Trying to build a £1m portfolio with FTSE 100 shares might sound unrealistic — especially with markets wobbling and headlines dominated by geopolitical tension. But that framing misses the bigger picture.

The real challenge isn’t just finding the next winner. Markets move in cycles, sentiment shifts quickly, and even strong shares can go nowhere for long periods.

So if short-term price moves can’t be relied on, what actually drives long-term wealth?

Durable moats

At some point, every business runs into disruption. Markets turn, costs rise, and demand weakens. But not all companies respond in the same way.

The strongest tend to have something others don’t — durable competitive advantages, strong cash generation, and the financial flexibility to keep investing when rivals are forced to pull back.

In fact, periods of uncertainty can strengthen their position. While weaker players retrench, these businesses can take market share, expand their footprint, and emerge from the cycle in a stronger position than before.

The question, then, isn’t what the market does next — but which businesses are positioned to come out of it stronger.

Spoilt for choice

In 2026, a number of FTSE 100 business models have been put to the test.

National Grid has faced scrutiny over a rising debt load, yet it continues to expand its regulated asset base, doubling down on long-term grid investment.

Meanwhile, RELX has had to contend with the rise of generative AI disrupting parts of its legal and information services. But it’s still investing heavily in data, analytics, and platform capabilities.

Aviva: a different kind of insurer emerging

For me, the standout opportunity in the FTSE 100 right now is Aviva (LSE: AV.)  It’s not because the share price has surged. It’s because the business underneath it has changed.

On the surface, it still looks like a large insurer. But the way it’s now competing points to something very different emerging: a more scalable, data-driven financial platform rather than a traditional cycle-dependent underwriter.

That shift has already been tested in practice. Rising claims costs and inflation exposed weaker players across the sector, with Direct Line a clear casualty. By contrast, disciplined underwriting — particularly tighter pricing and risk selection — allowed Aviva not only to navigate the cycle, but to acquire from a position of strength.

Scale now matters less as a growth driver and more as a structural advantage that stabilises earnings through the cycle.

That advantage is reinforced by data and machine learning embedded across pricing and claims, with AI increasingly positioned as a long-term lever for cost efficiency.

At the same time, a larger multi-product customer base reduces churn and improves the predictability of returns.

What’s the verdict?

This is still a transformation in progress, not a finished story. The key risk is execution. If the expected benefits from scale, data, and AI take longer to feed through than management assumes, then delivery of targeted earnings growth over the next three years could fall short. That would likely weaken confidence in margin stability and cash generation, and could weigh on sentiment.

That said, strong businesses often evolve their models while maintaining earnings momentum. Markets do not always price in that shift immediately.

For investors seeking high-quality UK names that may still be underappreciated, this is one to watch closely. The valuation may not yet fully reflect the story.

The post Trying to make a million from FTSE 100 shares? Here’s where to start today appeared first on The Motley Fool UK.

More reading

• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• What’s wrong with Aviva and its share price?
• What sort of passive income stream could you build for a fiver a day?

Andrew Mackie has positions in Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

Building a second income may feel out of reach for anyone starting from scratch at 45. But with 20 years ahead until retirement, investors still have time to put compounding to work — and potentially build a £17,360 annual income stream in later life.

Starting later in life doesn’t mean building a second income is simply a case of investing more each month. While higher contributions can help, the real driver of long-term wealth is how long money is invested and how effectively it compounds over time.

Making up for lost time

Importantly, both scenarios in the chart below assume the same annual return of 8%. In other words, the rate of compounding is identical in each case.

Even with a 20-year horizon, those effects can still be powerful. The key is getting money into the market and allowing returns to build on themselves, rather than leaving cash on the sidelines.

The chart below isn’t just about contribution levels. Instead, it highlights how putting more money to work earlier — and keeping it invested — can significantly increase the income a portfolio is capable of generating over time.

Chart generated by author

The key takeaway is that both portfolios grow at the same rate. However, the higher monthly contribution simply results in a larger pool of capital for that same compounding effect to work on over time.

A steady income compounder

Headline-grabbing yields don’t come much higher than Legal & General (LSE: LGEN). With a forward dividend yield of around 8.2%, the appeal for income-focused investors is obvious. But the real attraction lies in the consistency of the cash generation behind it.

The group is not simply paying out a high dividend; it’s operating a business model built around long-term pension risk transfer, annuities, and asset management. That creates highly predictable, recurring cash flows that support both dividends and buybacks over time.

FY25 results reflected that resilience. Core operating earnings per share rose 9%, sitting at the top end of the firm’s long-term 6%-9% growth target range, while the Solvency II coverage ratio remained strong at 203%. Shareholder returns were further underpinned by a £1.2bn share buyback, funded largely through portfolio optimisation.

Looking ahead, structural demand in the UK retirement market remains a key driver. Defined contribution pensions are still expanding, and demand for annuity and pension risk transfer solutions is expected to remain strong over the long term. The company also retains visibility on a significant pipeline of potential deals, supporting medium-term income stability.

However, risks remain. As an asset-heavy insurer, it’s exposed to movements in bond markets and credit conditions. A sustained rise in defaults or a sharp deterioration in fixed income valuations could pressure both earnings and dividend capacity. Likewise, weaker equity markets could reduce assets under management and fee income.

Despite this, the core appeal remains unchanged: a high-yielding business with relatively visible cash generation, returning capital steadily through cycles rather than relying on short bursts of growth.

Bottom line

The chart above illustrates the power of compounding in building a second income over time. Legal & General operates on a similar principle internally: consistent cash generation is reinvested into shareholder returns, primarily through dividends and buybacks, allowing investors to benefit from compounding at both the portfolio and business level.

The post No savings at 45? Here’s how investors could still build a £17,360 second income appeared first on The Motley Fool UK.

More reading

• Is this the perfect time to consider buying Legal & General shares?
• I asked ChatGPT for the best stock to buy in my ISA for passive income. Here’s what it said…
• Here’s why SIPP investors love these 2 top UK dividend stocks
• 57,584 shares of this high-yield dividend stock pay income equal to the State Pension
• Could £20,000 invested in these 5 dividend shares produce £14,760 of passive income over the next 10 years?

Andrew Mackie has positions in Legal & General Group Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

Owning high-quality UK shares can help investors build substantial passive income in retirement. But with markets exhibiting significant volatility recently, many investors are stepping aside and hiding in cash. Is this a costly mistake?

Time in the market

Not everyone has £10,000 available to invest as a lump sum. But the principle remains the same: over long time horizons, investing has historically outperformed holding cash.

Yet in periods of heightened volatility, many investors hesitate to invest and instead allow cash to sit on the sidelines. Over time, that caution can quietly turn into a habit — with money only being invested later, rather than immediately.

One common example of this is waiting until the end of each ISA season before putting money to work. While it may feel harmless in the short term, this repeated delay can have a meaningful impact on long-term portfolio growth.

£41k boost

The chart below illustrates this clearly. A £10,000 annual investment into a Stocks and Shares ISA over 20 years produces a noticeable difference in final portfolio value depending on when the money is invested.

Although the return assumption of 9% is identical in both scenarios, small differences in timing compound significantly over long periods. In this example, the gap builds to around £41,000.

To put that into context, using the 4% withdrawal rule, a portfolio of roughly £553,000 could generate around £1,845 a month in passive income.

Chart created by author

Where volatility creates opportunity

Periods of market hesitation don’t just affect when investors buy — they can also influence what they choose to buy.

When uncertainty rises, many investors step away from the market entirely, but others simply avoid certain sectors they believe are too exposed to volatility. That can create short-term mispricing in high-quality businesses that ultimately continue to generate strong cash flows over time.

An example is BP (LSE: BP.), which has seen investor sentiment swing sharply in recent years as energy markets, geopolitics, and strategy shifts have driven significant volatility in its share price.

Strong cash flows

One point often overlooked is that despite strategic missteps in its low-carbon transition and associated write-downs, BP has remained a significant cash-generating business.

The figures below highlight this clearly:

Last year, amid weak oil prices, the company still generated significant free cash flow, more than enough to support its growing dividend.

With prices now stronger, the business also has greater scope to accelerate balance sheet deleveraging than previously expected.

The new management team has already signalled a move towards simplification, with a sharper focus on its core upstream and downstream operations.

Of course, the business remains highly sensitive to oil prices, and a sharp fall — for example, if geopolitical tensions ease materially — would present a clear risk.

But oil markets have always been cyclical and volatile. For long-term investors, the key question is not short-term direction, but whether the underlying cash generation remains durable over time. With global energy demand still structurally supported, the current environment may be offering long-term investors an opportunity, even after the recent strength in the share price.

The post Here’s how a £10k ISA could generate £1,845 in monthly passive income appeared first on The Motley Fool UK.

More reading

• More oil wobbles as the BP share price dives 7% in a day!
• Up 50% in a year! Now check out the intriguing BP share price forecast for the next 12 months
• A stock market crash this summer? Here’s how it could help
• Why are some investors rushing to sell BP shares?
• BP share price forecast: can oil prices and buybacks push the stock higher in 2026?

Andrew Mackie has positions in Bp P.l.c. The Motley Fool UK has no position in any of the shares mentioned. 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.

Aviva (LSE:AV.) shares have delivered a strong long-term return. Once seen as a dull income stock, the share price has risen 56% over five years, turning a £7,500 investment into £11,700.

But that’s only part of the story. Over the same period, investors would also have received £3,025 in dividends, lifting the total return to almost double the original investment. Not bad for a ‘boring’ stock. The issue now is whether the insurer can keep compounding from here.

Growing dividend

As the following chart shows, the company has delivered strong dividend compounding in recent years, with dividends per share growing at a compound annual rate of 15.5%.

Chart generated by author

This has not come from luck or one-off gains. It reflects a deeper shift taking place within the business as it moves towards a more capital-light model.

That shift matters because it changes the quality of the earnings base supporting the dividend. Rather than relying purely on traditional, capital-heavy insurance returns, a growing share of profits now comes from wealth, pensions and fee-based businesses.

These areas generate more predictable cash flows and require less balance sheet strain, which in turn supports higher and more sustainable capital returns over time.

In simple terms, the company isn’t just paying a dividend — it’s steadily building the capacity to grow it.

Diversified business model

What stands out in Aviva’s latest update is how broad-based the progress has become. Management has already delivered its 2026 targets a full year early and has upgraded its medium-term ambitions. That matters because it signals execution is running ahead of expectations.

Crucially, all parts of the business are now firing on all cylinders. General insurance continues to benefit from scale advantages and disciplined underwriting. Wealth is growing strongly, supported by rising inflows and assets. Retirement and protection also continue to deliver steady, recurring earnings.

In other words, this is no longer a single-driver insurance story.

The key takeaway is that performance is now coming from across the group at the same time, rather than relying on one core engine. That creates a more resilient and self-reinforcing earnings base.

The result is a business that’s not just growing, but compounding faster than the market currently expects.

What could go wrong?

The main risk for Aviva is no longer whether the business is improving (it clearly is) but whether too much of that improvement is already reflected in expectations.

The group has already delivered its 2026 targets ahead of schedule, which raises the bar for future performance. At this stage, even a small slowdown in earnings momentum or capital generation could lead to volatility in sentiment.

There are also more traditional risks. Insurance profitability can be impacted by higher claims inflation, particularly in motor and health. Investment returns also remain sensitive to movements in bond yields and wider financial markets.

Bottom line

Aviva has already delivered a significant transformation in recent years, and the financial results increasingly reflect that shift.

The key question for investors is whether the company’s improvement is already reflected in the share price. With earnings momentum, capital strength and diversified cash generation all moving in the right direction, it’s certainly a business investors may want to take a closer look at. But it’s not the only opportunity on my radar right now.

The post £7,500 invested in Aviva shares 5 years ago is now worth… appeared first on The Motley Fool UK.

More reading

• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• Trying to make a million from FTSE 100 shares? Here’s where to start today
• What’s wrong with Aviva and its share price?

Andrew Mackie has positions in Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

Over the last five years, National Grid (LSE: NG.) shares have lived up to their reputation as a reliable dividend payer. A £5,000 investment would have generated around £1,660 in passive income alone.

But it’s not just about income. The share price has also risen around 58%, taking the total return to roughly £9,560 – equivalent to an annual return of 14%.

That’s the part many investors overlook. So-called income stocks aren’t just about yield — they can quietly build substantial wealth over time through a combination of dividends and steady capital growth.

The real question now is whether the stock can continue delivering that same compounding over the next five years.

Mispriced stock

What’s interesting about National Grid right now is not what the business is, but how the market is still pricing it.

For much of the past few years, sentiment has been shaped by higher interest rates. As bond yields rose, investors increasingly treated utilities as bond proxies, leaving the shares anchored to a ‘low growth, high income’ perception.

But that framing is starting to look outdated.

Electricity demand is no longer stable — it’s accelerating in ways many investors are still underestimating.

AI data centres are a clear example. They’re not just adding incremental demand; they’re creating concentrated spikes in electricity usage that existing grid infrastructure wasn’t designed to handle. In many regions, the constraint is no longer generation, but transmission capacity.

That matters because grid operators sit directly on that bottleneck.

Capital expenditure is shifting away from routine upgrades. It’s now driven by demand-led expansion and structural capacity shortages rather than regulatory cycles alone.

Electrification of transport and heating is adding further pressure. EV adoption and industrial electrification are accelerating the shift onto the grid.

Taken together, this creates a very different backdrop from the ‘slow utility’ narrative the market still leans on.

Risks

As a heavily regulated utility, the company’s returns are ultimately set through negotiations with policymakers. If outcomes are less favourable than expected, allowed returns could fall, impacting earnings and shareholder value.

This is amplified by the group’s large, capex-heavy investment programme, which is funded in part through leverage. Higher interest rates or weaker regulatory settlements could therefore pressure both the balance sheet and long-term returns.

What’s the verdict?

What ultimately matters for National Grid is not short-term sentiment, but the steady expansion of its regulated asset base — the capital it’s allowed to earn returns on.

Every pound invested into upgrading and expanding the grid is added to this asset base, and regulators then set returns on that growing pool of capital. In other words, the more efficiently it invests in essential infrastructure, the larger its earnings base becomes over time.

This is why demand matters so much. Rising electricity usage from AI, electrification and data centres is not just a volume story. It directly drives more grid investment and grows the asset base, which supports long-term cash flows.

In its latest year, the regulated asset base grew at around 10%, highlighting the strength of this compounding mechanism even in a higher-rate environment.

It’s this combination of visibility, inflation linkage and structural demand growth that drives my view. The market still underestimates the long-term income potential. That is why I recently added it to my position.

The post £5,000 invested in National Grid shares 5 years ago is now worth… appeared first on The Motley Fool UK.

More reading

• How to turn a Stocks and Shares ISA into £10k of annual passive income
• Could National Grid shares offer me a dividend that won’t be hurt by inflation?
• The FTSE 100 looks a lot like the late ’90s. Are we heading for a 2000-style crash?
• £20,000 invested in the stock market a year ago is now worth…
• Is now a great time to start aiming for a £1m Stocks and Shares ISA?

Andrew Mackie owns shares in National Grid. The Motley Fool UK has recommended National Grid 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.

The FTSE 100 slipped on renewed tensions this morning (13 April). But the real issue isn’t why it’s falling — it’s what’s suddenly become cheaper.

A contrarian opportunity?

Recent trading data from AJ Bell suggests many investors have been taking profits in BP (LSE: BP.) after its strong run. That’s understandable.

But today tells a slightly different story. While the FTSE 100 has slipped, BP shares have been pushing higher as oil prices rebound on renewed tensions.

That divergence is telling. Short-term sentiment may be shifting, but the underlying earnings story remains firmly tied to energy markets that are strengthening again.

For me, the key point isn’t whether the rally has run out of steam — but whether this is simply another pause before the next leg higher.

The bigger picture hasn’t weakened

While short-term sentiment continues to swing, the underlying investment case for BP hasn’t deteriorated — if anything, I think it has strengthened.

The company has reoriented its strategy back towards higher-return upstream oil and gas, improving the quality and visibility of future cash flows. At the same time, portfolio simplification is steadily reducing complexity and improving capital efficiency.

That matters because the oil major is no longer trying to be everything at once. It’s increasingly focused on areas where returns are structurally higher and more predictable across the cycle.

Put simply, the business is becoming more tightly aligned to the very drivers that move its earnings — not less.

For long-term investors, that shifts the debate away from short-term oil moves and towards the durability of the company’s cash-generating capacity over time.

The main short-term risk for BP is a renewed fall in oil prices if geopolitical tensions ease or global growth slows, which would quickly hit cash flow and sentiment.

On the other side of the cycle, sustained higher prices could prompt governments to impose additional taxes or windfall levies on energy companies, potentially limiting returns even as conditions strengthen.

Nevertheless, with exceptional cash generation, I’ve been adding to my position recently.

Why the market may be missing it

One interesting signal is that Aviva (LSE: AV.) hasn’t featured heavily in recent buy or sell data from AJ Bell, suggesting investor attention may be fading after a strong 2025 run.

But that may say more about sentiment than fundamentals.

What the market may be overlooking is how much the group’s earnings mix has already shifted. It’s no longer reliant on a single cyclical insurance engine, with a growing share of profits now coming from wealth, pensions, and fee-based businesses that generate more stable cash flows.

That matters because it changes the dividend story. It’s increasingly supported by recurring, capital-light earnings rather than pure insurance cycles.

Cash generation remains strong, capital returns are rising, and management continues to upgrade targets after early delivery of previous goals.

Of course, risks remain. A weaker economic backdrop or rising inflation could hit bond valuations in its portfolio, putting pressure on capital positions and returns.

Aviva has already surprised the market once. With a more capital-light model now embedded, it may not be the last time. For long-term investors, the market may still be underestimating the compounding under way. That’s why I view the stock as one to consider.

The post As the FTSE 100 dips again, here’s what I think smart investors do next appeared first on The Motley Fool UK.

More reading

• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• More oil wobbles as the BP share price dives 7% in a day!
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• Up 50% in a year! Now check out the intriguing BP share price forecast for the next 12 months

Andrew Mackie has positions in Aviva Plc and Bp P.l.c. The Motley Fool UK has no position in any of the shares mentioned. 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.

Passive income is often thought of as something simple: buy a high-yield stock, sit back, and collect the income.

But in reality, sustainable passive income in the stock market rarely works like that.

The strongest long-term income streams are built from owning quality businesses with growing cash flows, where dividends are supported by genuine earnings power and reinforced by compounding over time.

By contrast, chasing headline yields can be misleading, often prioritising short-term income over long-term durability.

The real ‘work’ in passive income investing isn’t effort in the day-to-day sense — it’s the discipline of selecting the right businesses and the patience to let compounding do its job over years, not months.

Blue-chip stock

One business I have long admired is Aviva (LSE: AV.). The headline many investors will focus on is that juicy 6.2% dividend yield. However, I view it less like a traditional income stock and more like a classic compounding machine hiding in plain sight.

The key shift over the past few years has been its move towards a more capital-light business model, driven by expansion into wealth management, insurance services, and other fee-based businesses. These areas require less balance sheet intensity, but generate more stable and scalable returns over time.

Strategic moves such as the acquisition of Direct Line have reinforced this shift, strengthening its position in the low-cost insurance segment through brands including Churchill. The deal also creates scope for meaningful cost synergies.

In simple terms, Aviva is gradually evolving from a capital-heavy insurer exposed to market cycles into a more diversified financial services group with increasingly predictable cash flows.

Compounding in action

What stands out is how clearly this transformation is already showing up in the numbers.

Operating profit rose 25% to £2.2bn, with earnings per share hitting 56p and return on equity climbing to 17.5%. Cash remittances increased to £2.1bn. With figures like these, it’s little surprise the group reached its 2026 targets a year early.

Crucially, that growth is translating into cash. Stronger capital generation has supported a 10% dividend increase, alongside a higher level of share buybacks.

That consistency matters. Over time, it is the ability to generate and return cash — year after year — that drives compounding for shareholders.

With earnings growing, cash flows strengthening, and capital returns increasing, the foundations for long-term income growth already look firmly in place.

Risks

Geopolitical instability remains a key risk for Aviva. Escalating conflicts or trade tensions could disrupt financial markets, drive inflation, and increase claims costs. Higher energy prices and supply chain pressures may squeeze margins, while cyber threats and market volatility could impact operations, capital strength, and the reliability of long-term returns.

Closing remarks

The key point is that passive income is rarely as passive as it appears.

It’s not simply about buying the highest yield and waiting. Instead, it’s about owning businesses capable of growing their cash flows over time — and having the patience to let that process play out.

That distinction matters. A high yield can disappear quickly if it’s not supported by underlying earnings. But a business that consistently generates and grows cash can increase income year after year. Aviva is one such example. But it’s far from being the last.

The post Passive income: what most investors get wrong appeared first on The Motley Fool UK.

More reading

• These 5 FTSE 100 shares all offer dividend yields well above average!
• How much do I need in an ISA for a £668 monthly second income?
• Here’s how to target a £50 monthly passive income in a Stocks and Shares ISA
• Trying to make a million from FTSE 100 shares? Here’s where to start today
• What’s wrong with Aviva and its share price?

Andrew Mackie has positions in Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

Many investors treat their Stocks and Shares ISA as something to sort out later in the tax year. After all, as long as the money goes in before the deadline, it shouldn’t really matter — right?

In reality, that delay could quietly cost thousands over time. The difference comes down to one simple factor: how long your money is working for you. Because when it comes to investing, even a few extra months of compounding each year can add up to a surprisingly large gap over the long run.

Maximise compounding

Over 25 years, the timing of ISA contributions creates a surprisingly large gap in wealth.

In this example, two investors both contribute £5,000 a year and earn the same 8% return. The only difference is when the money is invested.

One invests at the start of each tax year. The other waits until the end. That gap may feel insignificant in any single year, but compounding quietly amplifies it over time.

As the chart below shows, the divergence gradually builds into a final portfolio value difference of roughly £26,000.

Chart created by author

Compounding in real markets

If a simple timing difference can create such a significant gap in a passive ISA portfolio, the same principle becomes even more powerful when applied to real-world stock market investing.

Unlike smooth compounding models, equity returns are uneven. A large proportion of long-term gains often comes from relatively short bursts of performance. That means being invested — and invested early — can matter far more than most investors realise.

A good example is BP (LSE: BP.). Over shorter periods, the share price can be heavily influenced by swings in oil prices, macro shocks, and shifting sentiment. This has been clearly evident recently.

But over decades, the real driver of returns has been the underlying cash-generation engine — production, cost discipline, and the ability to return capital through dividends and buybacks.

Dividends

This cash-generating engine is effectively compounding in action, but within BP rather than an investor’s ISA portfolio.

Even through oil price volatility, BP’s cash flows remain resilient. And it is this free cash flow that ultimately underpins dividend sustainability in a capital-intensive business.

Viewed through this lens, BP’s dividend is not a static payout, but the output of a compounding cash engine. That has enabled both sustained dividend payments and growth at a compound annual rate of around 11%, alongside ongoing buybacks.

Like all stocks, BP is not without risk. Higher oil prices can be a double-edged sword — if they rise too far, they can eventually dampen demand and tip economies into recession.

There are also execution risks around large upstream projects, as well as regulatory and political intervention in energy markets, which could affect capital allocation and long-term returns.

Bottom line

The real edge in investing is not timing the market, but time in the market. As both ISA compounding and companies like BP show, small delays compound into large long-term gaps. Most investors underestimate this. The real question is whether your money is working for you right now — or sitting on the sidelines, quietly costing you future wealth.

The post This simple Stocks and Shares ISA move could be worth thousands over time appeared first on The Motley Fool UK.

More reading

• More oil wobbles as the BP share price dives 7% in a day!
• Up 50% in a year! Now check out the intriguing BP share price forecast for the next 12 months
• A stock market crash this summer? Here’s how it could help
• Why are some investors rushing to sell BP shares?
• BP share price forecast: can oil prices and buybacks push the stock higher in 2026?

Andrew Mackie has positions in Bp P.l.c. The Motley Fool UK has no position in any of the shares mentioned. 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.

The Fresnillo (LSE: FRES) is back in focus today (8 April), emerging as one of the standout movers in the FTSE 100. After a six-fold surge in 2025 followed by a bruising 30% decline in recent months, the question now is whether sentiment is beginning to turn again for one of the index’s most extreme cyclical performers.

Macro reset

Over the past few weeks, many investors have been puzzled by the lack of strength in precious metals following heightened geopolitical tensions in the Middle East. In fact, prices have been relatively subdued.

Now, with a temporary ceasefire in place, metals are beginning to move higher again. So what has actually been driving the volatility?

Part of the explanation may lie in positioning. When silver surged to around $120 before falling sharply by 30% in a single session, a significant amount of speculative excess was flushed from the market. That kind of move tends to reset positioning and remove froth.

But beneath the surface, the broader macro backdrop remains largely unchanged. US debt has continued to climb, moving beyond $39trn, while the dollar has been gradually weakening over the past year.

Historically, a softer dollar tends to be supportive for precious metals as global investors seek alternative stores of value.

Silver story

Beyond the short-term noise, the more important driver for silver is the depth and breadth of industrial demand.

This is no longer a single-sector story. Silver now sits inside a wide range of critical technologies — from advanced electronics and data infrastructure to defence systems, EVs and renewable energy components. In many of these applications, there’s no simple substitute without a loss of efficiency.

What matters more, however, is the supply side.

New production cannot respond quickly. Developing a mine is a slow, capital-intensive process that can take well over a decade from discovery to full output. Even when prices rise sharply, output does not adjust in real time.

That creates a structural imbalance: demand is increasingly diversified and growing, while supply remains rigid. In fact, the market has spent multiple recent years in deficit, with demand consistently running ahead of new supply.

This is why price volatility can look extreme in the short term, yet the underlying market can still tighten over time.

Risks

Fresnillo is not immune to structural risks, even in a strong metals environment. The most immediate pressure point is energy costs, which represent the largest component of a miner’s cost base.

Recent volatility across energy markets is likely to lead the industry to increase hedging activity in future. This could potentially lock in a higher long-term cost base.

As always, mining remains capital-intensive, cyclical, and sensitive to both input costs and operational execution.

What’s the verdict?

The key question now is whether the worst of the sell-off is over and whether gold and silver have found a level of support after recent volatility. That remains uncertain.

However, Fresnillo’s latest results highlight a very different point: even at current prices, the business is generating substantial cash flow and record dividends.

This is a classic high-volatility, high-leverage miner. Prices will swing sharply, but the underlying cash engine is already working. For investors willing to tolerate the volatility, it remains a stock worth considering.

The post Fresnillo share price rebounds as a FTSE 100 top mover after a 30% sell-off — what’s next? appeared first on The Motley Fool UK.

More reading

• Consider these FTSE 100 bargain shares in a Stocks and Shares ISA!
• How to invest £5,000 in the FTSE 100 today

Andrew Mackie has positions in Fresnillo Plc. The Motley Fool UK has recommended Fresnillo 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.

The BP (LSE: BP.) share price is under heavy pressure today (8 April), sliding 8% in early trading as oil markets reacted to signs of de-escalation in the Middle East and improved supply security through the Strait of Hormuz. But after such a powerful rally, is this the moment sentiment flips — or the moment long-term investors step in?

Time to sell?

A ceasefire between Iran and the US was always likely at some point. It was never realistic to assume oil tankers could be blocked indefinitely. The real question for investors is whether this changes the BP investment case.

In my view, it does not. On the surface, the 8% fall in the share price reflects a sharp unwind in oil prices as geopolitical tensions ease and the market begins to price out the ‘war premium’ that had supported crude in recent weeks.

In other words, this looks far more like a macro-driven reset in sentiment than any company-specific deterioration.

What has not changed overnight is the company’s underlying cash-generating engine. Production levels, a refocused upstream strategy, and balance sheet progress all remain intact.

In that sense, today’s move looks less like a structural warning sign and more like a volatility event layered on top of an unchanged investment case.

Cash flows

The oil major’s strategy reset remains the key investment narrative, in my view. Its renewed focus on upstream oil and gas has effectively redefined how the market should think about its financial performance.

Management is targeting a return on average capital employed of more than 16% by 2027, up from around 14% today. In simple terms, this means generating a higher percentage of profit from each pound of capital invested.

Alongside this, the group is guiding towards free cash flow growth at a compound annual rate of around 20%, highlighting the scale of the operational ambition.

At the same time, portfolio simplification is accelerating. The partial sale of Castrol and the disposal of its German refining assets point towards a leaner, more focused and ultimately more cash-generative business model.

That matters for the dividend. Despite heavy write-downs in its low-carbon portfolio and a challenging oil backdrop over recent years, the dividend has still compounded at roughly 11% annually since 2021.

Risks

The obvious near-term risk is that today’s move in oil prices proves the start of a broader reversal back towards the $50-$60 range seen over much of the past two years. That would quickly take considerable heat out of BP’s earnings momentum and temper expectations around cash flow growth.

There are also execution risks as the group leans further into upstream expansion, where project delays, cost overruns, or regulatory shifts can erode returns.

What’s the verdict?

Today’s sharp sell-off is certainly uncomfortable. But the bigger picture is what investors need to focus on.

Years of weak oil prices have meant the industry is no longer in a phase of aggressive overinvestment. In fact, some estimates suggest the sector is now underinvesting in sustaining production by $1bn–$2bn per day.

As rig counts fall and exploration budgets are cut, BP stands out with its renewed upstream strategy, supported by major recent discoveries in Brazil and a stronger production pipeline.

Ultimately, I believe the market will reward growing cash flow over time — which is why BP remains a stock to consider.

The post Has the BP share price rally just run out of steam? appeared first on The Motley Fool UK.

More reading

• More oil wobbles as the BP share price dives 7% in a day!
• Up 50% in a year! Now check out the intriguing BP share price forecast for the next 12 months
• A stock market crash this summer? Here’s how it could help
• Why are some investors rushing to sell BP shares?
• BP share price forecast: can oil prices and buybacks push the stock higher in 2026?

Andrew Mackie has positions in Bp P.l.c. The Motley Fool UK has no position in any of the shares mentioned. 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.