Did you earn enough money this year – or would it be good to have some more, but without working longer hours? I would certainly be happy to boost my own passive income streams in 2023.
Today is a great day to think about how I could do that, as I can get ready to start the year as I mean to go on.
One of my own preferred passive income ideas is using a bit of spare money each day to buy dividend shares. Here is how I could do that in 2023 and beyond, to set up income streams for the rest of my life.
New Year’s savings resolution
Some passive income ideas require a lot of money upfront, for example to pay a property deposit. One of the reasons I like investing in income shares is that I do not need savings upfront.
But of course, I will still need some money to start buying shares. I would get that through regular saving.
If I put just £3 aside each day – an amount I think is realistic — then by the end of the year I would have saved over £1,000. Investing it at an average dividend yield of 5%, for example, I ought to earn almost £55 in passive income annually. If I keep up my saving habit beyond 2022, I could keep buying new shares while hopefully continuing to earn dividends from the ones I already own.
If I invest conservatively in a diversified portfolio of blue-chip shares, hopefully some of them will continue paying out for decades. That is why I could set up passive income streams for life.
Money on its own though will not earn me dividends. My plan is to use it for buying shares. To do that, I would set up a share-dealing account, or Stocks and Shares ISA.
Choosing shares to buy
How would I know what shares to buy? My objective is passive income, so I would look for companies I felt had strong business models that ought to let them generate surplus profits far into the future, allowing them to pay dividends.
But just because a company has paid dividends in the past does not mean it will keep them up in future. So I look for a market with resilient demand. I then search for businesses I understand that have a competitive advantage in it. That can give them pricing power, enabling profits.
Building passive income streams
If the shares trade at an attractive price, I would consider buying them for my portfolio. With passive income as my objective, I would focus on shares that met these criteria and also offered me an attractive yield.
For example, this year I have added shares such as Dunelm and Altria to my portfolio because I felt they matched these criteria.
All shares have risks though. That is why I focus on building a diversified portfolio. I will continue doing that in 2023 — and hopefully building my passive income streams!
