Passive income can be a welcome financial boost at any stage in life. After 50, though, one’s planning timeframe is unlikely to be the same as it was at 30 or even at 40. Time, ever more, is of the essence.
So at that point my own focus when choosing income shares for my portfolio would be on jam today rather than jam tomorrow.
While I would still focus on buying into quality companies at attractive prices, I would be hunting for ones that offer me sizeable income streams today rather than others that I think could do so a decade or two from now.
Should you invest £1,000 in Legal & General right now?
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Here are a couple of passive income ideas that match that description I would happily buy now if I had spare cash to invest.
Phoenix: 9.9% dividend yield
Insurer Phoenix (LSE: PHNX) has a 9.9% dividend yield.
That means, that for every £10,000 I invested today I would hopefully earn £990 a year in dividends. (A bigger investment could give me bigger passive income streams overall).
In fact, the passive income prospects here could turn out to be even better than that, as Phoenix has what is known as a progressive dividend policy. That means it aims to increase its dividend per share each year.
It has done that recently, but dividends are never guaranteed and a company can always change them as it chooses. Phoenix has a number of strengths as I see it, from a customer base stretching into millions to a specialist expertise in certain types of complex financial products.
But it also faces risks, such as a market downturn forcing it to reassess asset valuations, hurting earnings. Even considering the risks, though, I like the passive income prospects of Phoenix not only in the future but right now.
Legal & General: 9.1% dividend yield
Another share that has strong passive income prospects right now, not just in the future, is financial services provider Legal & General (LSE: LGEN).
We will likely hear in the next fortnight how the business has performed in the first half and what that means for its interim dividend.
I am not expecting any surprises: like Phoenix, Legal & General has a progressive dividend policy and has already set out the increase in its per share dividend expected for the full current year (5%).
As it is buying back its own shares at the moment, the FTSE 100 firm could potentially raise its dividend per share in future (it is foreseeing 2% annual growth) without needing to spend more money than now in total.
The firm benefits from an iconic brand in a pensions and retirement product market that I expect to benefit from resilient client demand over the long run. Weak markets are a risk, partly because they can lead to clients pulling out funds but also because changes in asset values could hurt earnings. Legal & General held its dividend flat in 2020 and cut it during the last financial crisis.
But with a long-term mindset when assessing business prospects alongside a focus on passive income in the short term as well as further out, this share would easily make my shopping list.
