Image source: Getty Images
The UK stock market doesn’t have many potential growth superstars like SpaceX or Apple, which today is the world’s most valuable company. What it does have, however, is an abundance of exceptional passive income opportunities.
Like growth shares, these dividend shares also have the capacity to deliver long-term wealth. The dividends paid by London-listed companies can be reinvested to supercharge portfolio growth. Later on, they can be used to deliver a large and steady second income in retirement.
Today there are about 120 UK shares with forward dividend yields of 6% or above. Some of these may fail to pay the dividends analysts expect. Yet many others are proven income champions with the potential to keep delivering.
Here’s how you could aim for four-figure passive income this year alone with a £20,000 tax-free Stocks and Shares ISA.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Eight of the best?
Diversification is the name of the game when it comes to sensible investing. If you’re seeking dividends, holding a range of income-paying shares means your portfolio can still throw off healthy cash streams if one or two of your holdings disappoint.
So what could a well-rounded stocks portfolio look like? Here are eight top dividend shares a £20k ISA could be used to buy.
- Standard Life
- Chesnara
- Legal & General
- Topps Tiles
- Pennon Group
- Greencoat UK Wind
- Primary Health Properties (LSE:PHP)
- Henderson Far East Income
This portfolio of shares includes two FTSE 100 shares, with the remainder coming from the FTSE 250 index. I like it because it spans a variety of sectors (retail, utilities, financial services, property), and provides exposure to different parts of the world.
A huge passive income
This sort of diversification makes it super-resilient, in my view. And here’s the kicker: the average dividend yield across these shares is an enormous 7.4%.
It means that if analyst forecasts are accurate, a £20,000 Stocks and Shares ISA investment spread equally across them will deliver a £1,480 passive income this year alone. Over time, I’d expect this figure to grow as dividends from these companies steadily rise.
A top dividend share?
Zooming in on Primary Health Properties, this is a passive income share I hold myself. To me, it’s one of the best dividend stocks on the London stock market.
It’s a real estate investment trust (REIT), meaning 90% of annual rental earnings or more must be paid in dividends. But this doesn’t guarantee a large or reliable income stream for investors. So how has this company managed to raise shareholder payouts every year since 1997?
It’s simple, really. By focusing on medical properties, rent rolls are largely unaffected by broader economic conditions, unlike REITs operating in cyclical sectors. It’s still vulnerable to rising costs, but by tying many tenants down on inflation-linked contracts, it’s able to significantly reduce this risk.
Finally, the majority of its rents are guaranteed by government bodies. This further reduces problems like missed rental payments and empty properties. With a 7.4% yield, I think Primary Health’s one of the best passive income shares to consider in an ISA today.
What income stock do we like better than Primary Health Properties Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Royston Wild owns shares in Legal & General and Primary Health Properties.
Image source: Getty Images
The UK stock market doesn’t have many potential growth superstars like SpaceX or Apple, which today is the world’s most valuable company. What it does have, however, is an abundance of exceptional passive income opportunities.
Like growth shares, these dividend shares also have the capacity to deliver long-term wealth. The dividends paid by London-listed companies can be reinvested to supercharge portfolio growth. Later on, they can be used to deliver a large and steady second income in retirement.
Today there are about 120 UK shares with forward dividend yields of 6% or above. Some of these may fail to pay the dividends analysts expect. Yet many others are proven income champions with the potential to keep delivering.
Here’s how you could aim for four-figure passive income this year alone with a £20,000 tax-free Stocks and Shares ISA.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Eight of the best?
Diversification is the name of the game when it comes to sensible investing. If you’re seeking dividends, holding a range of income-paying shares means your portfolio can still throw off healthy cash streams if one or two of your holdings disappoint.
So what could a well-rounded stocks portfolio look like? Here are eight top dividend shares a £20k ISA could be used to buy.
- Standard Life
- Chesnara
- Legal & General
- Topps Tiles
- Pennon Group
- Greencoat UK Wind
- Primary Health Properties (LSE:PHP)
- Henderson Far East Income
This portfolio of shares includes two FTSE 100 shares, with the remainder coming from the FTSE 250 index. I like it because it spans a variety of sectors (retail, utilities, financial services, property), and provides exposure to different parts of the world.
A huge passive income
This sort of diversification makes it super-resilient, in my view. And here’s the kicker: the average dividend yield across these shares is an enormous 7.4%.
It means that if analyst forecasts are accurate, a £20,000 Stocks and Shares ISA investment spread equally across them will deliver a £1,480 passive income this year alone. Over time, I’d expect this figure to grow as dividends from these companies steadily rise.
A top dividend share?
Zooming in on Primary Health Properties, this is a passive income share I hold myself. To me, it’s one of the best dividend stocks on the London stock market.
It’s a real estate investment trust (REIT), meaning 90% of annual rental earnings or more must be paid in dividends. But this doesn’t guarantee a large or reliable income stream for investors. So how has this company managed to raise shareholder payouts every year since 1997?
It’s simple, really. By focusing on medical properties, rent rolls are largely unaffected by broader economic conditions, unlike REITs operating in cyclical sectors. It’s still vulnerable to rising costs, but by tying many tenants down on inflation-linked contracts, it’s able to significantly reduce this risk.
Finally, the majority of its rents are guaranteed by government bodies. This further reduces problems like missed rental payments and empty properties. With a 7.4% yield, I think Primary Health’s one of the best passive income shares to consider in an ISA today.
What income stock do we like better than Primary Health Properties Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Royston Wild owns shares in Legal & General and Primary Health Properties.
