Investing in shares that pay dividends is a simple and popular way to aim for that extra cash without taking on a second job.

For Britons, one of the smartest ways to invest is with a Stocks and Shares ISA, because any gains earned here are free from income tax. Over time, that tax shield can make a noticeable difference, especially as income grows.

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.

So what does it take to generate £100 a week?

Maths time

A hundred quid a week is £5,200 a year. If an investor targets a dividend yield of 6%-7%, the maths is fairly straightforward:

• At 6%, it would require roughly £86,700 invested.
• At 7%, it’s closer to £74,300. 

Split the difference, and a realistic target sits at £75,000-£85,000. That may sound like a lot but it can be built over time.

The FTSE 100 has delivered annnualised total returns of about 9.5% over the past decade (with dividends reinvested). If that average holds, it would take about 10 years with an investment of £400 a month.

It might sound counterintuitive to spend money to make money, but once in place, it can pay itself off quickly. Plus, you end up with a solid pot of savings for retirement.

Which stocks?

Of course, stock selection matters. The London Stock Exchange is full of quality dividend stocks, but the biggest winners are often global businesses rather than UK-focused names.

Long-term outperformance tends to come from scalable models like data and software, or from well-timed exposure to cyclical sectors such as commodities and defence.

A good example is global information services company Experian (LSE: EXPN). This year’s been tough but between 2015 and 2025, it delivered a total return of over 310% — roughly 15% a year on average. That’s far ahead of the wider market.

Looking at its latest results, growth remains steady despite fears around AI risks. Revenue’s been rising in the high single digits, supported by strong demand for credit data and analytics, particularly in North America.

What’s the catch?

While Experian’s margins and cash generation are solid, it only pays a modest dividend with a yield of around 1%-2%. So after the 10-year growth period, an investor would need to pivot more into higher-yielding shares.

Valuation’s also a concern. The shares trade at a premium price-to-earnings ratio compared to the FTSE average. That reflects its quality, but it does leave less room for error.

If consumer lending activity slows or regulatory changes hit profits, the share price could take a hit.

So is it worth considering?

For long-term investors, Experian shows how combining steady growth with rising dividends can accelerate income over time.

With generally positive analyst sentiment, I think it’s worth considering. Many brokers rate the stock as a Buy or Hold, with forecasts pointing to continued earnings growth. 

It’s not the highest yielder but it demonstrates an important point: building a £100 weekly income isn’t just about chasing yield. Getting there requires a mix of income shares and high quality, growth-focused companies.

The post How much should someone invest to target a £100 weekly second income? appeared first on The Motley Fool UK.

Analysts, however, expect the stock to bounce back strongly. So with the average price target 54% above the current level of the stock, is this a rare chance to buy? 

A FTSE 100 heavyweight

Experian is one of the FTSE 100’s most impressive businesses. It has a big competitive advantage that doesn’t take huge capital investments to maintain. 

The firm’s edge comes from the data it uses to produce its reports. This comes from a vast number of sources and includes a lot of information that isn’t publicly available.

On top of this, Experian’s credit scores have been a key asset for US lenders wanting to resell mortgages they originate. While this has evolved recently, it’s still largely the case.

That’s why the company’s shares have always traded at above-average multiples. But the stock market currently thinks the business might become an artificial intelligence (AI) casualty.

The AI disruption threat

AI won’t be able to match Experian’s product – it doesn’t have the data. But the concern is that it might be able to offer a close-enough alternative at a fraction of the price.

The FTSE 100 firm has an extremely strong position in the mortgage market, but that’s only one part of the business. The rest is things like payday loans and credit cards. 

In these cases, lenders might think an AI-driven background check that uses less data is good enough at a much lower price. And that’s the real threat for Experian to deal with.

This is why the stock has been falling. But the question for investors is whether it justifies a 34% fall from its highs, or whether investors are overreacting to a new and unusual threat.

How resilient is the business?

There hasn’t yet been any sign of disruption in Experian’s results. The latest update reported 8% organic revenue growth and it expects this to continue in the next few months.

Investors, though, need to think carefully about this. With the kind of threat the company is facing, things can change suddenly and without warning. 

That means the insights investors can get by looking at past results are very limited. This is always the case to some extent, but it’s especially true with Experian right now.

If AI competition starts to make progress in key markets, the situation could change very quickly. So investors need to look past the numbers to assess the firm’s resiliency.

Time to buy?

At its highs, a £10,000 investment in Experian bought 244 shares. With the stock now well below that level, investors can get 373 shares for the same amount of cash.

Analyst price targets suggest the stock is expected to bounce back strongly in the near future. But I think investors need to be a bit careful with this one.

While its core mortgage business is very well-protected, I can see some big potential threats elsewhere. And those need to be taken seriously.

I think the rise of AI is creating some unusually good investment opportunities. But Experian isn’t the stock I’m scrambling to buy right now to take advantage.

The post £10,000 buys 373 shares in this FTSE 100 heavyweight that’s tipped to surge in 2026 appeared first on The Motley Fool UK.

Some high-quality blue-chip businesses have seen their share prices knocked down far more sharply than their underlying fundamentals. For investors with a long-term outlook, this could provide a chance to grab some undervalued shares before they rebound.

Experian

Despite strong fundamentals, Experian‘s (LSE: EXPN) share price has plunged about 40% over the past year. According to reports, the market fears that artificial intelligence (AI) might disrupt the company’s business model.

The question now is: will it find new ways to remain relevant in an increasingly AI-dominated world?

On paper, things still look good. Most notably, it boasts a stellar return on equity (ROE) of 27.6%, reflecting efficient profit generation from shareholder capital — well above industry averages.

The balance sheet and recent results are also impressive. Equity comfortably covers debt, revenue grew 5.8% year on year, and organic growth reached 8% in recent results. A majority of analysts give the stock a Strong Buy rating. Targets like 4,300p from UBS highlight optimism about its cloud migration and margin expansion.

Earnings per share (EPS) rose 15% even as the share price fell, reiterating the external impact of AI and potentially setting up a rebound if fears subside.

One key risk is sensitivity to interest rate shifts and lender caution. This could slow credit checks and fraud screenings (one of its main revenue drivers) if borrowing stays subdued longer than expected.

Considering Experian’s market-leading position, it seems unlikely that these temporary challenges are insurmountable. For patient investors, I think this price slump presents an opportunity worth exploring — and one I plan to capitalise on.

Sage Group

Shares in Sage (LSE:SGE) are down 39% in the past year, hitting new lows around 800p after analyst tweaks. But like Experian, its fundamentals remain solid. An exceptional ROE of 40% suggests excellent capital efficiency, with its net margin at a decent 14.68%.

Revenue climbed 7.76% year on year (averaging 6.9% historically), fueled by recurring SaaS subscriptions and cloud transitions in accounting software. Most analysts view it as a Strong Buy, with a board-approved buyback signaling potential undervaluation. It has a moderately low forward price-to-earnings (P/E) ratio of 15.9 and an acceptable P/E growth (PEG) ratio of 1.22.

Plus, EPS forecasts of 42p support dividend sustainability.

However, an increase in insider sales have raised eyebrows. Total insider ownership remains below 1%, so the impact is minimal, but the sentiment is concerning. But a more pressing risk is elevated debt — more than double equity. That could strain finances or lead to a default if earnings slip amid economic slowdowns or delayed cloud adoption.

To some degree, the company’s solid cash flow and strong ROE mitigate this risk. Plus, the share price decline appears overstated due to sector rotation away from growth tech. 

For risk-tolerant buyers eyeing long-term compounding, this could be an opportunity to grab some shares in a growing firm with loyal enterprise customers. The tech rally might be cooling off in the short-term, but Sage remains a compelling stock worth considering.

The post Thank goodness I avoided these 2 FTSE 100 stocks a year ago. Should I consider them today? appeared first on The Motley Fool UK.

There are good reasons to be uncertain about AI winners and losers. But investors in general should consider adding some diversification to their portfolios, rather than just taking a side.

AI outcomes

I’m sceptical of anyone who claims to know with certainty what AI is going to mean for businesses over the long term. Moving share prices might present opportunities, but there’s inevitably risk.

One example that stands out to me is Experian (LSE:EXPN). The FTSE 100 company makes money by selling credit scores to lenders that helps them assess potential borrowers.

The risk is that AI might be able to allow banks to run their own assessments. That would significantly reduce their dependence on Experian and limit its ability to increase prices.

This, however, wouldn’t be entirely straightforward. Experian has a huge database that is virtually impossible for a newcomer to replicate and this should make its outputs more accurate and reliable.

The question, though, is whether lenders will care. For something like a mortgage, the risk is huge, but that’s only a small part of the business and the risk is much lower with payday loans or credit cards. 

With the stock down 36% in the last 12 months, I think it might be worth considering. But there’s a lot of uncertainty that investors need to be prepared to cope with going forward.

Away from AI

A bit further away from the cutting edge of AI, there are some interesting businesses in the FTSE 250. Two that stand out to me are Greggs and JD Wetherspoon. 

Importantly, both companies have strengths that give them unique advantages over competitors. If a business doesn’t have this, it’s hard to see it as a good long-term investment opportunity.

Both companies use their massive scale to generate cost advantages. And rather than using these to boost their own margins, they use them to keep prices down for customers.

That makes them a nightmare for competitors. It’s virtually impossible to make any money by selling sausage rolls for less than Greggs or pints for less than JD Wetherspoon. 

Could this be disrupted by AI? Maybe – if it results in significant job losses, consumers might have to pull back their spending and this could cause demand to fall. 

My sense, though, is that value choices are ones that people might find themselves trading down to. And I don’t think anything has an appeal that’s as durable as offering customers low prices.

What to invest in?

AI has been the stock market’s main theme recently – and with good reason. But investors don’t have to get involved in every emerging opportunity, especially when they’re hard to assess.

There are lots of quality businesses that are much more straightforward. And that simplicity doesn’t have to come at the expense of quality. 

So the question for investors is why not take a look at the likes of Greggs and JD Wetherspoon? Whatever happens with ChatGPT, my guess is they’re going to be around for a long time.

The post Not sure what to think about AI? Check out these FTSE 250 gems appeared first on The Motley Fool UK.

Entain shares plunge

The first is gambling and sports betting group Entain (LSE: ENT). I ran the rule over it last June, after the board upgraded its revenue forecast for BetMGM, its 50:50 joint venture with MGM Resorts.

Broker UBS was enthusiastic. It argued that while Entain was steadily improving operationally, the shares were still trading at a 20% discount to rivals. UBS upgraded the stock to Buy and lifted its target price to 920p. Oops. Today, Entain trades at 600p. Over one year its shares are down 13.7%, and 60% over three.

I’m not a huge fan of betting shares and it didn’t help that Entain had to stump up £585m following a bribery probe linked to its former Turkish business in 2023. Tighter gambling rules in the UK and Netherlands have weighed on profits, while fears of higher UK taxes came true in November’s Budget. Remote gaming duty was almost doubled, from 21% to 40%. Entain estimates this will cost it £200m a year.

The shares still have plenty of fans. Nineteen analysts offering one-year forecasts produce an average target price of 1,013p. That’s almost 70% above today’s level.

After a tough year, Entain may be due a recovery. However, I suspect many of those forecasts pre-date the latest share price slide. With a price-to-earnings ratio of around 20, the shares are also more expensive than I expected. Entain could bring real excitement this year, and high-risk investors might consider a punt. But it still isn’t for me.

Experian plunges too

January’s other big loser was Experian (LSE: EXPN). As a credit bureau it operates in a more respectable line of work, but this stock turns out to be a gamble too.

Here, investors are worried about artificial intelligence. Experian owns vast amounts of consumer and business data, but will customers still pay if AI tools can provide similar answers?

On balance, I think they might. I’ve learned not to rely on ChatGPT for financial data. Even basic facts like stock P/E ratios or dividend yields can vary wildly depending on the source. It’s nowhere near ready to replace Experian’s proprietary data.

The board insists AI will actually work in its favour, by allowing it to enhance its services. Yet even after a $1bn share buyback gave the stock a lift on 30 January, it’s down 30% in a year.

Again, analysts appear optimistic about the year ahead, setting a one-year target price of 4,201p. That’s a blistering 52% above today’s 2,761p. As with Entain, many of these forecasts may predate the recent drop.

Despite its troubles, Experian has a P/E of 24. I think that’s a bit expensive for what may ultimately prove a binary bet on AI. I’ll look elsewhere for my next recovery play. I can see plenty of exciting opportunities on the FTSE 100, and with fewer risks. I’ll research them instead.

The post I dodged a bullet with these two crashing UK shares – should I buy them today? appeared first on The Motley Fool UK.

According to City brokers, the following two FTSE 100 stocks could be joining in the fun by this time next year.

Software Armageddon fears

The most eye-popping City analyst target I saw recently was on London Stock Exchange Group (LSE:LSEG). On 27 January, Citigroup reiterated its Buy recommendation, with a 13,100p price target.

While that was slightly below the old target of 13,300p, it’s still a whopping 60% above the current price.

Shares of the group, which provides financial data and analytics, have slumped 32% in a year. Some investors fear AI agents will soon be able to pull and analyse the same data that the firm provides for a fraction of the cost, making the firm’s expensive physical terminal obsolete. This is a potential risk. 

In reality, however, the group has recently partnered with both Anthropic and OpenAI (ChatGPT) to sell its real-time data. So AI could be as much of an opportunity as it is a threat.

With the shares trading for 18 times forward earnings, and the company expected to keep growing its dividend by 10% per year, the stock is worth assessing more closely while it’s out of favour.

Another AI ‘loser’?

Next, we have another tech stock in the shape of credit bureau Experian (LSE:EXPN). It’s slumped 31% in the past 12 months, and is now up just 8% over five years.

This is surprising because Experian’s huge treasure trove of consumer and business data had underpinned strong business and share price for many years. So it’s very rare to now see the stock badly underperforming the FTSE 100.

Why is the market skittish here? Well, it’s almost certainly been dragged down by the AI-will-destroy-software trade. But Citigroup believes Experian will prove to be more of a beneficiary than a casualty of AI, and I agree with this (it has hard-to-replicate datasets).

However, the company behind the FICO score in the US has started selling its scoring services directly to mortgage lenders at lower prices. So there’s potential competitive challenges in its key North American market, and this has also been weighing on the stock. 

Even with these threats, the stock now looks too cheap to me. It’s trading at just 20 times forward earnings. Historically, Experian has always commanded an earnings multiple well north of 30, so this is a savage rerating.

If analysts rather than the market are right though, there could be a lot of value on offer here. The average target is now 4,195p — an incredible 52% above the share price!

In a show of confidence, Experian has just announced a mammoth new $1bn share buyback programme.

Foolish takeaway

Are these price targets realistic? I’m not sure they are because currently the market is avoiding most software/data stocks like the plague due to fears about AI disruption.

With the AI revolution just getting started, these fears could linger for some time, keeping pressure on high-quality tech stocks.

That said, there will be plenty of babies getting thrown out with the bathwater right now. And I think these FTSE 100 shares may well be two of them.

The post 2 FTSE 100 shares tipped to grow 50% (or more) by 2027 appeared first on The Motley Fool UK.

The company is one of the UK’s most obvious candidates to benefit from the rise of AI. And it’s currently trading at some unusually low valuation multiples, so investors might want to take a look.

AI credentials

Artificial intelligence looks like a double-edged sword for companies. Some are set to make much more powerful products, while others are likely to see barriers to entry fall away.

A good example is Duolingo. The stock has crashed because the company has stated that it can now make language courses much faster than before using AI.

The firm presented this as a good thing, but the market thinks otherwise. The concern is that if AI can make language courses for Duolingo, it should be able to do this for anyone else.

Experian, however, looks like it’s in a very different position. Artificial intelligence might well allow it to produce better products, but it has a unique advantage that’s almost impossible to replicate.

The FTSE 100 firm has data from over 12,000 sources, many of which would have no incentive to offer information to a new entrant into the market. That makes it almost impossible to replicate.

This means that Experian should still have a huge advantage over competitors even if AI makes it easier to create similar products. And that’s the crucial point for investors looking at the stock.

Why’s the stock going down?

Given this, there’s an obvious question as to why the price is going down. And the answer is that one of its largest markets – the US – is facing a structural challenge. 

Low interest rates in 2020 and 2021 mean a lot of homeowners have very attractive mortgages. This gives them a strong reason to avoid moving, restricting the supply side of the housing market.

That’s the big challenge – and the big risk – for Experian at the moment. But the firm’s latest update gives investors a lot of reasons for optimism and the stock is unusually cheap at the moment. 

Despite the challenges, organic revenue growth in the US came in at 10% in the most recent results. That’s a strong performance that highlights the FTSE 100 company’s continued importance. 

The stock is also trading at price-to-earnings (P/E) and price-to-book (P/B) multiples around 25% below their averages since 2020. Given this, I think this could be the best time to take a look in years.

An unusual opportunity

Experian’s core strengths are well-known. It has a competitive position that’s virtually impossible to replicate in an industry that is extremely important.

As a result, the stock is almost never cheap and a P/E ratio of 26 is still higher than the FTSE 100 average. But this is well below its usual multiple, which is why I think this looks like an opportunity.

AI looks like a double-edged sword, but I think Experian is set to be a clear beneficiary. As a result, I’m looking seriously into adding this to my portfolio in February.

The post A rare chance to buy 1 of of the UK’s top AI stocks at a bargain valuation? appeared first on The Motley Fool UK.

I’m very keen to add them all to my portfolio, but buying at the wrong price is always a bad idea. So a stock market crash – or something of that sort – could be just what I’m looking for.

Experian

There aren’t many FTSE 100 stocks that I think are genuinely expensive right now. But Experian (LSE:EXPN) is one of them – and there are good reasons why this is the case. 

The business is incredibly difficult to disrupt. Its credit scores are drawn from databases that are virtually impossible for new competitors into the industry to replicate. 

On top of this, it sells a product to mortgage lenders that costs a fraction of the risk it helps protect against. That’s an incredibly strong position to be in. 

There have been concerns that Fair Isaac Corp might try to bypass the firm by going direct to lenders. That’s a risk that I think is serious at today’s prices but could be less so at lower ones.

Porvair

Porvair (LSE:PRV) is a stock I used to own, but I sold it when I thought it got too expensive. The firm makes filtration products that are used in laboratories and aircraft.

The latter has been absolutely flying recently – no pun intended. And that means the risk of a cyclical downturn (that’s naturally present in both markets) is unusually high right now. 

What really stands out, though, is that both markets are heavily regulated. This creates a significant barrier to entry for competitors and helps Porvair generate strong recurring sales.

With a market value of £373m, the stock is one a many investors might not have on their radars. But I think they should consider taking a closer look before the next market crash. 

Danaher

Danaher (NYSE:DHR) is an odd S&P 500 stock. Despite being firmly out-of-favour with the market at the moment, it still trades at some relatively high multiples. 

The firm is a US supplier of life sciences equipment. And it’s built a strong position by acquiring other businesses and helping make them more efficient.

Despite the industry being under pressure recently, Danaher shares have only faltered slightly. That’s actually quite impressive for a stock trading at a price-to-earnings (P/E) ratio of 46.

Regulation is a risk in this industry and this is playing out at the moment. So while I want to own the stock very much, I find it hard to justify paying today’s prices. 

Crash opportunities

As I see it, investing is about balancing two things. One is being on the lookout for buying opportunities and the other is being disciplined about valuations. 

I think almost every stock comes to trade at a bargain price at some time or other. And a stock market crash is the kind of thing that can make this happen. 

With that in mind, I think it’s a good move to have a set of ideas about which stocks to buy ready for when prices fall. And Experian, Porvair, and Danaher are three from my list.

The post 3 stocks I’m looking to buy in the next crash appeared first on The Motley Fool UK.

But earlier this month, the stock fell almost 6% on news of a potential threat to its business model. It didn’t last long though, so have I missed my buying opportunity?

What happened?

As a credit bureau, Experian collects and stores huge amounts of data about potential borrowers. When lenders want to assess risk, they ask the company for a credit score. 

It generates this by combining its own data with an algorithm it licenses from Fair Isaac Corporation (Fico). It then sells the end score to the potential lender.

Experian therefore operates as an intermediary between Fico and the banks. But earlier this month, Fico announced plans to license its algorithm directly to lenders. 

The move amounts to a pricing war. And it threatens the FTSE 100 company’s ability to charge a mark-up on its licensing costs, which has been a high-margin revenue stream.

How big is the problem?

Fico going direct to lenders doesn’t threaten to cut the credit bureau out entirely. Its data remains indispensable, but it could still mean a significant loss of revenue.

On top of this, there’s a possibility that Fico might have overplayed its hand. Together with Equifax and TransUnion, Experian has its own competitor to Fico – VantageScore.

Right now, Fico is the industry standard and US lenders need its scores to sell mortgages on to Fannie Mae and Freddie Mac. But that’s not guaranteed to last.

Given this, it’s certainly premature to write off Experian going forward. But with the stock now back where it was before the news, have I missed my opportunity?

Too late to buy?

Experian’s valuation metrics are roughly in line with their five-year average. So – on the face of it – the opportunity to buy the shares at an unusually good price has passed.

Despite this, however, the stock does trade at a discount to its US counterparts. As a multiple of earnings or free cash flows, the FTSE 100 firm is significantly cheaper.

The businesses aren’t identical. But they have a lot in common and are very similar in terms of a number of their most important competitive strengths and weaknesses.

It’s always better to buy a stock at a lower price than a higher one. But missing the recent drop in Experian shares might not automatically mean my opportunity to buy has passed entirely.

Competitive strengths

With any company that acts as an intermediary – as Experian does – there’s always a risk of suppliers trying to go direct to customers. But it’s not always as straightforward as that. 

Fico’s move is a bold one, but it puts it into competition with its key suppliers. And as things stand, Experian’s data can’t be removed from the picture entirely.

The stock market has recovered from its initial reaction to the news and has gone back to focusing on the credit bureau’s key strengths. As a result, the stock has bounced back. 

Despite this, I think it might still be worth considering. Compared to its US counterparts, shares in the FTSE 100 firm look significantly more attractive to me.

The post Have I just missed my chance to buy this world-class FTSE 100 stock? appeared first on The Motley Fool UK.

There are two parts to it. The first focuses on the business and its competitive position and the second involves trying to work out what price to buy it at. 

Part 1: the business

In my view, the most important thing when it comes to investing is the underlying business. And as a long-term investor, I’m looking for companies that can endure well into the future.

This means I’m trying to find organisations that have something that can keep them ahead of any potential competitors for a long time. And Experian’s (LSE:EXPN) a good illustration of this. 

The FTSE 100 credit bureau has a vast database of information about potential borrowers. And importantly, it’s virtually impossible for a new entrant into the market to replicate this.

Experian’s business involves using an algorithm licensed from Fair Isaac Corp (FICO) to generate a credit score for potential borrowers. It then sells both the score and the data to mortgage resellers.

Recently though, FICO’s said it plans to license its score directly to resellers, bypassing Experian (as well as Equifax and TransUnion). But I think this reveals the FTSE 100 company’s strength.

Even with FICO going direct to resellers, Experian’s data is indispensable for resellers looking to generate a FICO score. So while it’s a potential disruption, it shows the value of the firm’s data.

Part 2: valuation

Working out what gives a company strong long-term prospects though, isn’t the one part of how I evaluate stocks as potential buys. If it was, investing would be a lot easier.

Shares in even the best business can be bad investments if they’re bought at the wrong prices. So the second part of my process involves thinking about valuation. 

In the case of Experian, the stock trades at a price-to-earning (P/E) ratio of 36. That seems very high, but a closer look at the company’s financials reveals something very interesting.

Over the last 10 years, the firm has consistently generated more cash than its official net income. And this is true even adjusting for the non-cash costs that result from using shares to pay staff.

Adjusting for this, Experian shares are currently trading at a multiple closer to 23. That’s still well above the FTSE 100 average, but it’s significantly lower than it initially seems. 

The trouble is however, FICO looking to go direct to mortgage resellers is likely to cut into sales. And the current multiple arguably reflects expectations of earnings growing, not contracting. 

Should I buy it?

Experian’s in an interesting position at the moment. The threat of FICO licensing its algorithm directly to mortgage resellers is something I’m thinking about carefully. 

The effect of losing revenue from FICO scores could be significant on the firm’s bottom line. But resellers will still need the FTSE 100 company’s data. 

There are still gaps I need to fill in my analysis of Experian and the value of its database without FICO scores included. I think however, taking a closer look could potentially be very rewarding.

The post Here’s my method for finding shares to buy appeared first on The Motley Fool UK.