How I could make a passive income with just £5 a day!

I’m aiming to build spectacular passive income flows with UK shares. Here are two top dividend stocks I’d buy to try and get wealthy.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

History shows us that investing in UK shares can be a great way to generate passive income streams. I myself have created a diversified portfolio of dividend stocks to provide a steady flow of income. The beauty is that one doesn’t have to stump up a fortune at the beginning to start creating wealth with income shares either.

Building wealth with £5

Let’s say that I have £5 in change sitting at the bottom of my pocket when I come home. That’s less than a cinema ticket or a good bottle of wine. If invested wisely this small sum could make a huge difference to my wealth levels over the long term.

If I were to put £5 aside regularly I’d have about £152.08 sitting in my piggy bank after one month. Over the space of a year this amount would rise to £1,825. With this sort of handy sum I’d have a wide choice of options to try and create wealth with UK shares. Investing that in stocks with 3.9% dividend yields could make me a yearly passive income of around £71.

Two passive income stocks I’d buy

This clearly wouldn’t be enough on its own to make me financially independent. However, sensible share investing involves taking a long-term view. And by regularly saving and investing that £5 a day over a number of years I could build some huge passive income flows. By sticking to this plan I could turn that £71 annual passive income in year one into £710 by my tenth year of investing.

Of course I can make a higher passive income if I buy dividend stocks with yields above that 3.9% FTSE 100 average. Here are a couple of passive income stocks I’d buy today because of their market-beating yields:


ContourGlobal of the FTSE 250 develops, acquires, and runs power plants all over the globe. Like other utilities shares, then, the essential services it provides generate strong and steady cash flows. The key to passive income investing is to find dividend stocks that can pay decent dividends over the long term and not just today. And this particular UK share sits firmly in this stable.

I like ContourGlobal in particular because of its increasing focus on renewable energy. Its a strategy could pay off handsomely as the world moves away from fossil fuels. Profits at the dividend stock could take a significant hit if project delivery issues occur. However, I believe the potential rewards of my owning it far outweigh the risks. The forward dividend yield at ContourGlobal sits at 7.9%.

Admiral Group

FTSE 100-quoted Admiral Group is one of the biggest names in the general insurance business. This makes it one of the go-to brands with British consumers. I also like Admiral’s focus on the car insurance market, a segment which is particularly robust during economic upturns and downturns. Driving with insurance is a legal requirement, after all. This gives Admiral the earnings stability and the confidence to pay big dividends year after year.

Admiral’s yield for 2022 sits at a meaty 7.5%. I’d buy the business despite the threat that weather-related claims pick up considerably due to climate change.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Admiral Group. 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.

More on Investing Articles

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

Could Raspberry Pi shares hit £5 by 2030?

After a strong start out of the blocks this month, our writer asks whether Raspberry Pi shares could move further…

Read more »

Close-up of British bank notes
Investing Articles

Five 5%+ yielders I’d buy for an ISA today!

Our writer identifies a handful of FTSE 100 and FTSE 250 firms each yielding at least 5% he'd happily buy…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

5 stocks with 5%+ yields I’d love to buy and hold in a Stocks and Shares ISA

Harvey Jones is keen to add these five FTSE 100 high-yielders to his Stocks and Shares ISA, ideally before they…

Read more »

A young Asian woman holding up her index finger
Investing Articles

I’d target £880 of passive income annually, spending £10K now on this FTSE 100 share

Our writer explains how he would add to his diversified portfolio happily by investing in this FTSE 100 passive income…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

3 reasons I think the Scottish Mortgage share price could keep rising

Christopher Ruane explains a trio of reasons he thinks the once-mighty Scottish Mortgage share price could be set to increase…

Read more »

Syringe and vial on blue background
Investing Articles

Is this forgotten FTSE share about to make investors rich all over again?

Not long ago, this FTSE share was all the rage before demand dropped off and things went south. Is it…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’d use these 5 Warren Buffett approaches to build wealth

Christopher Ruane outlines a handful of investing lessons from billionaire Warren Buffett that he thinks can help a small investor…

Read more »

US Stock

Nvidia stock: 3 things investors need to know as it surges towards $150

Nvidia is a stock that's had an extraordinary run in 2024. Edward Sheldon highlights some important things investors should know.

Read more »