What this means in cash terms depends on someone’s earnings and their employment status. But a typical worker earning £45,000 a year will pay £2,593 in NI this tax year.

In other words, £90,755 (£2,593 a year for 35 years) could unlock an annual pension of £12,548. Someone enjoying 25 years of retirement could receive £313,700. This is a tremendous return but, unfortunately, it isn’t enough to provide for a comfortable retirement.

However, a SIPP (Self-Invested Personal Pension) could help bridge the gap. Let me explain.

One possible approach

According to Pensions UK, a single person needs an annual income of £43,900 to enjoy a comfortable retirement. And by investing in a SIPP, I think it’s possible to produce a nest egg large enough to provide the additional £31,353 needed to supplement the State Pension.

Of course, the size of an individual’s pension pot will be determined by the amount invested, for how long, and the rate of return. For example, if someone invested £2,593 a year for 35 years — and achieved an annual return of 8% — they would have a SIPP worth £482,562.

At this point, a portfolio of dividend shares paying 6.5% a year, could produce an annual income of £31,366. Alongside the State Pension, this should be enough to have a decent retirement.

Something to consider

One stock that’s yielding 6.5% at the moment is LondonMetric Property (LSE:LMP). It owns a £7.4bn portfolio of 683 property assets, in what it describes as “structurally supported” sectors. The group avoids investing “where income security and growth is less assured”. This means the majority (54%) of its assets are in the logistics industry.

Presently, its annual contractual rental income is £420m.

A special status

As a real estate investment trust (REIT) it has to return at least 90% of its rental profit to shareholders each year by way of dividend. Otherwise, it loses certain tax advantages. Generally speaking — no guarantees, of course — this means LondonMetric Property should offer an above-average yield. Conventional trading companies are unlikely to have a payout ratio of 90% or more.

However, there’s a potential threat to its earnings if interest rates remain higher for longer. By having to return such a high proportion of profit to its shareholders, the group’s forced down the route of having to take on debt to buy properties.

Not only would a higher interest rate environment increase borrowing costs, it could also limit future access to finance and, therefore, restrict growth.

Also, the UK commercial property market’s highly cyclical. Tenants going bust is an ever-present risk.

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. 

Final thoughts

However, LondonMetric Property has a strong track record of raising its dividend. It also has a 98% occupancy rate, which reflects the quality of its portfolio.

I also like its emphasis on triple net leases. Under these types of agreements, the tenant is responsible for maintenance costs, insurance, and property taxes, as well as the rent. This reduces the level of the operational risk faced by the group.

That’s why I think it’s a stock worth considering by those looking to boost their income, whether in retirement or earlier in life.

The post Want to aim for £31,353 more than the State Pension? A SIPP could be the answer appeared first on The Motley Fool UK.

When held inside an ISA, REITs can generate chunky dividend yields from rental property for shareholders who don’t have to worry about paying any taxes. That’s quite the opposite compared to a direct investment in a property, which also comes with all the extra costs of repairs and managing tenants.

This doesn’t mean buy-to-let’s dead. It’s still a good way for experienced landlords to profit from the UK property market. But with new rules coming in this year, there’s no denying that it’s becoming harder.

That’s why REITs remain my favourite way to invest in real estate. And in 2026, there’s one REIT in particular that looks like an excellent investment, in my eyes.

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.

A tasty 6.6% dividend yield

Out of all the REITs listed on the London Stock Exchange, my personal favourite right now is LondonMetric Property (LSE:LMP).

The firm’s vast commercial real estate portfolio covers a wide range of property types, including healthcare, convenience, entertainment, and a large concentration in urban logistics. But what makes its business model unusually robust is its triple-net lease (NNN) structure.

NNN means that tenants are ultimately responsible for paying rent, maintenance, insurance, running costs, and taxes like business rates. As such, beyond the initial cost of acquiring or building a property, LondonMetric has virtually no property-level operating costs, turning it into a free cash flow-generating machine.

This structural advantage is a big reason why the business is on track to deliver its 11th year of consecutive dividend increases. And even in April, with a chunky 6.6% dividend yield, the group’s rental cash flows are still more than enough to cover its substantial payout.

Pair that with an average lease duration of 16.4 years, 98% occupancy, and 67% of lease agreements including an annual contractual uplift, and LondonMetric’s dividends look exceptionally secure.

So what’s the catch?

Where is the risk?

Even as a bullish shareholder, LondonMetric Property isn’t a risk-free REIT, and there are some important risk factors that investors need to consider carefully.

The company carries a lot of debt on its balance sheet. And while management has recently refinanced £1.5bn of its outstanding loans to remove maturity risk until 2029, interest rates also impact the group’s property valuations.

Changes in real estate prices don’t impact its rental cash flows. But it does nonetheless move its share price.

Another potential risk factor is over-expansion. In the past, LondonMetric focused exclusively on logistics properties. But following its acquisition of LXi, a wide range of new property types were thrown into the mix.

Yet with a limited history and experience of being a landlord to supermarkets, hotels and theme parks, the impact of poor execution in the short-term could have a noticeable impact in the long run.

Are these risks worth taking?

Every investor has their own personal risk tolerance limit. So before buying any shares in LondonMetric, it’s crucial to consider both the risks and potential rewards.

For me personally, the combination of rock-solid fundamentals paired with a juicy 6.6% yield makes LondonMetric a REIT worth buying. That’s why it’s already in my passive income portfolio.

The post I’m ignoring buy-to-let in 2026 and buying this REIT for passive income! appeared first on The Motley Fool UK.

This means that beyond buying and holding shares, shareholders don’t have to do any of the work of finding tenants, maintaining properties, or dealing with contractors.

Best of all, with higher interest rates making real estate less popular, there are some enormous dividend yields on offer right now. And it’s why I’m eager to buy more shares in one REIT that’s already in my income portfolio.

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.

A hidden compelling opportunity

Out of all the REITs on the London Stock Exchange, it’s LondonMetric Property (LSE:LMP) that stands out as my personal favourite.

The REIT owns and manages 680 commercial property assets across a combined £7.4bn portfolio, specialising in triple net leases (NNN) rental contracts. That means it’s the group’s tenants that are responsible for maintenance, insurance, and taxes in addition to paying rent.

The result? LondonMetric is enormously cash generative and diversified across multiple sectors, including urban logistics, retail, healthcare, hotels, and even a few theme parks.

Digging a bit deeper, its long list of tenants include Amazon, Tesco, and Marks & Spencer, among others, almost all of which deal in long-duration lease agreements.

For LondonMetric, this enterprise-scale clientele means that, beyond having reliable tenants that pay on time, the group also benefits from 98% occupancy and a 16.4-year average lease duration from capital-light lease agreements that contain annual contractual uplifts.

All in all, by combining a steady expansion of its property portfolio with higher rental income from its existing tenant base, LondonMetric is on track to deliver its 11th consecutive year of dividend increases. And with the shares trading at a 6% discount to its net asset value, the REIT currently pays a chunky 6.7% dividend yield.

Too good to be true?

As dividend stocks go, LondonMetric ticks almost all the boxes.

• It’s a highly cash-generative business with a reliable and sticky customer base.
• Dividends have been steadily and consistently increasing while still being covered by underlying earnings.
• The shares trade at a discount to their intrinsic value, offering a higher yield.

But even the most promising income opportunities have their weak spots. And in the case of this business, those weak spots are acquisition integration risk and debt.

As a serial acquirer of other smaller commercial landlords, LondonMetric has vastly expanded its portfolio in recent years. And just last month, management started targeting another REIT (Picton Property Income) in a joint bid with Schroder REIT to further expand its empire.

So far, this strategy has proved quite lucrative, transforming the business into the second-largest REIT on the UK stock market. But acquisitions are expensive and can backfire if rental performance later fails to live up to expectations.

This risk is only amplified by the firm’s substantial pile of outstanding debts. While management did recently refinance a large chunk of its loan obligations, granting some valuable financial flexibility, leverage needs to be monitored carefully, especially if interest rates start rising again.

Nevertheless, with a proven leadership team and a high-quality property portfolio, the risk looks well worth the potential reward to me. That’s why LondonMetric is on my personal buy list right now.

The post Here’s the REIT I’m buying for huge and sustainable passive income appeared first on The Motley Fool UK.

Finding the right investments is key to generating strong returns. But not having to pay tax on dividends is also a big help.

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. 

REITs

Real estate investment trusts (REITs) are a terrific asset class. They’re literally designed for passive income investors. They originated around 65 years ago in the US. Property prices were rising and ordinary people were struggling to keep up. 

Sound familiar? The government’s plan to do something about it was to create a new asset class to help people own property.

REITs are organisations that own and lease property. And they’re exempt from paying tax on the income they generate. 

In exchange, they have to return 90% of their income to investors as dividends. So ordinary people get a way to earn passive income from property.

This basic structure hasn’t really changed since 1960. And some REITs currently come with very attractive dividend yields. 

UK property

LondonMetric Property (LSE:LMP) is one example. The stock comes with a 6.5% dividend yield, but this isn’t what makes it interesting. 

Growth is often difficult for REITs. Since they pay out almost all of the cash they generate, they can’t use it to buy more properties.

LondonMetric, however, has done a good job of working around this. Over the last few years, it’s acquired several other REITs. The strategy involves incorporating the best assets and selling the others. In doing so, the firm grows and strengthens its portfolio.

It’s a risky strategy. Financing these deals involves taking on debt or issuing shares and sale prices for divestitures aren’t guaranteed.

The result, however, has been consistent dividend growth. And that makes it well worth checking out for passive income investors.

Monthly income

The annual contribution limit for a Stocks and Shares ISA is £20,000. To earn £100 a month on that requires a 6% yield. 

LondonMetric Property shares come with a better starting return than this. But there are a couple of things to note. 

One is that the firm pays dividends quarterly. So anyone looking for cash each month will also need other investments.

Another is that investing heavily in any one company is risky. And this is especially true for anyone starting from scratch. 

The solution to both problems is the same. It involves finding more than one stock to buy, while looking for a 6% average yield. 

The good news is this is absolutely possible in today’s stock market. LondonMetric Property is only one of the names worth considering.

From 0 to £100 a month

I think investors targeting passive income should look at REITs. This is, after all, exactly the purpose for which they were originally designed.

UK REITs have been attracting a lot of attention recently. And rightly so – a number of them combine high yields with consistent returns. 

In my view, there are still several names that are worth considering. LondonMetric Property is one, but I think there are others. 

Using a Stocks and Shares ISA, someone starting from scratch can earn £100 a month or more. The key is knowing what to look for.

The post How to turn an empty ISA into £100 a month in passive income appeared first on The Motley Fool UK.

But let’s see if the stock’s really as attractive as it sounds.

Delving deeper

LondonMetric Property‘s (LSE:LMP) a relative newcomer to the index of the UK’s largest listed companies. Following a significant acquisition, it joined the elite in June 2024. The group owns a portfolio of properties valued at £7.6bn (at 30 September 2025).

It specialises in “mission critical and key operating assets” in the “strongest sectors”. According to the group, these comprise logistics (experiencing strong demand from “e-commerce expansion”), entertainment and leisure (“high barriers to entry”), convenience stores (“defensive, income stable”), and healthcare (“attractive to investors seeking resilience”).

The trust claims it’s built an “all weather portfolio that can navigate short term macro volatility”. This could make it attractive to investors given the turbulent times in which we live.

The REIT also focuses on triple net leases in which the tenant pays rent plus all property taxes, insurance, and maintenance costs. This transfers more of the operational risk associated with commercial property to the tenant.

Despite its name, only 40% of its portfolio valuation comes from properties located in London and the South East.

Great for income

To retain certain tax privileges, a REIT must return at least 90% of its annual rental property to shareholders via dividends each year.

This helps explain its yield of 7%, compared to 2.8% for the FTSE 100 as a whole. However, savvy investors know that income shares don’t come with any guarantees. Indeed, 90% of zero is nil.

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.

But LondonMetric has increased its annual payout for 10 successive years. Although this still doesn’t provide any future certainty, it gives some comfort that it offers a better chance than most of raising its dividend.

In cash terms, its payout over the past four quarters was 34.6% higher than for its March 2022 financial year.

And there’s more…

However, this is only half the story. At 30 September 2025, the group reported net assets per share of 202.1p. This is around 13% more than its current (31 March) share price. This means there should be some capital growth for new shareholders as — in theory — rational investors seek out undervalued companies.

However, discounts in the REIT sector are common. As with its peers, LondonMetric’s vulnerable to a higher interest rate environment – it had bank borrowings of £2.8bn at 30 September – which seems increasingly likely given events in the Middle East.

Not only would this lead to increased borrowing costs and, potentially, restrict its ability to take on more debt and expand, it also makes alternative less-risky investments more attractive to investors. This could dent its share price.

With its emphasis on the rapidly-growing urban logistics sector (54% of its portfolio value), an occupancy rate of 98.1%, a weighted-average unexpired lease term of 16.4 years, and many blue-chip tenants, including Amazon and Tesco, I think the group’s dividend looks secure for now. And some capital growth could be the icing on the cake.

For those looking to take a stake in the UK property market, without wanting the hassle of becoming a landlord, I think LondonMetric Property could be a REIT to consider.

The post This dividend share’s yielding 7%. And it’s 13% undervalued appeared first on The Motley Fool UK.

Plus, because no tax is paid on dividends or capital gains inside an ISA, more returns stay invested, which can really turbocharge compounding. As a result, it’s perfectly possible to grow a really attractive second income over time, even £10k a year. 

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.

Looking back 

A high-quality business will grow its earnings and often dividends over time. This should result in its shares becoming more valuable, as more investors want a piece of the thriving enterprise.

Take Games Workshop (LSE:GAW) as a prime example. Back in 2016, the Warhammer maker reported earnings per share (EPS) of 42.1p and a 40p dividend. Fast forward to 2025, EPS was around £6 and the dividend 520p.

The FTSE 100 company has also become far more profitable over this time, with its operating margin ballooning to 42% from just under 15%.

Someone who invested £2,500 a decade ago would now have roughly £90,000, with dividends taking the total return above £100,000.

Rare breed

Admittedly, Games Workshop is a rare outlier. Indeed, it’s the best-performing UK share of the last two decades. But it also shows what’s possible from an income perspective.

Unfortunately, for investors buying the stock today, it’s less of an income bonanza. The dividend yield is only 2.3%, which is lower than the FTSE 100 average of 3.2%.

Moreover, rising inflation doesn’t help the disposable income of Games Workshop’s customers. With the stock also valued highly, this isn’t one I will load up on today.

That said, I won’t be selling my existing Games Workshop shares. It’s one of the UK’s best-run companies, with a growing global army of loyal customers, unique IP, and long-term pricing power.

Looking forward

In a bid to increase my passive income, I bought shares of Londonmetric Property (LSE:LMP) in February. And I couldn’t have timed it any worse, because the real estate investment trust (REIT) has fallen 16% in four weeks!

The problem is the threat of higher interest rates, which would make it more difficult for Londonmetric to grow its portfolio (REITs tend to rely on debt to fund property acquisitions).

However, taking a long-term view, I’m still bullish. The REIT’s portfolio is built around four resilient sectors, including healthcare (12.5%) and urban logistics (54%). The latter is in tight supply, which favours long-term rental growth.

I like the balance here, with logistics assets having shorter leases due to high demand, while leisure is decades-long (Alton Towers, for example). The average number of years left on tenants’ contracts is 16.4. 

While dividends are never ultimately guaranteed, I’m optimistic about this one’s long-term income prospects.

Passive income

Returning to my original question then, how big does an ISA have to be to generate a £10k second income?

Well, Londonmetric’s now sporting a 7% dividend yield. If an ISA’s overall yield matched this, its value would need to be around £143k for £10k in dividends.

Assuming an average 8% return, with dividends reinvested, it would take 13.5 years to reach this amount by investing £500 every month.

The post How much do you need in a Stocks and Shares ISA for a £10,000 second income? appeared first on The Motley Fool UK.

But how much money does it take to actually start earning a small sum like £300 a month? Let’s take a look.

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.

Crunching the numbers

The stock market’s filled with countless opportunities for earning some extra income. But for investors wanting to keep things simple, a FTSE 100 index tracker might be one of the easiest options.

With the UK’s flagship index currently offering a 3.2% dividend yield, earning an extra £300 a month, or £3,600 a year, will require a £112,500 ISA portfolio today.

Obviously, not everyone has that sort of money stuffed behind the sofa. But by being more selective with a stock-picking strategy, this threshold can be significantly reduced.

For example, if a custom-crafted portfolio generated a 6% average yield, an ISA would only have to be worth £60,000 to generate the same passive income.

Of course, the question now becomes, which high-yielding UK stocks should investors be considering?

A top income pick to consider

Looking at my own passive income portfolio, one high-yield opportunity that stands out right now is LondonMetric Property (LSE:LMP).

With the war in Iran triggering a surge in energy costs, speculation has begun about the Bank of England potentially hitting pause or even reversing its recent interest rate cuts. That’s bad news for businesses with debt-heavy balance sheets. And it’s why this stock, along with other REITs have recently been sold off.

However, while higher interest rates are problematic and put pressure on profit margins, it seems investors are overlooking the quality of LondonMetric’s cash flows and their seemingly exceptional resilience.

By leasing exclusively to large-scale enterprises, the firm’s commercial property portfolio, by design, is fairly recession resistant. And this defensive advantage is only further compounded by long-term lease agreements spanning an average of 16.4 years as of March.

These leasing dynamics don’t make LondonMetric immune to disruption. But it has translated into exceptional rental revenue visibility, enabling almost 11 consecutive years of uninterrupted shareholder payout hikes. So is this a no-brainer?

What to watch

With an interest coverage ratio of 3.9, LondonMetric’s outstanding debts remain comfortably in manageable territory. Even more so now that management has just recently completed a £1.5bn refinancing of its outstanding loans, bringing total maturities over the next two years down to just £186m versus the original £601m due.

This move massively reduces the group’s refinancing risk over the next two to three years. However, that doesn’t mean LondonMetric’s a guaranteed winner. Higher interest rates still apply notable downward pressure on the valuation of its property portfolio. And come 2029, if rates are still elevated, another massive wave of refinancing might be required that could end up being more expensive to service than today.

This is the key risk that investors have to consider before adding any shares to their ISA. But given the generous cash-covered dividend yield on offer, it’s definitely an opportunity worth mulling, in my opinion. And it’s not the only income stock I’ve got my eye on right now…

The post How much do I need in a Stocks and Shares ISA to earn £300 a month? appeared first on The Motley Fool UK.

Real estate

Real estate investment trusts (REITs) can be great income stocks. Their businesses are some of the most straightforward around. Fundamentally, REITs own and lease properties. And they return the cash they generate to investors in the form of dividends.

There’s a lot to like about a simple business model. It makes the company relatively predictable and the risks easier to understand. The downside is that it’s harder to find overlooked opportunities. And that can make finding outstanding opportunities a challenge.

Quality properties in good locations usually benefit from strong demand. But this usually leads to high share prices and low dividend yields. Another approach is to look for high dividend yields. These can look attractive, but they often involve compromising on asset quality in some way.

A stock market correction though, can shake things up. REITs with attractive portfolios can offer unusually good returns.

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.

A quality business

LondonMetric Property (LSE:LMP) has a mixture of assets. These range from theme parks to urban distribution warehouses.

What impresses me most about the firm is the way it structures its leases. The average time to expiry varies from one to another. There’s a good reason for this. Long contracts bring reliable income, but they also impose limits on future growth potential.

As a result, LondonMetric’s most in-demand assets have shorter leases. This allows for more regular rent increases when contracts expire. This is a bold move and it can be risky. There’s always a possibility that increasing rents causes tenants to move out. 

Supply however, is naturally limited by the amount of available real estate close to urban areas. So this offers some support.

Growth potential

In general, it’s hard for REITs to expand. What they need for this is cash, but they have to pay this out to shareholders as dividends. As a result, acquiring new properties often involves merging with or buying other companies. And this is inevitably risky.

In general, businesses that do this more often tend to be better at it. Put simply, they have experience managing the process.

LondonMetric Property has been busy in recent years. And its management has created an attractive portfolio as a result of its recent deals. More importantly though, it’s establishing itself as a good acquirer of businesses. That’s a very valuable skill in the REIT sector. As a result, investors might well think this is one of the best businesses in the industry. And it has an unusually high dividend yield right now.

Dividend income

LondonMetric Property’s shares are currently trading with a dividend yield close to 7%. The average over the last five years has been closer to 4.5%.

The threat of higher interest rates might weigh on the share price in the short term. But for investors looking for income, I think the stock’s well worth considering.

The post Stock market correction: a rare second income opportunity? appeared first on The Motley Fool UK.

Given these benefits, how large does an ISA need to be to generate a monthly income of £900? More importantly, how quickly could this happen? Let’s do a bit of number crunching to find out.

A bit of maths

To answer these questions, it’s first necessary to consider the dividends on offer. For example, with a 6% yield — close to the return of the 10 highest-yielding FTSE 100 stocks at the moment (20 March) — an ISA would need to be worth £180,000 to produce £900 a month.  

How could someone build an investment pot worth this much? Fortunately, there are plenty of online calculators available to help with the maths. The table below illustrates how long it would take depending on the amount invested each month and the annual rate of return.

It shows that investing £396 a month for 20 years would grow to around £180,000, assuming an annual growth rate of 6%.

Something else to consider

One of the FTSE 100’s top 10 income stocks is LondonMetric Property (LSE:LMP). It owns a £7.4bn portfolio of properties principally in the logistics, leisure, and healthcare sectors.

The trust specialises in triple net leases, where its tenants pay rent plus all property taxes, insurance, and maintenance costs. Its legal status is that of a real estate investment trust (REIT), which means it must return 90% of its rental profit to shareholders by way of dividends each year.

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.

A rising yield

Based on amounts paid over the past 12 months, it’s currently yielding 6.5%. Apply this to our £180,000 ISA and it would produce a monthly passive income of £975.

As the table below shows, LondonMetric Property has consistently offered an above-average yield over the past 10 years.

Since the pandemic, it’s seen its share price drift lower. At the same time, it’s increased the payout – its dividend in 2025 was 45% higher than in 2020 – helping to push its yield higher.

It recorded its 10th successive year of dividend increases in 2025.

However, with debt of £2.8bn (at 30 September 2025), it’s vulnerable to rising interest rates. Not only would this increase borrowing costs but it could also limit the group’s capacity to take on more debt to buy additional properties and, therefore, restrict its future growth.

Final thoughts

Personally, I think the REIT has lots going for it. It’s exposed to areas of the UK commercial property market that, in my opinion, are likely to grow faster than the average for the sector as a whole. Indeed, analysts have a 12-month share price target that’s 22% higher than today’s value.

Also, the group enjoys a 98.1% occupancy rate and a weighted average unexpired lease term (WAULT) of 16.4 years. Both these factors help give some certainty over the level and longevity of its future revenue. In addition, 77% of its rents are subject to contractual uplifts.

For these reasons, I believe investors looking to generate a healthy additional income stream from their Stocks and Shares ISA could consider taking a position in LondonMetric Property.

The post How much do I need in a Stocks and Shares ISA to aim for a £900 monthly second income? appeared first on The Motley Fool UK.

But how much money does someone need to earn this tax-free passive income? With the right strategy, it’s not as much as most people might think…

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.

Crunching the numbers

According to celebrity financial advisor Martin Lewis, the most generous Cash ISAs are offering up to 4.68% in interest right now. But digging a little deeper, this elevated interest rate only lasts for one year, with most dropping to an average of around 3% thereafter.

At this lower rate of return, a £1,000 monthly passive income, or £12,000 a year, will need a Cash ISA worth around £400,000 – a fairly massive chunk of change. And that’s assuming interest rates don’t continue to decline from their current levels.

What about a Stocks and Shares ISA? This is where things get far more interesting.

By being selective, an investor can craft a custom portfolio that yields a far more lucrative 6% dividend return. And by selecting the right businesses, this payout can even grow over time, rather than fall.

Apart from dropping the required portfolio size by half to £200,000, the added bonus of capital gains can boost the returns even higher. And simply drip feeding money each month, investors can build up a six-figure nest egg and have a five-figure passive income in potentially a few short years.

The question is, which dividend stocks should income-focused investors choose in 2026?

A high-yield opportunity?

One dividend-paying stock from my passive income portfolio is LondonMetric Property (LSE:LMP).

The business is simple. It’s a commercial landlord that owns, manages, and leases a diversified portfolio of properties across the logistics, healthcare, convenience, and entertainment sectors.

With most of its tenants large-scale companies, the average lease duration spans just over 16 years, generating exceptional long-term revenue visibility and predictable cash flows. And it’s an advantage that management’s used to continuously hike dividends for 10 consecutive years.

In other words, even a tasty-looking 6.5% yield today could get even bigger. Of course, unlike in a Cash ISA, no investment’s ever without risk.

If inflation proves stubborn, there’s no guarantee interest rates will continue to fall. And that presents a potential problem.

With a large chunk of its debt maturing in a few years’ time, persistently higher interest rates may force LondonMetric to refinance at a less attractive rate.

The group’s sturdy cash flows should be capable of absorbing this. But it nonetheless applies more pressure to profit margins and, in turn, dividends. And if a surprise spanner is thrown into the works, today’s high yield might not be so sustainable after all – a key risk that investors must think about carefully.

Regardless, with such a stellar track record, I feel this risk is well worth considering for the potential reward. And it’s not the only passive income opportunity I’ve got my eye on right now…

The post How much will I need in an ISA to earn a £1,000 monthly passive income? appeared first on The Motley Fool UK.