There are two main ways to tuck money away in the tax-free wrapper. The first is through a Cash ISA, which is effectively just a savings account, but with no tax on the interest. The second is via a Stocks and Shares ISA. At The Motley Fool, this is the one we favour. That’s because history shows over the longer run, equities deliver a vastly superior return to cash deposits.

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.

Cash or equities, there’s only one winner

New research from Investing Insiders shows that in the last 10 years, the average Stocks and Shares ISA returned on average 9.5% a year, against just 4% from Cash ISAs.

My own figures show that if somebody had £10,000 in a Stocks and Shares ISA, and invested another £5,000 a year for 10 years, they’d have £109,975 at the end of it. By contrast, in a Cash ISA they’d have just £77,234.

The performance gap widens over time. In cash, they’d have £176,757 after 20 years. That’s less than half the £357,735 they’d get from shares (assuming those growth figures hold).

Cash ISAs are a great home for short-term savings, but for long-term wealth, the Stocks and Shares ISA is superior. So how big a pot does an investor need to generate income of £250 a week, which adds up to £13,000 a year? There’s a simple way of calculating this, known as the 4% rule. This says if you withdraw that percentage of your portfolio each year, your capital should never run dry. Using that, our investor would need £325,000.

However, if they invested in a spread of dividend shares with an average yield of 5% a year, and took that as their income, they’d need just £260,000.

Land Securities has a high yield

It’s actually possible to get a much higher yield than 5%. Real estate investment trust Land Securities Group (LSE: LAND) yields an impressive 7% a year. REITs come with tax advantages, as they pay no corporate tax provided they distribute at least 90% of taxable income to shareholders.

Land Securities, or Landsec, as it’s often called, runs a commercial property portfolio of offices, shopping centres and retail parks. While it’s an established FTSE 100 blue chip, it has had a tough run lately, along with the rest of the REIT sector.

The pandemic-era working-from-home trend hit office demand while the subsequent cost-of-living crisis hit bricks-and-mortar retail (as did e-commerce). Higher interest rates pushed up borrowing costs, and made it harder to dispose of properties at a profit.

Things looked more promising at the start of the year, as investors anticipated falling interest rates, but the Iran war has put a spanner in the works. Landsec still looks good value with a price-to-earnings ratio of 11.6 and is worth considering with a long-term view. Investors should only buy as part of a wider portfolio of shares to spread risk.

Equities may be volatile in the short term, but that’s the price investors pay for higher returns. And with luck, a higher retirement income too.

The post What size ISA do you need for £250-a-week retirement income? appeared first on The Motley Fool UK.

Delightful dividends

Dividends are cash payouts from companies to shareholders. Not all London-listed businesses pay dividends, but most FTSE 100 firms do. Future dividends are not guaranteed, so they can be cut or cancelled without notice. This happened repeatedly during the 2020/21 pandemic.

As a value/income investor, I’m a big fan of dividends — the closest thing to ‘free money’ I’ve found. Once, US business tycoon John D Rockefeller even remarked, “Do you know the only thing that gives me pleasure? It is to see my dividends coming in”.

Good news: AJ Bell expects £88bn in FTSE 100 dividends for 2026. In addition, Footsie companies have announced £29.4bn of share buybacks for 2026, more than half 2025’s total. Hence, the UK stock market now offers one of the highest cash yields among world equity markets.

Catching this cash

Currently, my family portfolio is balanced between high-yielding dividend shares and US growth stocks. We own perhaps 25 different UK shares, including many long-established FTSE 100 and FTSE 250 businesses.

Even better, the FTSE 100 has surged by 34.5% over the past 12 months, beating many major stock indexes. Meanwhile, the US S&P 500 is up 29.6% over one year, while the tech-heavy US Nasdaq Composite index has gained 39.3%. (All figures excluding dividends.)

The simplest way to seize a share of this flood of FTSE 100 cash is to buy low-cost passive funds that track the index. Some trackers charge fees as low as 0.06% a year. I see this as the cheapest, simplest way to grab dividends and global growth (because over three-quarters of Footsie earnings come from overseas).

Hi, yields!

From the latest Dividend Dashboard, I note my family portfolio owns three of the five highest-yielding FTSE 100 shares. But we don’t own stock in Land Securities Group (LSE: LAND), the UK’s largest developer of commercial property.

British property investors and developers have had a hard time since 2020. In particular, the Covid-19 pandemic led to a rise in hybrid working and working from home. Also, rising interest rates since 2022 have dramatically pushed up borrowing costs.

Then again, real estate was the world’s original asset class, plus my family portfolio is under-exposed to this sector. And Land Securities owns a wide range of properties, from London offices to leading shopping centres and major retail parks.

At the current share price of 583.5p, this stock offers a market-beating dividend yield of 7% a year. That’s nearing twice the Bank of England’s base rate of 3.75% a year. The shares are up 10.9% over one year, but down 18.6% over five — and perhaps hover in value territory?

Therefore, I shall recommend Land Securities as a new high-yield holding to my family. Again, the past six years have been rough for this industry — and further rate hikes or falling valuations could mean more tough times for property businesses. Even so, I’m still drawn to that 7% yearly cash!

The post Here’s how FTSE 100 dividends produce potent passive income appeared first on The Motley Fool UK.

However, the real potential of these types of stocks lies in reinvesting the dividends. Let me explain.

Short-term sacrifice for long-term gain

Land Securities Group (LSE:LAND), owner of a £10.9bn property empire, is currently yielding 7.2%. In other words, it’s paying dividends of £72 for every £1,000 invested. That’s a great return for doing nothing. If this was maintained for 10 years, an initial lump sum of £1,000 would produce income of £720 over the course of the decade.

However, if someone reinvested the dividends and bought more shares – often referred to as compounding — the £1,000 would grow to £2,004 after 10 years. That’s a near-doubling and a 16.5% improvement on the return for someone who banked the dividends. 

Repeat this for another decade and a shareholding of £4,017 could result.

After 30 years, the £1,000 could be worth £8,051. That’s an astonishing overall return of 705%.

These examples ignore any growth in the group’s share price although, of course, stocks can go down as well as up.

Buyer beware

However, dividends can be volatile, especially for a business that’s 100% exposed to the UK commercial property sector. But income investors can take some comfort from the fact that as a real estate investment trust (REIT), Land Securities Group must pay dividends equal to 90% of its annual rental profit.

Threats to its earnings include higher interest rates leading to increased borrowing costs. Also, the group’s in a period of transition – it calls this “capital rotation”.

Until recently, it owned only retail properties and offices. By 2030, it hopes to have over 6,000 homes in the residential sector on its books. It also plans to shift its focus to premier retail destinations and top-tier offices. If all goes to plan, this will deliver a higher return on capital. And the group’s hoping that the income from residential properties will be less cyclical. Otherwise, it will have spent billions with little improvement in its financial performance.

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.

My view

Impressively, the group has a strong track record of growing its dividend. And investors appear to be warming to its story. Since April 2025, Land Securities’ shares have risen 16%.

Despite the risks associated with the sector, I like its new strategy. I also think its 97.7% occupancy rate demonstrates the quality of its properties. For example, it owns the Bluewater Shopping Centre in Kent, MediaCity in Salford, and Liverpool One.

And I appreciate the near-50% increase in its payout over the past five financial years. That’s why I believe it’s one of many income shares – and REITs in particular – that could be considered by those looking to make a healthy return from the UK stock market.

The post With the potential to double in 10 years, this could be a dividend stock to consider buying appeared first on The Motley Fool UK.

Yields are calculated by dividing the dividend per share by the share price. So when share prices fall, yields rise. That makes market dips a particularly appealing time to buy income shares. As the Iran war sadly continues, are we looking at an opportunity today?

Top FTSE 100 dividend options

The FTSE 100 has already slipped into correction territory, defined as a fall of 10% or more. That’s pushed yields noticeably higher across a range of sectors. Life insurer Legal & General Group offers the biggest trailing yield of all at a stunning 8.55%. Insurer Standard Life yields 7.85%, while wealth manager M&G yields 7.2%. Another insurer, Aviva, yields 6.3%.

Real estate investment trusts, or Reits, are also terrific sources of dividends. Land Securities Group (LSE: LAND) yields 7.2%, while Londonmetric Property yields 6.6% and British Land 6.3%.

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.

Land Securities, or Landsec, is one of the UK’s largest commercial property owners and developers, with a broad portfolio of offices, shopping centres and retail parks. Like much of the sector, it has faced a tough few years.

The pandemic dealt a double blow, crushing retail footfall while accelerating the shift to online shopping. At the same time, the rise of working from home reduced demand for office space. The subsequent cost-of-living crisis added further pressure, squeezing consumers, pushing up borrowing costs and denting returns from property disposals.

Even so, underlying rental income has remained relatively resilient, and tenant occupancy levels have held up well.

This stock is cheaper than a decade ago

There were hopes of a recovery this year, due to the anticipated drop in interest rates. This should both reduce the cost of capital and support both businesses and consumers. The Iran conflict has wrecked that for now. Landsec shares are down around 11% over the past month alone. Over 12 months, they’re up just 3%.

In fact, at 586p the shares of roughly half their value of a full decade ago. That explains the high yield and low valuation. The price-to-earnings ratio is a modest 11.3.

This could present a buying opportunity to think about, but risks remain. That’s especially so if the conflict drags on, denting growth and driving up inflation and interest rates. Property companies like Landsec are particularly sensitive to borrowing costs and demand. Yet I think this could be a good moment to consider Landsec. The short term is likely to remain bumpy, but investors who take a long-term view will potentially reap the rewards. Not just in income, but growth too. If and when the shares finally recover.

This isn’t the only FTSE 100 income stock trading around a 10-year low today. I can see several more worth looking at. A sensible approach may be to drip-feed money in, to take advantage of today’s reduced valuations. If shares fall further, be ready to invest even more.

The post Is this market correction a once-in-a-decade chance to buy ultra-high-yield income stocks? appeared first on The Motley Fool UK.

The Stocks and Shares ISA wrapper’s a great way to invest in equities because all share price growth and dividend income is tax-free for life. On death, unused pots can even be passed onto a spouse or civil partner, with the tax advantages intact.

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.

Stock markets are volatile right now, due to the conflict in Iran. That will scare many investors away, but in fact today could actually be a good time to invest.

FTSE 100 buying opportunity

At The Motley Fool, we think stock market volatility as a good opportunity to snap up shares, because they’re suddenly cheaper than they were. Not just that, but they pay more income too. Yields are calculated by dividing the dividend per share by the share price. When share prices fall, yields automatically rise. We’re seeing that again now.

Today, two FTSE 100 stocks offer eye-popping yields. Insurer and asset manager Legal & General Group has a trailing yield of 8.8%, while insurer Standard Life, until recently called Phoenix Group, yields 8.1%.

This is roughly twice what investors can expect from a market-leading savings account. Plenty of other blue-chip stocks have supersized yields including wealth manager M&G at 6.9%. I actually hold all three. They’re all financial services stocks, so I need to diversify my income sources by investing in another sector. What about Land Securities Group (LSE: LAND), also known as LandSec? It pays some of the most generous income on the index.

LandSec’s one of the UK’s largest commercial property owners and developers, with a diversified portfolio of offices and shopping centres. Lately, it’s had a tough run, hit by trends beyond its control. They include online shopping, the work-from-home trend, and the cost-of-living crisis. The ailing UK economy has also knocked profits from property disposals.

Land Securities’ shares tempt

At today’s price of 600p, LandSec shares trade at roughly half their level 10 years ago. The shares were starting to recover, but rising oil prices and inflation have knocked them back. They’re down 9% in the last month. One positive is that LandSec shares now look good value, with a price-to-earnings ratio of just 11.8. The dividend yield has climbed to 6.8%.

Obviously, there are risks, especially if the Iran conflict drags on. This could fall further, or the dividend could come under pressure. I think it’s worth considering for income-focused investors who understand this niche sector. If not, I can see plenty more nicely-priced passive income stocks on the FTSE 100 today.

The post An unmissable chance to get an eye-popping second income from FTSE shares? appeared first on The Motley Fool UK.

But it’s important not to tar all of them with the same brush. Here are two stocks yielding more than 6%. Does this sound too good to last? Let’s see.

Changing habits

ITV’s (LSE:ITV) having to adapt to a changing world. When I was growing up, it was just one of three television channels. And until Channel 4 came along in 1984, ITV had a monopoly on TV advertising revenue. Nowadays, it has to compete with other linear broadcasters, US streamers, and the internet.

In some respects, it’s remarkable that in February, UK viewers spent an average of 28 hours and five minutes watching its programmes. Despite such fierce competition, this is higher than the figures for Netflix and YouTube.

But concerns that viewers are moving away from traditional broadcasters have been weighing on the company’s share price, which has been stuck in a relatively narrow range for the past three years or so. Occasionally, it will leap on takeover rumours — there’s been recent speculation that Sky wants to buy its broadcast channels and streaming platform – but nothing’s come of these.

Since the pandemic, the group’s maintained its dividend at 5p. This lack of growth is a potential red flag to me.

Although I think it’s a little early to write off the group – ITVX is performing well and its production arm continues to grow — I see advertising revenues shrinking over the long term. I suspect this summer’s football World Cup will give it a bit of a boost, especially if England and Scotland do well. Otherwise, it looks like a case of managed decline to me. And if I’m right, its dividend’s likely to come under pressure. The stock’s not for me.

Bricks and mortar

On the other hand, I think the 6.9% yield offered by Land Securities Group (LSE:LAND) is more sustainable. It owns a £10.8bn portfolio (at 30 September 2025) of offices, retail parks, and shopping centres.

Admittedly, the UK commercial property market is cyclical but history shows that the sector regularly delivers above-inflation returns. This gives me some confidence that the group’s dividend can keep growing, albeit at a relatively modest rate. In cash terms, its payout was 3.4% higher for its March 2025 financial year than it was three years earlier.

Importantly, Land Securities Group qualifies as a real estate investment trust (REIT). In return for certain tax privileges, this means it must return at least 90% of its annual rental profit to shareholders by way of dividends. For those who want to invest in commercial property without having to find a huge amount of capital – or borrow – a REIT can be an attractive investment vehicle.

One issue to keep an eye on is the group’s debt. Higher interest rates will increase borrowing costs and lift its loan-to-value stance. This could restrict its future borrowing capacity or, worse, lead to a breach of lending covenants.

Looking ahead, the group’s scaling down its exposure to offices and moving into residential property developments. This should boost its future rental yield. On balance, I think the stock’s one that could be considered by income investors.

The post With 6%+ yields, are these two of the best stocks to consider buying for passive income? appeared first on The Motley Fool UK.

One method is to compare dividend yields. However, an above-average return can be a sign that investors are expecting a cut in a company’s payout.

Could this be the case with these three high-yielding shares that I’ve identified, or are they a great opportunity to start generating a healthy second income stream? Let’s see.

1. Legal & General

My favourite income share at the moment is Legal & General (LSE:LGEN). The FTSE 100 retirement and savings group is presently (27 February) offering a return of 8%, the highest on the index. This assumes the group keeps its pledge to increase its 2025 payout by 2%.

Some of this impressive yield can be attributed to a falling share price. Even so, the stock has a solid track record of raising its dividend. It was last cut during the global financial crisis. And it plans annual rises of 2% up until 2027.

Threats to its earnings (and therefore its dividend) include increased competition and global market uncertainty. The group invests heavily and equities and bonds. A stock market correction, or worse, would be bad news.

However, the group has a huge pipeline of pension schemes that it’s looking to take over and manage. Also, with the State Pension age predicted to rise further, I think more people will turn to third-party providers to look after retirement planning.

2. Land Securities Group

Another stock I like is Land Securities Group (LSE:LAND). It has a £10.8bn portfolio of mainly offices, stores, and retail parks.

Again, its yield has increased more due to its falling share price than a rising payout. Having said that, it’s gone up 9.2% over its past three financial years. Based on amounts paid since February 2025 (40.8p), the stock’s yielding 6.2%.

However, it has to be pointed out that future increases might not be possible due to the volatile nature of the commercial property sector. And with substantial borrowings, if interest rates were to stay higher for longer, this is likely to impact earnings.

But the group’s planning to sell some of its offices to fund an expansion into the residential sector. These are expected to offer a better return. It can also boast of a high occupancy rate, thanks largely to the quality of its portfolio.

3. Supermarket Income REIT

Like Land Securities Group, Supermarket Income REIT (LSE:SUPR) is a real estate investment trust (REIT). This means it must return at least 90% of its qualifying profit each year to shareholders by way of dividends. At the moment, the stock’s yielding 7%.

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.

The REIT buys supermarkets in the UK and France and then rents them to blue-chip grocers. Positively, the quality of its tenants means it doesn’t have a bad debt problem. However, 51% of its debt is floating, which means its repayments will rise if interest rates go up. And in extreme circumstances, falling property prices could lead to a breach of its lending covenants.

Personally, I think the recent announcement by Ocado Group that six of its warehouses are to close over the next three years is proof that the death of the traditional supermarket has been greatly exaggerated.

Investing £10,000 in these three stocks could generate passive income of £710 over the next 12 months. That’s why I think these dividend shares could be considered for inclusion in a high-yielding income portfolio.

The post These 3 stocks are offering passive income of 7.1%. But is there a catch? appeared first on The Motley Fool UK.

I’ve been trawling the UK’s blue-chip index for companies that look good value and yield at least 5% a year. These three jumped out and now may be a brilliant time to consider buying them, because if their shares rise so will their valuations, while those yields will come down.

NatWest shares soar

Today, NatWest Group (LSE: NWG) combines a bumper 5.3% trailing dividend yield with a lowly P/E ratio of just 9.1. A high yield and low valuation can be a sign that their stock is struggling, but that’s not the case here.

The NatWest share price is up a hefty 40% over the last year, and a fabulous 220% over five. All dividends are on top of that.

Higher interest rates have given the big banks an opportunity to widen net interest margins, the difference between what they pay savers and charge borrowers. Profits are surging as a result. In the case of NatWest they’re up 24% to £7.7bn in full-year 2025. However, growth may slow with interest rates likely to fall.

Also, NatWest is heavily focused on the UK, and the domestic economy isn’t exactly thriving. But given the income and entry price, I still think it’s well worth considering with a long-term view.

LandSec has recovery potential

High interest rates haven’t been as helpful for real estate investment trust (REIT) Land Securities Group (LSE: LAND). LandSec is one of the UK’s largest commercial property owners and developers, with a diversified portfolio of offices and shopping centres. Unfortunately, it’s been hit by the working from home trend, online shopping and the cost-of-living crisis.

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.

Rising inflation and interest rates then pushed up the cost of capital, while economic concerns have knocked gains from property disposals.

The Landsec share price has had a volatile five years, climbing just 8.5% in that time, but there are signs of recovery as it’s up 16.7% in the last year.

With interest rates expected to fall, the outlook is getting brighter and while Landsec isn’t as cheap as NatWest, a P/E of 13.2 isn’t bad. The trailing yield of 6.1% is rather good. There are still risks, but the rewards may start to flow and I think Landsec is also worth considering for income seekers, with a minimum 10-year view.

Admiral rate of income

Motor insurer Admiral Group (LSE: ADM) combines a stunning trailing yield of 6.67% with an inexpensive P/E of 13.3. Its shares were flying last summer, with first-half interim result showing pre-tax profits up 69% to £521m, driven by strong performances in its UK motor, household and Admiral Money operations.

Since then, the stock has been somewhat volatile. It spiked about 3,600p last year, but has since fallen 20% to 2,865p. Over 12 months, it’s up a modest 4%. However, this could offer new investors an opportunity to bag that income at a decent price.

Admiral has been hit by a slew of broker downgrades, as tough motor insurance competition and continued high claims inflation threatens margins. This is a cyclical sector, so share price ups and downs are to be expected. But it’s still worth considering. The shares may be bumpy in the short term but with luck, the dividends should compensate.

The post A once-in-a-decade chance to buy 3 cheap stocks with fabulous yields? appeared first on The Motley Fool UK.

This would produce dividends of £1,250 for every £20,000 invested. Want to find out more?

Bricks and mortar

A popular way of earning a second income is to invest in property. But with the need for a large deposit this is becoming increasingly unaffordable. And very few individuals have access to the funds required to buy commercial premises. However, for those who are attracted to the property sector there’s an alternative approach available, one that doesn’t require as much up-front capital.

For example, one share in Land Securities Group (LSE:LAND), the FTSE 100 property company, currently (13 February) costs £6.53. And based on amounts paid over the past 12 months, it could earn 40.8p (6.25%) in dividends.

Okay, 40.8p doesn’t sound like much of a second income. But instead of having one share, £20,000 would buy 3,063 of them and potentially generate dividends of £1,250 a year.

Now, here’s the clever bit. Rather than banking the payouts each year, by reinvesting them to buy more shares in the group, it’s possible to take advantage of compounding. Assuming the 6.25% yield is maintained, doing this for 25 years would turn £20,000 into £91,044.

At this point, a return of 6.25% would produce an impressive second income of £5,690 a year, or £474 a month.

Buyer beware

But it’s wise to be cautious. Dividends cannot be guaranteed. That’s because they are paid out of earnings, which can be volatile. This is especially true in the commercial property sector.

Land Securities Group invests primarily in offices in Central London and shopping centres. And as the table below shows, there’s no real pattern to its net rental income or earnings.

The group’s profit is particularly sensitive to occupancy rates. If the UK economy struggles, the chances of one of its tenants going bust increases. And sluggish GDP means the scope for rent rises is limited. Also, with relatively large borrowings, it’s vulnerable to interest rates staying higher for longer.

Good prospects

But Land Securities is a real estate investment trust (REIT). To retain certain tax privileges, it must pay dividends equal to at least 90% of its rental profit each year. This helps ensure a healthy payout ratio but, even so, 90% of nothing is zero.

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.

However, I think the group’s dividend looks reasonably secure. Nearly 98% of its properties are let and its prestigious portfolio, which includes Liverpool One, MediaCity, and the Bluewater Shopping Centre, means there should be strong demand on a change of tenant. Also, most of its leases contain provisions for inflation-linked rent increases. Over the medium term, it’s planning to pivot away from offices towards residential developments, which offer better returns.

On this basis, I reckon Land Securities is a share that income investors could consider. In fact, it’s one of many REITs on the UK stock market that currently pay above-average dividends and offer investors the chance to gain exposure to the property sector without having to find large up-front sums or borrow.

The post Here’s how to invest £20,000 in an ISA for a £1,240 second income appeared first on The Motley Fool UK.

However, without a large lump sum to invest, it’s easy to be put off. After all, a 9.46% annual return – the average of the FTSE 100 from 2016-2025 – on £100 isn’t a life-changing sum of money. But I reckon by sacrificing a cup of coffee each day and buying a few shares instead, it’s possible to achieve some amazing results. Let’s see.

Patience and discipline

Rather than invest £5 every day (fees are likely to wipe out most of the benefit) it would be better to set aside £150 a month. Assuming a 9.46% return every year, this would grow to £812,046 after 40 years. That’s a 1,028% return on the £72,000 invested.

The 9.46% return of the Footsie was achieved from a mixture of growth shares and dividend stocks, and assumes that all payouts were reinvested – a process known as compounding.

Of course, it might not be possible to achieve such a high growth rate every year for four decades. But history suggests there’s a good chance the UK stock market will grow over the long term. And even if we reduced the growth rate to 5% in our example, it would still give an investment pot worth £401,965 after 40 years.

At the moment (30 January), the FTSE 100’s yielding 3.1%, which suggests around a third of the total annual rate of return comes from dividend shares. But there are plenty of stocks offering a better yield than this.

Bricks and mortar

For example, based on amounts paid over the past 12 months, the return on Land Securities Group (LSE:LAND) is currently 6.4%. Returning to our example, this could generate an annual passive income of £51,971 on our portfolio of £812,046. And there would be no need to touch the capital.

Although it’s important to remember that dividends can be erratic, the group — which has a £10.8bn portfolio comprising mainly offices and shopping centres — has been steadily raising its payout since the pandemic.

Combined with an occupancy rate of 97.7%, it seems to have successfully addressed concerns that working-from-home and internet shopping are going to change the property landscape forever.

But the group’s not resting on its laurels. With a view to achieving higher income growth rates, it’s currently moving away from offices towards residential properties. This should also help reduce its exposure to the commercial property sector, which is notoriously cyclical.

At nearly nine times EBITDA, it must be said that Land Securities’ borrowings are on the high side, although a loan-to-value of 40.3% suggests there’s plenty of headroom. Impressively, its desirable portfolio means it was able to achieve a 10% uplift on re-lettings and renewals during the six months to 30 September 2025.

On balance, I think Land Securities is a stock to consider.

Having said that, it would be a bad idea to invest in just one stock. By building a diversified portfolio of high-yielding dividend shares, it’s possible to generate healthy levels of passive income, all from sacrificing a cup of coffee every day.

The post Start building a lifelong passive income with just £5 a day! appeared first on The Motley Fool UK.