3 of the best shares I’d buy now in an ISA to make a passive income

These three companies could offer a generous passive income in 2021 and beyond. They could be among the best income shares to buy now.

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.

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.

Low interest rates have made obtaining a passive income even more difficult than it has been over recent years. Fortunately, a wide range of FTSE 350 shares currently offer high yields that could grow in the coming years.

Buying a diverse range of them may provide a resilient income return during what is likely to be a challenging period for the economy.

With that in mind, here are three UK stocks that I think could be among the best shares to buy now to make an income in 2021, and over the long run.

Obtaining generous passive incomes

GSK’s 5.8% dividend yield makes it one of the higher-yielding shares in the FTSE 100. However, it offers more than just a passive income. The company’s pipeline could positively impact on its financial performance. This has been relatively robust during recent economic challenges. The company’s planned restructuring could produce greater efficiency in the long run that allows for dividend growth after a lack of improvement in this area over recent years.

National Grid is another FTSE 100 stock with a high yield. Its yield of 5.7% is relatively high compared to its historic average. It suggests that investor sentiment towards the utility company is relatively weak. Yes, it faces the prospect of regulatory change it has a business model that is relatively uncorrelated to the performance of the economy. Its defensive characteristics and stable dividend could become more attractive should the economic outlook deteriorate.

Imperial Brands is another stock that offers a generous passive income at the present time. It yields over 8% from a dividend that is forecast to be covered 1.9 times by net profit this year. Certainly, the company is in the midst of a period of change under a new management team that is likely to shift its focus further towards next-generation products. Yes, this may cause some uncertainty in the short run. But it may lead to improving dividend prospects in the long run.

Building an income portfolio

Of course, obtaining a resilient passive income requires more than just a handful of stocks in a portfolio. Diversifying across a wide range of businesses from different sectors helps to reduce company-specific risk. This is the threat of poor performance from one company affecting the entire portfolio. As such, a diversified portfolio is more likely to offer a robust income return in the long run.

The FTSE 350 contains many companies that have a potent mix of high yields and strong track records of growing dividends. And there are opportunities for income-seeking investors to overcome challenges such as low interest rates. By adopting a long-term view of holdings, it is possible to enjoy a potent mix. That potentially means high yields, growing dividends and capital growth in a likely stock market rally as the economic outlook for the UK improves.

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.

Peter Stephens owns shares of GlaxoSmithKline and Imperial Brands. The Motley Fool UK has recommended GlaxoSmithKline and Imperial Brands. 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.

More on Investing Articles

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »

Investing Articles

£12K in savings? Here’s how I could turn that into £13K annual passive income

This Fool explains how investing a lump sum can help her build a passive income stream to enjoy in her…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s why Rolls-Royce shares are now set to fly over the £4 mark

Once again, Rolls-Royce shares are crushing the FTSE 100. Should I add to my holding of this stock at the…

Read more »

Investing Articles

1 under the radar FTSE 100 AI stock investors should consider buying

Our writer explains why this FTSE 100 pick could be a shrewd investment with its established experience of using AI…

Read more »

Investing Articles

Does the beaten-down Diageo share price make it a no-brainer buy?

Harvey Jones spent years waiting for the Diageo share price to look like good value, before finally buying it in…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

8%+ yields! Should I buy these FTSE 100 income shares this month?

Christopher Ruane weighs some pros and cons of two FTSE 100 shares, both of which have a dividend yield over…

Read more »