3 passive income ideas I’d consider

One of my favourite passive income streams is investing in UK dividend shares. I like this because I can benefit from the profits of professional management and world class companies, without having to lift a finger myself.

Here are three UK dividend shares I would currently consider as passive income ideas for my portfolio.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Passive income ideas: Direct Line

One UK share I’d consider for passive income is insurer Direct Line. With its 7.9% yield, the shares will hopefully continue to be a strong source of income. That’s just counting ordinary dividends – this year the company also paid a special dividend of 7.6p per share. It benefits from a well-known brand that ought to be positive for its customer acquisition costs. The insurance business is durable and Direct Line’s strong position means that I see strong future prospects for it.

One risk is lower profits as the UK moves to curb renewal premium prices for insurers.

9%+ yield: Imperial Brands

One of the passive income ideas I already use in my own portfolio is tobacco maker Imperial Brands. The company is a large multinational manufacturer, which owns brands such as John Player Special and Rizla. In the past couple of years, it has streamlined its business, reduced its dividend, and set out a new strategy to help boost cigarette sales in the face of declining demand.

Even after the cut, these shares yield 9.1%. That means that Imperial Brands is one of the most lucrative passive income ideas among FTSE 100 members when it comes to dividends. The declining cigarette usage rate remains a risk at the company, though, as it could lead to smaller future revenues and profits.

Passive income ideas: Income & Growth Trust

Far less well known but also potentially rewarding for my portfolio is the Income & Growth venture capital trust. As its name implies, this trust invests in small companies with the aim of generating both capital growth and income for shareholders.

The dividends tend to be unpredictable, as they depend on the performance of the underlying businesses. Last year’s payouts totalled 14p. This year has been rewarding so far, with a 5p interim dividend. One risk here is that any economic downturn could hurt sales at the growing companies in which the trust typically invests.

How I’d seek passive income from these UK dividend shares

Passive income isn’t supposed to involve work. So I wouldn’t be buying these shares and then spend hours tracking their price movements and comparing them to the broader market. Instead, having bought them, I would simply sit back and wait for passive income to accrue over time. It’s never guaranteed, as dividends can be suspended or cancelled. But one of the benefits of investing in a diversified group of companies is that even if one stops its dividend, that only represents one part of my portfolio.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Christopher Ruane owns shares in Imperial Brands. The Motley Fool UK has recommended Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

This post was originally published on Motley Fool

Financial News

Daily News on Investing, Personal Finance, Markets, and more!