I’m looking for more income shares to add to my Stocks and Shares ISA in 2024. And the FTSE 100 is helpfully staying low, leaving plenty of big dividends for me to choose from.
My aim is to put some money away each month, and buy shares every time I have enough. And I want to build a big enough pot to pay me a bit of passive income to help me when I retire.
Other people have other ways of trying to create some extra income. But I want something that doesn’t mean much work for me. And the UK stock market has beaten other forms of investment for more than a century now.
Biggest yields?
I won’t just snap up the biggest dividends yields on offer, because they’re not guaranteed. And they often drop, or can be cut altogether.
It means I need to be convinced that a dividend stock can keep on paying before I’ll buy it.
That rules out something like Vodafone, despite a massive 11.7% yield on the cards right now. Its earnings don’t cover it, and it looks like the market has little confidence — the share price is down 55% in five years.
If the dividend keeps up, I could be badly wrong. But I want a bit more safety.
Long-term thinking
Talking of safety, I mean in the long term, over 10, 20 years or more. It means I don’t mind buying something with a bit of short-term volatility.
That’s why Aviva with a 7.4% yield, and Legal & General at 7.8%, are two of my top income stock candidates this year.
They could come under pressure if earnings are squeezed, and it looks like they might be. And that could dent the share prices. But I see long-term cash cows here.
Banks too
I’m still big on banks for 2024, with big profit rises forecast for the financial sector.
I might add some NatWest Group shares to my Lloyds Banking Group holding. A falling share price has helped push the NatWest forward yield up to 7.3%.
The government’s holding could be a drag, as it will presumably want to sell it some day. And I don’t think the market has forgiven the bank for the Nigel Farage thing. But I’d like some of that dividend.
Sticking again
The other thing I’ll stick with in 2024 is the housebuilding business. Share prices have come back, and with earnings expected to be down this year, dividend yields aren’t as big as they’ve been.
But the 6.6% forecast at Taylor Wimpey is the one I might go for. I really don’t mind a possible couple of years of weak prices, as I still expect long-term dividend growth.
No big change
So, I’m still a fan of the finance sector, and the builders. And that’s no real change in my income stock outlook for 2024.
But I think it makes sense. If we have sectors we’ve researched, understand and like, why chop and change each year? Especially when they’re still cheap.
