Here are 5 of the most popular passive income stocks investors are buying

These are the most bought passive income stocks in December, but are they truly good investments? Zaven Boyrazian looks at their long-term performance.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The London Stock Exchange is full of passive income opportunities. Home to some of the most generous dividend policies, investors can easily build a diversified income portfolio. And thanks to the latest data from Barclays, we can see which income stocks British investors are finding most attractive.

Top 5 passive income stocks

As of December 2024, the most actively bought income shares among Barclays trading accounts were:

  1. International Consolidated Airlines – 0.86% yield
  2. Glencore – 2.66% yield
  3. Lloyds Banking Group – 5.24% yield
  4. Barclays – 3.04% yield
  5. Ashtead Group (LSE:AHT) – 1.86% yield

These firms may not have the highest yields in the stock market, but their size grants some welcome safety from share price volatility. And with mature business models, their cash flows are pretty established, making dividends more reliable while potentially opening the door to growth in the long run.

Should you invest £1,000 in Ashtead Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Ashtead Group Plc made the list?

See the 6 stocks

With that in mind, it’s not difficult to understand why these shares are the most popular. But sadly, popularity doesn’t always guarantee market-beating returns. A quick glance at these businesses reflects some big swings in past performance over 10 years:

  • International Consolidated Airlines: -31%
  • Glencore: +127%
  • Lloyds Banking Group: +7%
  • Barclays: +53%
  • Ashtead: +448%

Since December 2014, the FTSE 100‘s generated a total return of 80% for index investors. Meanwhile, this basket (excluding Ashtead) only generated a measly 39% total return over the same period. Therefore, blindly investing in stocks because they’re popular is likely a bad idea. Sure, it’s possible to get lucky and stumble onto a massive winner like Ashtead. But luck isn’t a sustainable strategy.

Therefore, investors need to carefully analyse each business before adding them to their portfolios. With that in mind, let’s explore what made Ashtead so successful.

Finding winning investments

There are a lot of factors to consider when picking individual stocks. But not all of these are financial in nature. Ashtead’s success story can largely boil down to prudent capital allocation and smart leadership.

Early on, management discovered the landscape was shifting within the construction industry. Builders were opting more and more to rent equipment rather than buy them. After all, it reduced upfront costs and eliminated all the headaches and maintenance expenses.

The firm positioned itself to capitalise on this trend, paving the way to becoming an industry leader both here in the UK and in the US. Even today, the firm continues to expand operations internationally into Canada, opening the door to even more opportunities. That’s all translated into stellar cash flow growth and a constant stream of dividend hikes.

The group’s still sensitive to macroeconomic fluctuations. In fact, its latest earnings saw the stock take a tumble on reduced guidance due to weakness within the US market. And let’s not ignore that the equipment rental sector today is now rife with competition. Nevertheless, Ashtead’s track record and competitive advantages merit a closer look, in my opinion.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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 assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Ashtead Group Plc, Barclays Plc, and Lloyds Banking Group Plc. 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Want a comfortable retirement? Here’s how much you need in your SIPP

The SIPP is a great vehicle for confident investors to build their personal pension over time and eventually use that…

Read more »

Investing For Beginners

3 ways I try to spot cheap shares during a stock market crash

Jon Smith talks through his process of filtering for cheap shares at a time when simply buying anything isn't the…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

As share trading hits new records, here’s why I’m planning to keep buying UK shares!

Thinking like Warren Buffett and buying 'on the dip' can unlock significant long-term returns from UK shares. Here's why.

Read more »

Elevated view over city of London skyline
Investing Articles

UK stocks: a brilliant buying opportunity?

UK stocks have taken a battering in recent days. That can be disconcerting -- but our writer is taking a…

Read more »

Bronze bull and bear figurines
Dividend Shares

2 dividend shares that could provide some shelter from the market storm

Jon Smith points out a couple of dividend shares that have yields in excess of 5% -- and that have…

Read more »

Investing Articles

I’ve been snapping up shares in this 11.6% yielding FTSE 250 growth stock

As a trade war knocks a quarter of the value off this FTSE 250 asset manager in a few days,…

Read more »

Investing Articles

I asked ChatGPT which FTSE 100 stocks are screaming buys for Trump’s tariff war. Here’s what it said

As the trade war heats up and the sell-off in stocks resumes, Paul Summers is looking for great FTSE 100…

Read more »

Investing For Beginners

Analysts now expect up to 4 UK rate cuts this year! Here’s what it could mean for the FTSE 100 index

Jon Smith points to the rapidly shifting market expectations when it comes to UK interest rates and explains the impact…

Read more »