2 passive income stocks I just bought for my Stocks and Shares ISA!

Dividend yields have rocketed across the London Stock Exchange during 2022. Here are two top income stocks I’ve added to my Stocks and Shares ISA.

| More on:
Man using credit card and smartphone for purchasing goods online.

Image source: Getty Images

I love the idea of making money without the day-to-day hassle of actually creating it. Who doesn’t? But establishing a healthy passive income isn’t a pipe dream. I’m already building a second income by regularly investing in my Stocks and Shares ISA.

And in recent weeks I’ve been buying stocks with big dividend yields to boost my income. I won’t buy shares based solely on the near-term yield they’re offering. Indeed many vulnerable stocks have seen their dividend yields jump in 2022 as their share prices have plummeted.

However, selecting solid businesses with larger dividend yields can make a considerable difference to my monthly passive income.

2 top stocks in my ISA

Let’s say I’m aiming to make £300 a month — or £3,600 a year — in additional income from UK shares. If I bought dividend stocks with an average 2% yield I’d need to invest £180,000. That’s not an easy amount to come by, and especially in tough times like these.

However, if I invested in dividend shares with an average 10% yield, I’d likely need the much smaller amount of £36,000. Remember that the actual dividends investors receive do sometimes fail to match up to forecasts, however.

Here are two passive income stocks I’ve just bought for my Stocks and Shares ISA. I plan to hold each of these for at least a decade, hopefully receiving a healthy dividend income in that time.

Rio Tinto

Dividend yield: 10.7%

Rio Tinto (LSE: RIO) is one of the world’s largest producers of iron ore. It also provides other essential commodities like copper, aluminium and lithium.

Falling commodity prices have caused its share price to topple around 20% in just two months. I nipped in during late June to buy this bargain and am tempted to buy some more for my ISA following additional price falls.

Rio Tinto could come under pressure in the near term as the global economy slows and demand for its products weakens. But I expect things to improve strongly after then as themes like rising urbanisation and investment in the green economy boost consumption of its commodities.

Consultancy CRU expects world copper demand alone to rise 2.1% a year (to 28.5m metric tons) by 2030.


Dividend yield: 12.8%

I think Persimmon (LSE: PSN) could be one of the best stocks to buy for passive income. Its share price has slumped more than a quarter in 2022 as investors have feared the impact of rising interest rates on its sales.

I’m more worried about the issue of rising building product costs and materials shortages on its profits. But I still think the business — the UK’s second largest housebuilder by revenues — should generate healthy earnings growth as house prices rip higher.

Latest Nationwide data showed average annual home price growth hit 11% in July. This was up 0.3% from June, even though interest rates continued to rise. I believe prices will continue rising over the long term too amid a disappointing outlook for new home starts. And in the process, firms like Persimmon could deliver terrific dividend income to my ISA.

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.

Royston Wild has positions in Persimmon and Rio Tinto. The Motley Fool UK has no position in any of the shares mentioned. 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

Mixed-race female couple enjoying themselves on a walk
Investing Articles

UK shares: 1 burgeoning tech stock to buy for returns and long-term growth!

Jabran Khan is looking for the best UK shares to buy for his holdings that provide excellent returns and growth…

Read more »

Black father holding daughter in a field of cows
Investing Articles

2 FTSE 100 shares I’d buy for lifelong passive income!

These FTSE 100 shares have proved to be excellent dividend stocks for many years. Here's why I think they'll continue…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

1 cheap penny stock that boosts passive income and has great growth prospects!

This Fool likes this penny stock that currently looks good value for money, has an enticing dividend yield, and growth…

Read more »

Sun setting over a traditional British neighbourhood.
Investing Articles

Will the Taylor Wimpey share price rebound soon?

The Taylor Wimpey share price has jumped 10% since it bottomed last month. But will it continue its rally and…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Should I buy this growth stock at £10?

The ASOS share price has tumbled to its lowest price in the last 10 years. Surely at £10 per share,…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Is the bear market in stocks over? I fear not!

After the worst first-half bear market in 52 years, US stocks have rebounded in the past month. But what should…

Read more »

Happy male couple looking at a laptop screen together
Investing Articles

Is this FTSE 250 stock one of the best to buy for consistent growth and returns?

Jabran Khan takes a look at whether this FTSE 250 tech stock could be a good addition to his portfolio…

Read more »

Girl and father putting coin into piggy bank, sitting on sofa at home
Investing Articles

Here’s why I’d buy Legal & General shares to bag 7.5% dividends today

Legal & General shares are picking up, as the company reaches the halfway stage in its five-year cash and dividend…

Read more »