Making a passive income has been a challenge for ISA investors in 2020. Many FTSE 100 and FTSE 250 shares have cut or cancelled their dividends in response to coronavirus and the market crash.
However, a number of companies continue to pay attractive dividends that could improve your level of income.
Here are two such examples. They could be worth buying today and holding for the long run as part of a diverse portfolio of shares.
A resilient passive income opportunity
National Grid’s (LSE: NG) robust business model could make it an attractive means of making a passive income in 2020. The utility company has a long track record of being relatively unaffected by periods of weak economic growth. Therefore, it may be able to offer modest dividend growth in the coming years.
Its recent results showed it’s making progress in becoming more efficient. For example, £100m in savings were delivered in the most recent 12-month financial period. It’s also investing heavily in its asset base, with record capital expenditure of £5.4bn.
Looking ahead, National Grid expects to deliver asset growth of 5-7% per annum. It also anticipates Covid-19 won’t have a material impact on its financial performance in the long run.
As such, now could be the right time to buy while it offers a dividend yield of 5.4%. It could prove to be a solid passive income option at a time when many FTSE 100 and FTSE 250 companies are facing challenging prospects. And that may impact on their capacity to pay rising dividends in the coming years.
A FTSE 100 growth opportunity
BHP (LSE: BHP) may not be an obvious choice when it comes to making a passive income during a period of weak economic performance. After all, commodity stocks have historically been negatively impacted by slowing global GDP growth.
However, the diversified mining company’s financial prospects are relatively encouraging. For example, it’s forecast to post a 4% rise in net profit next year. And, with its recent results showing it has a solid financial position, it seems to be well-placed to deliver improving profitability in the long run.
In terms of BHP’s passive income potential, the company’s dividend yield currently stands at around 6.3%. This is higher than the income returns available across much of the stock market. It suggests the stock offers a wide margin of safety. That means it can produce an attractive income return even if it experiences an increasingly difficult outlook.
Of course, over the long run, the prospects for a global economic recovery seem to be relatively bright. Therefore, alongside its income potential, BHP could deliver an attractive rate of capital growth that helps to grow the size of your ISA portfolio. This could make it easier to generate a worthwhile income in older age.
Peter Stephens owns shares of BHP Group. 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.