley Fool UK.
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  42. Best shares to buy now for passive income: 3 on my list (10/05/2021 - The Motley Fool UK)
    On my list of passive income ideas, shares rank highly. I aim to buy shares and receive dividends from them without work. So the income really is passive. Below I discuss three names from my list of best shares to buy now that I would consider to boost my passive income. High-yield tobacco shares A lot of people won’t invest in tobacco stocks because of ethical concerns. But as an investor who is willing to buy tobacco shares, I consider such stocks among the best shares to buy for passive income. Take British American Tobacco (LSE: BATS) as an example. The owner of iconic brands such as Lucky Strike and Camel currently yields 7.5%. With its quarterly dividends, that could make for an attractive passive income stream. The company has increased its dividends each year for two decades. But future dividends are never guaranteed for any share. I think the high yield reflects City concerns about a key risk for tobacco shares: declining rates of cigarette usage in many markets. That could hurt future turnover and profits. I recognise that risk. But I draw some cheer from BAT’s momentum in developing cigarette alternatives. It added 3m non-combustible customers last year. BAT says it is on track to have 50m such customers by 2030. Meanwhile, the company continues to be a cash generation machine. Last year it generated £2.6bn of cash flow even after paying dividends. Supermarket sweep Among the best shares to buy now for passive income, I am considering Morrisons. Taking special dividends into account, the retailer yields 6.3%. I think the company’s store estate will help it to attract customers for years to come. But it has also been ramping up its online presence, using Ocado technology. The supermarket giant has also been growing its smaller footprint offering. It plans 300 more Morrisons Daily stores in the coming three years. These stores currently trade under a different name. I like the approach of extending the brand reach without incurring high capital expenditure. But risks include the highly competitive retail environment. For example, discount retailers like B&M have been very successful. That could force Morrisons into discounting, which might damage its profit margins. Financial services names among my best shares to buy now With its 8.2% yield, I consider financial services provider M&G among the best shares to buy now to boost my passive income streams. I see its strong brand as a competitive asset in the financial services market. The company has a policy to target a stable or increasing dividend. Its dividend increase last year of 2.6% might not sound much. But against the backdrop of the pandemic I thought it was welcome sign of confidence from management. Risks include a downturn in demand for traditional financial service products, for example due to an increase in low cost products from fintechs. My passive income action plan To manage my risk, I always try to diversify my holdings. No matter how good a share might seem, I don’t put too many of my eggs in one basket. I already hold BAT. Both Morrisons and M&G are on my list of best shares to buy now for my portfolio.  CEO’s £500,000,000 Stake on Industry’s “Uber” Revolution We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign. But with this opportunity it could get even better. Still only 55 years old, he sees the chance for a new “Uber-style” technology. And this is not a tiny tech startup full of empty promises. This extraordinary company is already one of the largest in its industry. Last year, revenues hit a whopping £1.132 billion. The board recently announced a 10% dividend hike. And it has been a superb Motley Fool income pick for 9 years running! But even so, we believe there could still be huge upside ahead. Clearly, this company’s founder and CEO agrees. Learn how you can grab this ‘Top Income Stock’ Report now More reading Here are 2 top dividend stock picks I think are ESG-investing-friendly FTSE 100 shares: 3 I’m considering for my ISA Is the British American Tobacco (BATS) share price too cheap? Why is the British American Tobacco share price down this week? British American Tobacco and Imperial Brands: which one would I buy? christopherruane owns shares of British American Tobacco. The Motley Fool UK has recommended Morrisons and Ocado Group. 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. The post Best shares to buy now for passive income: 3 on my list appeared first on The Motley Fool UK.
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  43. I’m seeking passive income the Warren Buffett way (22/04/2021 - The Motley Fool UK)
    Passive income is money I can get without working for it. I don’t need to work to set up a new income-generating business as passive income can be as simple as dividends received from shares in which I invest. Warren Buffett is famous as an investor. And he’s also a role model in how to set up passive income streams. My aim is to earn passive income following Warren Buffett principles. Benefit from embedded value Buffett once said that “someone’s sitting in the shade today because someone planted a tree a long time ago.” His investment in Coca-Cola is a case in point. The brand has enjoyed heavy marketing investment for decades, which helps drive demand now. It has built brand loyalty. That helps to give the company pricing power. Investors in the company today are benefiting from value that has been embedded in the company over decades. Buffett spent years as a director of the firm, so Coca-Cola’s dividends weren’t purely passive income for him. But I would look to use the same principle. For example, I could invest in branded drinks manufacturer Diageo. Like Coca-Cola, its brands such as Johnnie Walker and Guinness have been built over a very long time. That has engendered brand loyalty. With a dividend yield of 2.1%, if I put £10,000 into Diageo now I’d expect to generate over £200 a year in passive income, as long as the dividend is maintained. Of course, Diageo has risks, which include any sales decline from a fall in alcohol consumption and the vulnerability of premium pricing to an economic downturn, but the principle still works. Making the most of opportunities Buffett is well known for long periods of share-buying inactivity. And during the past year of frenetic stock market activity, he’s been notable mostly by his absence. That’s because he’s happy to wait for what he sees as better-than-normal opportunities. Consider this Buffett nugget: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”. We see that applied to his approach to passive income. For example, during the financial crisis, he struck a deal to help fund Goldman Sachs. Part of that involved buying preferred shares paying a 10% dividend. Buffett put out the bucket and invested $5bn. He later said: “It’s been pointed out that our preferred is paying us $15 a second. So as we sit here, tick, tick, tick, tick, that’s $15 every tick.” Passive income principle That was an incredible result, although it reflected the risks associated with some financial services providers during economic downturns.  The chance to make passive income like that won’t be open to most investors. But I think I can still learn from the principle Buffett espouses here. Instead of investing in passive income opportunities that look just okay, I would wait until something comes along that seems excellent to me. If that means I need to wait a year or two to start generating money from that passive income stream, I’ll wait. But then, when I uncover an opportunity I think looks especially promising, I’ll “put out the bucket”. However, while I want to make the most of opportunities, even what looks like a good investment can go bad. So, like Buffett, I’d be sure to diversify my holdings. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared. What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations. And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! More reading The BP share price is under £3. I’d buy today 1 FTSE 100 renewable energy stock I’d buy Deliveroo shares still look expensive to me Coinbase shares: should I buy now? What is upcycling and what can you upcycle? christopherruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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. The post I’m seeking passive income the Warren Buffett way appeared first on The Motley Fool UK.
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  44. How I’d generate a passive income of £24,000 a year from UK shares and retire early (27/02/2021 - The Motley Fool UK)
    One of the things I like most about investing in UK shares is that they pay income as well as provide capital growth. Many investors underestimate the importance of this, especially when starting out. I currently reinvest all of the dividends I receive straight back into my portfolio, to buy extra stock. This way, I am loading up on even more UK shares without having to dip into my own pocket. What’s not to like about that? When I retire, I plan to draw those dividends as income, to top up whatever I get from the State Pension and my company schemes. By doing this, I hope to leave the underlying capital untouched, and pass it on to my loved ones when I die. I’m buying UK shares to retire on In retirement, I plan to work to something called the 4% rule. This states that if you draw 4% of your portfolio as income, and leave the rest to grow, your money should never run out. I’ve set myself a target of generating a passive income of £24,000 a year from my portfolio. What does that mean in practice? Under the 4% rule, I would need UK shares worth £600,000 to generate income of £24,000 a year. This is a tall order, although plenty of ISA investors have done far better than that. The UK is now home to thousands of ISA millionaires, who would generate a minimum £40,000 a year from their portfolios. To save £600,000, an investor who started at age 25 would need to put away £250 a month, assuming their portfolio grew at an average of 7% a year. In fact, that would give them £640,000 by age 65. If they didn’t start saving until age 35, they would have to invest £350 a month. As these figures to demonstrate, to generate a passive income of £24,000 a year from UK shares, it pays to start early (and stick with it). My retirement is still 15 years away so I couldn’t say whether I will hit my goal. Even if I fall short, I will have more money for my retirement than if I had never tried at all. By investing in a Stocks and Shares ISA, the dividends I draw will be entirely free of income tax, which is a real boost. I hope my passive income is enough Also, that income will come on top of any State Pension I am due. Currently, the new State Pension pays a maximum of £9,110 a year. If I added that to my £24,000 target, I reckon I should have enough to live on. My only worry is that we might have a burst of inflation, so that £24,000 doesn’t have anywhere near the buying power as it does today. On the plus side, thanks to my ISA allowance, nearly all of my income from UK shares should be free of income tax. Also National Insurance, which Britons no longer pay once they reach State pension age, currently 66. I’m still some way short of the money I need. I’ll aim to put that right, by going shopping for more UK shares. Like this one maybe. The high-calibre small-cap stock flying under the City’s radar Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity… You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy. And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline. Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report. But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! More reading Top British stocks for March 2021 FTSE 100 banking stocks are reinstating dividends. Are they a wise investment? Earning passive income through shares What you need to know about IKEA’s buy back scheme Stock market crash? I’ll keep buying cheap shares, despite these warning signs! Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. The post How I’d generate a passive income of £24,000 a year from UK shares and retire early appeared first on The Motley Fool UK.
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  45. 2 passive income streams I’d use for £10 a week (17/03/2021 - The Motley Fool UK)
    Passive income is money one gets without having to earn it through work. For example, if one rents out a field to a local farmer or earns interest on a savings account, it’s a form of passive income. Finding passive income streams which are simple to understand and don’t require much time or money can be a challenge. But by putting aside just £10 a week, I think it’s possible to start building solid passive income streams. Here are two passive income streams I’d consider. High-yield shares as passive income streams £10 a week might not sound like a lot but it’s just over £500 annually. That would be enough to get started investing in shares. I’d drip feed the weekly payment in until I felt I had enough to make my first investment. I’d consider looking for shares with a high yield. That means they payout a relatively high percentage of their cost price each year to shareholders, as dividends. Right now, the FTSE 100 index of leading shares yields around 3%. So £10 a week should throw off about £15 a year in dividends. But some shares have a much higher yield. For example, Imperial Brands yields over 9%. So investing at the current price, I’d expect £520 to generate passive income of around £46 per year in future. That isn’t guaranteed, though. Dividends can be cut and indeed Imperial cut its dividend last year. Its main business is cigarettes. Smoking is declining in many markets. On the positive side, if dividends do continue, I wouldn’t just get passive income next year. It should continue for as long as I held the shares, based on the dividend payouts. So putting in £10 a week now could still be earning me passive income far into the future. Growth potential Alternatively, I could pick shares that offered some income but also growth potential. In theory, all shares have growth potential – Unilever could continue to grow profits as more consumers buy branded products. Even Imperial could grow, for example by raising prices or expanding into new markets. But some shares already paying out income have much clearer pathways to growth. If I was willing to accept a lower yield I might also get some future growth as well. For example, B&M European Value Retail had paid 24.3p in dividends – including special dividends – this year and still hasn’t declared its final dividend. That means the yield is at least 4.5% but will probably be higher. Even if 4.5% is the final yield, on £10 a week that would amount to almost £24 of passive income a year. That depends on the dividends being maintained, though, and special dividends in particular tend to vary each year. But B&M also continues to grow its business fast. It’s one of my favourite ideas for passive income streams. But it could also produce some share price gains. B&M has proven its ability to thrive in a tough retail landscape. But with retailing facing challenges from quiet high streets to online shopping, B&M’s recent success might not continue. Its model could be copied by competitors, as happened with many dollar stores in the US. So I’d diversify my £10 weekly investment across multiple shares to help reduce my exposure to any one company’s fortunes. The high-calibre small-cap stock flying under the City’s radar Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity… You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy. And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline. Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report. But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! More reading How much does in-home care cost? Will the Hammerson share price recover in 2021? Why I’m tempted to buy this turnaround FTSE share right now Should I buy Argo Blockchain shares today? 4 free homeschooling resources for parents christopherruane owns shares of Imperial Brands. The Motley Fool UK has recommended B&M European Value and Imperial Brands. 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. The post 2 passive income streams I’d use for £10 a week appeared first on The Motley Fool UK.
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  46. How I’d look for a passive income of £40,000 per year from buying dividend shares (22/02/2021 - The Motley Fool UK)
    Dividend shares do not only offer the chance to make a generous passive income right now. They also have the potential to deliver impressive total returns over the long run as a result of a lack of other income opportunities available to investors. This could increase their popularity, and mean that they outperform the wider stock market in the coming years. They could even ultimately provide an annual income of £40,000 from a modest monthly investment that grows at a relatively fast pace in the coming years. Passive income opportunities among dividend shares Clearly, an investor who has a £1m portfolio today could generate a passive income of £40,000 from buying a selection of dividend shares. However, those same stocks could be used to gradually build a portfolio of a similar size from regular investment over the long run. Dividend shares could become increasingly popular in the coming years because of a lack of opportunities available elsewhere. Low interest rates mean that cash and bonds have very disappointing return prospects that may even lag inflation. Meanwhile, low yields in the property sector due to high house prices may push an increasing number of income investors towards dividend stocks. Building a retirement nest egg The impact of higher demand for dividend shares may be rising stock prices that outperform the wider stock market. Even if they match the performance of equity markets, which have risen by around 8% per year on a total return basis in the past, a modest monthly investment could produce a £1m portfolio that provides a £40,000 annual passive income. For example, investing £750 per month over a 30-year period would lead to a portfolio being valued at over £1.1m. This is based on an 8% annual return that is reinvested into the portfolio. From this, eventually taking a 4% dividend return would provide an annual income in excess of £40,000. But we have to remember that the 8% return is not guaranteed. The return could be higher, but it could be lower too. Managing a portfolio of dividend shares Of course, simply buying the highest-yielding dividend stocks may not necessarily lead to the largest portfolio or passive income in the long run. They could have high yields for a variety of reasons, including weak financial prospects that have caused investor sentiment to decline. As such, it is logical to buy dividend shares that can afford their payouts. And it is good if they can also grow them in the coming years. They may prove to be the most appealing income shares to a wide range of investors. The result could be rising stock prices that catalyse an investor’s retirement portfolio. Furthermore, diversifying among dividend shares could be a logical move. It will reduce company-specific risk. This is the threat from a small number of companies underperforming and their impact on a wider portfolio. Diversification also allows an investor to capitalise on multiple growth opportunities. This may increase their potential rewards and lead to a larger portfolio, and passive income, in the long run. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading Royal Mail shares: here’s why I’ve changed my mind AstraZeneca share price: is this FTSE 100 growth stock now a top ‘dip buy’? Moonpig shares: here’s why I’m not buying Top UK growth shares to buy if this market bubble bursts A 2021 market crash may be coming. Here’s what I’m doing about it 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. The post How I’d look for a passive income of £40,000 per year from buying dividend shares appeared first on The Motley Fool UK.
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  47. How I’d invest £500 a month to make four figures a year in passive income (11/03/2021 - The Motley Fool UK)
    Sometimes I can get ahead of myself when it comes to thinking about passive income. Of course, I’d love to make enough to retire tomorrow and spend more hours playing tennis and golf. But as an alternative, making just four figures a year in passive income would also be fantastic. Reducing the amount of income I need to make also reduces the cash I need to be investing each month, making it less of a burden on me month-to-month. How to target passive income from investing In theory, I don’t have to just look to dividends from stocks to make me passive income. For example, Buy-to-let property and bonds are both alternatives that can offer income. But my preference would be to buy solid UK stocks that pay out a regular dividend a few times a year and to hold them for as long as possible. For example, take GlaxoSmithKline. The company details the dates of each quarter that the dividend will be paid. Closer to the time, the amounts will also be released. So if I buy shares in GSK today, I’ve got reliable information about the passive income that I’ll be making over time. The main risk to using stocks to make passive income is my ‘priority’ as a shareholder. If I was a bondholder, I’d be guaranteed my coupon payments. This ranks higher than my rights as someone who owns shares. After these coupon payments, profit that’s left over is available to be paid as a dividend. But due to the pandemic, profits were severely dented and even some well-known names stopped paying dividends as they couldn’t afford it. For the record, GSK maintained a dividend over this period. Although investing in stocks is inherently more risky, than some other investments, I feel the potential rewards are worth it. And I think I can find safer stocks that are less likely to cut or cancel their payouts. Let’s run the numbers Ok, so now let’s look at how an investment of £500 a month adds up. I think I can target a 6% dividend yield by investing in several top stocks (for reference, the GSK dividend yield is 6.32%). So after a year, my £6,000 pot would potentially be making me £360 a year. At the end of year three, my dividend stocks could be generating me £1,080. This four-figure annual sum is clearly very obtainable, and something that I can achieve after only a relatively short period of time. Taking it from four figures a year to four figures a month requires more patience and time. It would take me close to 33 years to generate £12,000 a year, or £1,000 a month, in passive income. A good point to remember though is that there’s nothing stopping me getting to four figures a year and keeping going. If I don’t need the £500 for other pursuits, I may as well keep investing it for the long term.  And if I decide to reinvest my dividends for a few years, I can take advantage of the power of compounding, building up a bigger pot for when I eventually decide to draw a passive income further down the line. One stock for a post-Covid world… Covid-19 is ripping the investment world in two… Some companies have seen exploding cash-flows, soaring valuations and record results… …Others are scrimping and suffering. Entire industries look to be going extinct. Such world-changing events may only happen once in a lifetime. And it seems there’s no middle ground. Financially, you’ll want to learn how to get positioned on the winning side. That’s why our expert analysts have put together this special report. If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains… Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge! More reading The Lloyds share price: what have I learned from it? Aviva’s share price is rising. Should I buy the stock now? Why I’d buy top FTSE 100 stocks like this one to give me a passive income in retirement Profits have halved at this FTSE 100 share! Is now the time to buy? Should I buy Roblox shares after the company’s blockbuster listing? jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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. The post How I’d invest £500 a month to make four figures a year in passive income appeared first on The Motley Fool UK.
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  48. How I’d aim to generate a growing passive income from dividend shares (04/03/2021 - The Motley Fool UK)
    Generating a growing passive income from dividend shares is a realistic goal for most investors. Buying companies that have affordable dividend payouts as a proportion of profit could indicate they have scope to raise shareholder payments. Similarly, stocks with impressive profit forecasts may be able to raise their dividends at a relatively fast pace. Through buying a diverse range of such companies, it could be possible to build a strong income portfolio in a low interest rate environment. Buying shares with low dividend payout ratios A company’s dividend payout ratio can provide guidance on its passive income prospects. The ratio is calculated by dividing dividends paid in the most recent financial year by net profit from the same year. The result is a percentage figure. A figure below 100% shows the company had headroom when making its most recent dividend payments out of net profit. Clearly, company profitability can change. Especially in the current economic environment. However, businesses with low payout ratios may find it easier to grow their dividends at a fast pace than those companies that have higher payout ratios. They may be less reliant on rising profits to fund dividend growth. As such, they could be a more promising means of obtaining a rising passive income in the coming years. Earnings growth can catalyse a company’s passive income Companies that have attractive earnings growth prospects may also offer a higher chance of providing a rising passive income. For example, two companies with the same payout ratios may have very different financial outlooks due to industry conditions and their strategies. The stock with a more upbeat operating outlook may find it easier to raise dividends without compromising the affordability of its shareholder payouts. Of course, assessing the profit potential of any business is a known unknown. It’s especially difficult at the present time to judge whether a company has scope to raise profitability. However, by focusing on the track record of profit growth for a specific stock versus its peers, it may be possible to deduce whether it has a competitive advantage. This may indicate that it’s able to offer more resilient sales growth, higher margins and a rising passive income in the long run. Buying dividend shares today The uncertain economic outlook makes it more important than ever to diversify among a range of dividend shares when seeking to make a passive income. Otherwise, an investor may be too reliant on a small number of holdings for their income. Even after the stock market’s rally since the 2020 stock market crash, a number of companies appear to be trading on low valuations. Certainly given their long-term dividend prospects. As such, there seem to be opportunities to build a diverse income portfolio. One that can provide strong growth in a low interest rate environment. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading I’d listen to Warren Buffett’s advice to buy undervalued shares today Should I buy Boohoo shares in my portfolio? FTSE 100 watch: 2 UK shares I’d buy before the ISA deadline Argo Blockchain shares: here’s what I’m doing now Budget: all the information on SEISS grants 4 and 5 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. The post How I’d aim to generate a growing passive income from dividend shares appeared first on The Motley Fool UK.
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  49. How I’d generate a passive income from UK shares starting today (11/02/2021 - The Motley Fool UK)
    Despite the recent stock market rally, many UK shares continue to have relatively high dividend yields. As such, they can be used to generate a worthwhile passive income in 2021 and in the coming years. Focusing on yields and dividend growth is important for any income investor, I feel. But building a diverse portfolio that offers less risk and higher reward potential may be equally crucial. It could offer a more stable income stream that has a higher chance of rising in the long run. As such, through buying companies with different geographic exposure and that operate in varied industries, it may be possible to obtain an attractive income. Buying UK shares in different countries for a passive income The prospects for the UK economy are set to improve sharply following the pandemic. But buying shares in a wide range of regions could be a sound move when seeking to make a passive income. After all, it is extremely difficult at the present time to deduce which countries and regions will bounce back the fastest from the economic challenges of the last year. Fortunately, it is relatively straightforward to gain exposure to different parts of the global economy. For example, the majority of the FTSE 100’s income is derived from countries outside the UK. As such, it is not necessary to buy companies listed in other countries to gain exposure to different economies. This could make the process of building a diverse passive income stream easier for UK-based investors. Purchasing UK stocks from different industries Just as it is difficult to ascertain which countries will recover quickly from present challenges, it is also tough to judge which industries will perform well. As such, it may be prudent to buy UK shares that operate in different sectors to make a more resilient passive income. For example, banking stocks have really struggled in the last year due to low interest rates and a weak economic outlook. They could experience further difficulties. Or they could be buoyed by an economic recovery that leads to a rise in interest rates over the coming years. Similarly, retailers’ performance may be very closely linked to the end of lockdown measures in the UK because of their presence on the high street. Predicting when social distancing requirements will end is a very tough task. The cost of diversifying among a wide range of companies has fallen in recent years. As such, passive income investors with varying portfolio sizes may realistically be able to build a portfolio containing a relatively large number of companies. This may provide them with exposure to a broad range of businesses and sectors. And that could reduce their dependence on a small number of industries and/or companies. Over time, this may provide a more resilient and faster-growing income stream as the world economy recovers. FREE REPORT: Why this £5 stock could be set to surge Are you on the lookout for UK growth stocks? If so, get this FREE no-strings report now. While it’s available: you’ll discover what we think is a top growth stock for the decade ahead. And the performance of this company really is stunning. In 2019, it returned £150million to shareholders through buybacks and dividends. We believe its financial position is about as solid as anything we’ve seen. Since 2016, annual revenues increased 31% In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259 Operating cash flow is up 47%. (Even its operating margins are rising every year!) Quite simply, we believe it’s a fantastic Foolish growth pick. What’s more, it deserves your attention today. So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. More reading How I’d start earning passive income to supplement my wages 8.3% dividend yields! 2 UK shares I’d buy in February and hold for 10 years Why I’d follow Warren Buffett’s buy-and-hold strategy The US S&P 500 or the UK FTSE 100: which would I buy today and why? FTSE 100 shares to buy: why this one is near the top of my pick-list 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. The post How I’d generate a passive income from UK shares starting today appeared first on The Motley Fool UK.
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