Top 2 Passive Income Strategies for Stocks and Shares ISA
The London Stock Exchange is filled with opportunities for passive income through dividend shares. Selecting the right investments can be more challenging than finding them. Here are two promising passive income strategies using a Stocks and Shares ISA from the FTSE 250 that investors may want to consider.
Top Passive Income Strategies for Stocks and Shares ISA
1. 3i Infrastructure
3i Infrastructure (LSE:3IN) is an investment trust focusing on unlisted infrastructure companies. It aims to deliver a medium-term total return of 8% to 10% annually, including an annual dividend. The company first invested in Belgium’s TCR in 2016, which provides airport ground support equipment.
- TCR now operates in over 237 airports across 24 countries.
- In March, 3i Infrastructure sold its 71% stake in TCR, achieving net proceeds of €1.14 billion.
- This sale resulted in an impressive 19% annual return since the original investment.
The company plans to use €300 million of the profits to acquire a majority stake in the Lefdal Mine Datacenter in Norway. With a fully let capacity of 80 megawatts and a growth outlook for earnings, this investment looks promising. However, there are concerns about its investment in DNS:NET, a German telecom provider, which may face significant write-downs in 2026.
Despite challenges, 3i Infrastructure projects a dividend of 13.45p per share, marking a 6.3% increase, with analysts forecasting a rise to 14.3p for FY27. This presents a forward dividend yield of 4.3%, reflecting an attractive entry point for investors in a well-managed infrastructure fund.
2. Primary Health Properties
Another noteworthy passive income opportunity is Primary Health Properties (LSE:PHP), the largest UK healthcare real estate investment trust (REIT). With a portfolio valued at £6 billion, it encompasses 1,142 properties such as GP surgeries, medical centers, and private hospitals.
- 76% of rental income is supported by the UK and Irish governments.
- An additional 13% is generated through established private hospital operators.
Primary Health Properties demonstrated a 4% increase in adjusted earnings per share last year. The dividend grew by 3% to 7.1p, with expectations of another 3% increase to 7.3p this year. If achieved, this milestone would signify the trust’s 30th consecutive year of dividend growth. Despite a challenging 11% decline in stock prices since February, the forward yield now stands at an attractive 8%.
Though the company faces risks tied to rising interest rates—indicated by a 36% decline in share price over five years—the long-term outlook appears promising. An ageing population and the government’s push towards community-based healthcare bode well for the sector. Additionally, the REIT plans to expand its portfolio through a partnership with the pension fund USS, mitigating some capital risks.
Utilizing Stocks and Shares ISAs for exposure to these companies can offer strong passive income potential while navigating the complexities of the UK equity market.
