5-Stock Portfolio Delivers Monthly Passive Income
Many UK companies that offer dividends typically distribute them to shareholders biannually. However, a select few, including firms in the FTSE 100, provide quarterly payments. This opens up the opportunity to create a robust portfolio in a Stocks and Shares ISA that could produce monthly passive income throughout the year.
Five-Stock Portfolio for Monthly Passive Income
Here’s a curated selection of five FTSE 100 stocks that could potentially deliver a steady stream of income. While no dividend is guaranteed, this combination aims to create a comprehensive calendar of payments:
- Legal & General: Dividends in June and September.
- HSBC: Payments in April, June, September, and December.
- LondonMetric Property: Dividends in January, April, July, and October.
- Shell: Payments in March, June, September, and December.
- British American Tobacco: Dividends in February, May, August, and November.
Payment Schedule Overview
| Company | Dividend Month(s) |
|---|---|
| Legal & General | June, September |
| HSBC | April, June, September, December |
| LondonMetric Property | January, April, July, October |
| Shell | March, June, September, December |
| British American Tobacco | February, May, August, November |
Company Profiles and Dividend Insights
British American Tobacco, known for brands like Lucky Strike and Pall Mall, generates significant profits, facilitating attractive shareholder distributions. HSBC is capitalizing on growth opportunities in Asia, especially in wealth management. Legal & General brings nearly 200 years of insurance experience along with decades in asset management.
LondonMetric Property, a real estate investment trust (REIT), focuses on sectors like logistics and healthcare and maintains an impressive occupancy rate of 98.1%. Meanwhile, Shell serves as a buffer against fluctuating energy prices that can impact the broader economy.
Diversification and Yield Potential
This portfolio balances risks across diverse sectors, making it strategically appealing. June and September stand out as major dividend months, with multiple distributions occurring simultaneously. If an equal investment is made across all five companies, the overall forecast portfolio yield could reach approximately 5.8%. Thus, a £20,000 investment could yield around £1,160 in annual passive income.
Investment Considerations
Two of these stocks—Legal & General and HSBC—are part of my investment strategy, and I am contemplating acquiring shares in LondonMetric soon. The REIT has experienced a price drop of nearly 30% since early 2022, attributed to rising interest rates. While inflation remains a concern, most of LondonMetric’s liabilities are fixed-rate, allowing it to sustain a high occupancy rate.
Management is optimistic about continuing the trend of annual dividend increases through 2025, with a forecast yield of 6.4%. Therefore, for long-term investors seeking solid returns, LondonMetric may represent a compelling opportunity moving forward.
