3 top income stocks for passive investing

Andrew Woods sets out three income stocks that he thinks could add value to his portfolio over the long term.

| More on:

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.

Cheerful young businesspeople with laptop working in office

Image source: Getty Images

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.

Investing for an income stream can be a great way to grow wealth. Through dividends and share buyback schemes, investors can reap the benefits of choosing a profitable company. Here are my three top income stocks I’m buying soon.

FTSE 100 stalwart Legal and General (LSE:LGEN) has fared pretty well over the past year. While many other stocks have been affected by market corrections, the life insurance firm has been steady in comparison.

Over the past year, the shares in the business are down just 10% and currently trade at 241p. This is mainly due to increasing new business volumes since the lifting of pandemic restrictions.

For 2021, the company reported that pre-tax profits were up 39%, year on year, to £2.49bn. The firm then declared a higher total dividend of 18.45p per share. At that time, this equated to a dividend yield of 6.2%. 

While dividend policies may be subject to change in the future, investment in this business could provide me with a decent income stream.

Legal and General might, however, face an unpredictable outlook in the coming months due to the war in Ukraine, because it is unclear how the conflict might affect the life insurance industry.

Antofagasta

Another exciting income stock is Antofagasta (LSE:ANTO). The share price of the Chilean copper mining firm is down only 5.8% in the past year.

Currently trading at 1,212.5p, the company has been benefiting from consistently higher metal prices. 

The price of copper, in particular, has doubled since the beginning of the pandemic. It has a variety of uses and it’s an important component in the construction of electric vehicles (EVs).

The business announced a dividend of $1.43 per share and this was equivalent to a dividend yield of 8.7%. 

As the metal markets remain tight, it’s possible that Antofagasta may continue to post solid results. 

With any mining firm, however, there is always the risk that operations could be halted for a myriad of reasons, like pandemic absences or lack of water resources as a result of drought.

Lloyds

Like the shares in the previous two businesses, the Lloyds (LSE:LLOY) share price has fallen only slightly in the past year, by about 7.5%. It currently trades at 43.25p. 

The banking company paid a total dividend in 2021 of 2p per share, equivalent to a dividend yield of 4.2%.

It also swiftly rebounded after the pandemic. In 2020, it reported pre-tax profits of around £1.2bn, down from £4.3bn in 2019. By the end of 2021, however, pre-tax profit stood at £6.9bn.

The firm may well benefit from the recent interest rate rise to 1.25%. With further hikes expected, this may enable Lloyds to charge more for its loan and mortgage products.

As inflation and energy costs start to bite, however, this might deter potential customers from taking on more debt.

Overall, these three firms have been solid performers in recent times. With consistent dividend yields, I could gain an income stream over the long term. I will be adding these three businesses to my portfolio soon.

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.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking 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

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »