Stock market

5 UK stocks I would really put 100% of my money into for passive income.

Image source: Getty Images

With spare cash to invest, I aim to build a passive income stock portfolio focused on my five best ideas.

Broad diversification is useful, however, because it can help protect capital against company-specific disasters and failures. So that would be one of my investments. FTSE All Share Index Tracker Fund

There is a good example. SPDR FTSE UK All Share UCITS ETF (LSE: FTAD). However, similar tracker funds are available, so research is essential.

By choosing a tracker, one-fifth of the money in a portfolio will be allocated to a position backed by hundreds of underlying businesses.

Currently, the average rolling dividend yield across the All Share Index is running at around 3.9% – great for passive income.

A very strong brand

As well as a tracker, I would choose a bottler based in Switzerland. Coca Cola products, Coca-Cola HBC.

Over the decades, the brand has remained strong and loved by many, and this strength is reflected in the company’s strong multi-year commercial and financial record.

With a share price of around 2,382p, the future yield to 2025 is around 3.8%. It’s not the highest, but profits have been growing every year with a compound annual growth rate (CAGR) running at just over 10%.

The Company may at some point lose its exclusive rights to distribute Coca-Cola products. However, it’s a risk I’ll take now given the strength of the business.

Attractive energy sector

I will have third position. National Grid (LSE: NG). The company operates regulated energy businesses on both sides of the Atlantic, including the UK’s electricity transmission grid.

Due to the ongoing need to invest in energy infrastructure and operations, the balance sheet is heavily indebted. In addition, regulators keep a close eye on the sector. They have the power to implement changes that may make it difficult for the company to continue making shareholder payments.

Despite this, National Grid has a long record of paying generous dividends and I will accept the risks and assume that these payments will continue – although there is no guarantee.

With the share price close to 1,032p, the forward dividend yield for the trading year to March 2025 is close to 5.7%.

A great production and recovery game

Coca-Cola HBC and National Grid are both defensive businesses and enjoy stable cash flows whatever the general economy is doing. However, I am optimistic about the outlook for general economic conditions. So, I will target Legal and General With its share price around 255p. The expected dividend yield for 2025 is just over 8.8%.

One risk is that the financial services provider is in a cyclically sensitive industry. However, the dividend has a decent multi-year growth track record, so I would bear the risks and plan to hold the stock for years to come.

Finally, I would choose fast moving consumer goods. Unilever. The forward-looking yield to 2025 is running at just over 4%. That’s not much, but the valuation here is close to its recent lows, with the share price hovering around 3,827p.

While there’s no certainty, I think the business has a decent chance to recover its growth mojo in the coming years as economies hopefully continue to improve.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button