[ad_1]
Image Source: Getty Images
money Money money! ABBA have done a good job of generating ongoing income from their back catalog, and I aim to do the same when it comes to investing in my Stocks and Shares ISAs.
If I have an extra £20k to invest in my ISA today and want to aim for an annual dividend income of £1,600, here’s how I would do it.
Why now?
The past several years have seen quite a few blue-chip FTSE 100 The companies offer very attractive dividend returns.
Sometimes, 8%, 9%, or even 10% yields may be available only to investors who are willing to take a risk on small or highly volatile companies. But for the time being, that’s the way many established businesses yield in the big leagues.
Higher yields can sometimes indicate increased risk. Dividends are never guaranteed and companies like it too shell has abruptly cut its payouts in recent years.
Still, I think that with the kind of yields available in today’s market, this is an ideal moment for me to try to grow my passive income streams by buying dividend payers for my stocks and share ISAs.
portfolio creation
To reach my goal, I would need to earn an average dividend yield of 8%. This is only an average, so even if some businesses pay me less I can still manage as long as I earn 8% overall.
I would diversify my Stocks and Shares ISAs across five to 10 companies to reduce my risk if any one company disappoints.
In financial services firms, I would invest M&G (yield 10.3%), legal and general (9%), Aviva (8.5%) and wonder (9.7%). would be a telecom company on my list VODAFONE (10.6%). and 8.8% yield British American Tobacco Will also be on my shopping list.
I would also look outside the FTSE 100 to avoid becoming too heavily weighted in financial services stocks on my portfolio. After all, four of my six FTSE 100 picks above are in that sector.
That’s why I will keep an eye on the stocks of smaller companies as well as investment trusts. income and growthWith its 11.3% yield.
embarrassment of riches
With so many high-yield stocks on offer at the moment, I feel comfortable that I can achieve my 8% yield target while keeping my portfolio sufficiently diversified.
However, one trap I’d avoid is being overly influenced by yield. Even if a company’s yield is high today, if its business is weak, the dividend could be cut tomorrow (or any time). That’s a risk for all of the companies I’ve discussed above — and really for any dividend stock.
Therefore my priority in investing in my Stocks and Shares ISAs will be in quality businesses that I believe have a strong future, as well as attractive share prices.
Fortunately, I feel that today’s market provides ample opportunities for me to do just that.
This is how I would invest £20K in a Stocks and Shares ISA to aim for £1,600 in annual dividends This post appeared first on The Motley Fool UK.
read more
Si Ruan holds positions with British American Tobacco plc, Legal & General Group plc, M&G plc and Vodafone Group Public. The Motley Fool UK recommends British American Tobacco plc, M&G plc and Vodafone Group Public. The views expressed on the companies mentioned in this article are the author’s own and therefore may differ from the official recommendations made in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a wide variety of insights can make us better investors.
Motley Fool UK 2023
Source
[ad_2]
