I already know how to earn a second income on the stock market but I’m always open to new ideas. So I thought I’d ask everybody’s favourite AI chatbot, ChatGPT.
Now, it’s fair to say that taking investment tips from a generative AI bot probably isn’t the smartest move. But since it collates and aggregates information from across the internet, I thought it might find some gems of wisdom among the noise.
And, in fact, I was pleasantly surprised. I wouldn’t say it quite cracked the code of generational wealth and instant retirement — but the response was well-formulated.
Initially, it asked the same questions most of us ask when queried about similar topics: “How much can you afford to invest? What’s your timeline? What are your goals? etc.”
I replied with answers best suited to the average investor: £25,000 to £50,000 with a 10 to 20-year horizon, targeting a mix of growth and income.
This is what it had to say.
A strategic, dividend-focused framework
Straight off the bat, ChatGPT highlighted the tax benefits of investing via a Stocks and Shares ISA. This is particularly important given dividend tax rates rise from 8.75% to 10.75% (basic rate) in April 2026.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
It then outlined a conservative, well-balanced strategy of 60% quality FTSE 100 dividend stocks, 30% higher-yielders, and 10% cash reserves. The iShares UK Dividend ETF was also mentioned for those looking for simplified diversification. It also provided standard allocation guidelines: no sector exceeding 25% and no more than 6% in any single stock.
So far, so good.
But for quality Footise stocks, it named three finance picks: Legal & General, Phoenix Group, and M&G. That’s too concentrated for me — I’d mix it up with a utility like National Grid, or a well-established real estate investment trust (REIT).
For examples of higher-yielders, it picked another finance stock, Ashmore, and the renewable energy REIT Greencoat UK Wind.
Overall, a decent — albeit basic — strategy. Still, I can’t say I’d agree with the stock picks. When it comes to high-yielding mid-caps, there’s one stock I would consider before any others.
Defensive, inflation-linked income
Supermarket Income REIT (LSE: SUPR) owns critical retail and warehouse spaces rented to big name grocers like Tesco and Sainsbury’s.
With long, inflation-linked leases stretching into the low teens, it provides solid visibility on rising rents even as economic challenges linger. Plus, it’s defensive by nature: people always need to eat, and omnichannel grocery has proven resilient through thick and thin.
And the cherry on top is a meaty 7.7% yield, paid quarterly. Dividend growth is modest but consistent, ticking up 1%-2% annually, which fits nicely for a portfolio aiming for reliable passive income.
But as always, it’s not without risk. Dividend coverage is thin, with earnings only just covering them, and cash only covering 50%. This is not unusual for REITs, but still, it leaves slim margin for error. If rents stall or financing costs bite, a dividend cut isn’t off the cards.
But with eight years of uninterrupted payments and seven years of growth, I’m optimistic about its future.
