It’s fairly easy to put together a high-yield passive income portfolio in the UK today. That’s due to the dozens of dividend shares across the FTSE 350 offering attractive streams of income.
Here, I’ll demonstrate this with five UK stocks that could form the basis of a £1k-a-month dividend income portfolio.
The quintet in question
All five are from the FTSE 100, with three of them in the financials sector. These are asset manager M&G (LSE:MNG), insurer Aviva, and banking goliath HSBC.
M&G currently has a forward dividend yield of 8.1%. And following its acquisition of Direct Line, Aviva is the UK’s biggest provider of home and motor insurance, with over 20m customers.
Meanwhile, HSBC has an increasingly heavy footprint in Asia. Aviva and HSBC carry forward yields of 6.2% and 5.4%, respectively.
The other two are LondonMetric Property, a REIT (real estate investment trust) focused on logistics and warehouses, and British American Tobacco. They yield 7% and 6%, respectively.
As a REIT, LondonMetric pays out most of its rental income as dividends. In March, the portfolio was valued at £6.2bn, up from £6bn the year before.
British American Tobacco is behind cigarette brands Dunhill and Lucky Strike, as well as Velo nicotine pouches. It has a decades-long history of dividend growth.
The highest yielder
Now, it’s worth pointing out that M&G’s ultra-high yield may reflect face some near-term challenges. For example, volatility in global markets could see rising outflows from its funds.
Longer term, the rise of passive investing also poses risks, as more investors shift to low-cost index funds and ETFs that track markets.
That said, I’ve been impressed with M&G’s resilience. In the first half of 2025, it swung from a £1.1bn net outflow in the same period last year to £2.1bn of net inflows.
Adjusted pre-tax operating profit edged up to £378m, which fell short of analyst expectations for £398m. But management blamed one-off charges in both its asset management and life insurance divisions, as well as foreign exchange losses.
Assets under management and administration rose by £8.7bn to £354.6bn, while the interim dividend was raised slightly to 6.7p per share.
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What about that £1k a month?
Dividends are never assured, of course. And HSBC and Aviva could both struggle during an economic downturn. Meanwhile, higher interest rates pose a challenge for LondonMetric, as does an overall decline in smoking for British American Tobacco.
But on balance, I think the attractive yields on offer here make the stocks worth considering. Taken together, the yield for this group is 6.5%, around double that of the FTSE 100.
To generate the equivalent of a grand a month in dividends, someone would need to invest £185,000. The problem here, of course, is that most of us don’t have that sort of cash squirrelled away.
Moreover, a fair chunk of the income would be taxed. But if regular monthly sums were invested inside a Stocks and Shares ISA, it would be possible to build up to a tax-free passive income stream over time.
Investing £750 a month with a 7.5% annual return (that is, including share price rises), while reinvesting all dividends, would become £185k in just over 12 years. At this point, the ISA would be generating the equivalent of £1k a month in dividend income, assuming the same 6.5% yield.
