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.

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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.

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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.

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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.

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 considered, so you should consider taking independent financial advice.

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