Yet the overall returns delivered by the Cash ISA and Stocks and Shares ISA are considerably different. According to Moneyfacts, the average yearly return on the cash product was a miserly 1.79% between 2010 and 2025.

The investing ISA, meanwhile, has delivered a far superior 6.79%. In monetary terms, this translates into a substantially greater cash sum. Of course, this is an average figure. Different stocks would have yielded very different returns, so the exact return would have varied for each investor.

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.

What’s the difference?

Let’s use a £20,000 investment made in 2010 to illustrate the wealth gap. If someone put this into a Cash ISA and didn’t touch the interest, they’d have £26,155 sitting in their account in 2025 based on those long-term averages.

The return on the same lump sum in a Stocks and Shares ISA would be a whopping £55,222, meanwhile, with dividends reinvested. That’s more than double the return of the cash product. This demonstrates perfectly the impressive long-term wealth creation of the stock market.

In reality, though, the return of the equities investor vs the cash saver would likely have been greater. This is because most people drip-feed money into their savings and/or investing accounts over time.

With an extra £500 a month parked in a Cash ISA, the total return over 15 years improves to £129,307. For a Stocks and Shares ISA? That comes in at a brilliant £210,842, meaning an even wider difference in cash terms.

Here’s what I’m doing

It’s important to remember, though, that the Cash ISA has some big advantages over the stocks equivalent. Savings products carry no risk, excluding the unlikely scenario where the account provider goes bust. And they provide a guaranteed return. Shares don’t carry the same assurances. In fact, it’s possible theoretically for investors to lose all their cash.

For this reason, I’ve taken two steps to protect my money while still targeting high returns. I hold money in cash, but put most of it in stocks. And in my shares portfolio, I hold roughly 20–25 stocks to help me manage risk.

Primary Health Properties (LSE:PHP) is a share I’ve just bought for my portfolio. It’s not totally without risk, as rising interest rates can hit earnings. But it’s still a pretty secure way to get stock market exposure.

Why? Well as the name implies, it rents out medical facilities like GP surgeries, and receives a steady stream of income. Healthcare assets like this remain in constant demand. And what’s more, rents are backed by government bodies like the NHS, basically eliminating the chance of rent defaults.

Primary Health has raised dividends every year since the mid-90s, underlining its resilience. And today its dividend yield is 7.7%. For ISA investors looking for low-risk ways to invest, I think it’s a great stock to consider.

The post £20,000 invested in an ISA a decade ago is now worth… appeared first on The Motley Fool UK.

These are firms that lease properties to tenants and distribute the cash to shareholders. And the returns can be very attractive due to tax advantages they have.

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.

Earning income

Some REITs come with very high dividend yields. But while this can be a warning sign, a few are worth a closer look.

A 7.5% annual return is better than a savings account. And investing at that rate can bring big results over time. In Year One, a £10,000 investment earns £750. But reinvesting the dividends at the same rate means more income next year. 

At the same rate, the return in Year Two reaches £806. And by Year 10, it reaches £1,437 – more than twice the Year One return. After 30 years, this process returns £6,108 in dividends. That’s income that investors don’t have to do any work for. 

The big question is how to find 7.5% opportunities. Fortunately, the UK is an unusually good place to look. 

Primary Health Properties

Primary Health Properties (LSE:PHP) owns GP surgeries and health centres, and it’s a long-term passive income machine.

Its average lease has almost 10 years to run and the bulk of its income comes from the NHS. That’s about as reliable as it gets.

That reliability however, comes at a cost. It means chances to increase rents don’t come around often and negotiating can be tough. There’s also a risk that a change in government policy could affect demand. That’s impossible to rule out. 

The firm has however, recently acquired its biggest competitor. That should strengthen its negotiating position. 

Dividends are never guaranteed, but in terms of a reliable 7.5% yield, Primary Health Properties has to be worth considering.

AEW REIT

AEW REIT (LSE:AEWU) is the opposite of Primary Health Properties. But there’s more than one way to be a great investment.

The firm’s portfolio is a mix of different property types. These include leisure centres, gyms, and car parks.

The average lease is also much shorter, with less than six years to expiry. That obviously creates a risk of vacancies. With risk however, comes opportunity. AEW looks to use expiring leases as a chance to negotiate higher rents.

As a result, the firm focuses on properties with certain feafures. This can be low competition or scope for improvement.

Finding a 7.5% dividend yield with real growth potential is rare. So AEW has to be worth a closer look at today’s prices.

UK REITs

Stable businesses and high yields are an attractive combination. And UK REITs have been attracting attention recently. There are however, still some opportunities that I think are worth considering. These include Primary Health Properties and AEW.

A portfolio of stocks like these could be a valuable asset. And reinvesting dividends could generate real passive income.

The post How to invest £10,000 to aim for a £6,108 annual passive income appeared first on The Motley Fool UK.

Yet there are other ways to invest in UK real estate. And one such method only takes a few hundred pounds to get started, with all income potentially entirely tax-free. Here’s how.

An easier, tax-efficient way to invest in property

With high-yielding real estate investment trusts (REITs), it’s possible to start earning a chunky tax-free second income overnight.

These unique businesses trade like any other stock on the London Stock Exchange. That means compared to a buy-to-let property, it’s far more straightforward to start putting money to work.

But REITs are a special type of investment. The underlying business owns and manages a portfolio of real estate assets, generating rental cash flows each month, the bulk of which is returned to shareholders via dividends after covering expenses.

Dividends in the UK are indeed taxed. But when REITs are held inside a Stocks and Shares ISA, this tax disappears. And the result is an indirect real estate passive income stream that HMRC can’t touch.

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.

Which property stocks should investors buy?

Here in the UK, there’s a long list of REITs to pick from. But one that currently stands out in April 2026 is Primary Health Properties (LSE:PHP).

As the name suggests, the REIT owns and manages a portfolio of healthcare-related real estate, primarily GP surgeries. In fact, the company is one of the UK’s largest healthcare landlords with over 1,100 properties in its portfolio.

Digging deeper, most of these facilities are leased by the NHS, resulting in a revenue stream that’s ultimately backed by the UK government.

That’s translated into a remarkably reliable rental income, resulting in 30 years of continuous dividend hikes. And at a share price of around 92p, the yield sits close to 7.8%.

In terms of money, that means for every £100 invested, Primary Health Properties will generate £7.80 in a passive second income that’s almost entirely guaranteed by the government.

What’s the risk?

Having the UK government as the largest tenant is quite advantageous. But it’s also a double-edge sword. It’s no secret that the state of the UK public finances is a mess. And if political priorities shift or budgets are cut, Primary Health Properties’ predictable cash flow could start to suffer if expiring leases don’t get renewed.

Another weak spot is debt. With the bulk of profits paid out to shareholders, the company is highly dependent on debt to expand its empire. That’s not a problem when interest rates are low. But when rates are high, suddenly enormous chunks of cash flow get gobbled up. And that means, less money is available for dividends.

For now, the company is generating enough profit to cover shareholder payouts. But the margin is thin. And if interest rates start rising again while leases expire, dividends could be put on the chopping block.

This risk is why the yield is so high. And investors will need to consider this potential scenario carefully before snapping up any shares. Yet with such a long-track record of financial diligence, Primary Health Properties could be worth mulling over for investors seeking a second income from UK property.

The post How to earn a tax-free second income from UK property without purchasing a buy-to-let appeared first on The Motley Fool UK.

I’m investing in a Stocks and Shares ISA to make a second income for retirement. The UK is facing a double-whammy of a soaring elderly population and surging public debts. In this climate, I’m not taking any chances and betting on the State Pension alone to fund my lifestyle.The good news is the stock market’s been delivering excellent returns for decades.

Over the long term, a share investor can expect an average annual return of roughly 9%. That’s based on capital gains of 6% and dividend income of 3%. At this rate, even those in middle age with £0 put aside can generate enough cash to fund a comfortable retirement.

Want to know how? Read on.

Targeting a £16k income

I love the idea of dividend investing. Right now, I invest any cash payouts in my Stocks and Shares ISA back into the market, speeding up my portfolio’s growth. When I retire, I plan to use those dividends supplement my State Pension and hit my financial goals.

Now imagine we have a 40-year-old investor following the same strategy. How much would they need to invest for a large passive income stream by the time they hit 68?

They certainly wouldn’t need to set aside huge sums of money. Let’s say our investor puts £5 a day into their ISA, which works out at £152 a month. That isn’t the largest amount, so they choose an account with zero trading fees and low running costs to protect their investing power.

If they can hit a 9% average annual return, they would — after 28 years, and with dividends reinvested — have a nest egg of £229,262. If they then switched their ISA portfolio into 7%-yielding dividend shares, they’d have a healthy £16,048 income stream to fund their retirement, tax free.

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 top dividend share

Dividends are never guaranteed. But the UK’s stock market has a deep pool of quality, high-yield income shares investors can choose from. With a diversified portfolio of these, retirees have a brilliant chance of earning a substantial second income.

Primary Health Properties (LSE:PHP) could be a perfect share to consider for a strong dividend portfolio. You might not have heard of it, but you may have been in one of its buildings. It operates 1,142 healthcare centres across the UK and Ireland such as GP surgeries.

What makes the firm a dividend winner is its focus on a defensive industry that’s immune to economic downturns. It’s grown annual dividends consistently since the late 1990s, and is tipped by City analysts to keep doing so. This leaves an enormous 8% dividend yield for 2026.

So what are the risks of buying Primary Health shares? Well if interest rates rise as expected, its net asset values and borrowing costs will be negatively affected. In this climate, its share price might decline.

On the plus side, the firm will almost certainly continue paying a large and growing dividend in the near term. And as Britain’s booming population drives healthcare services demand, I expect both the share price and dividends to grow over time.

The post No savings at 40? Just £5 a day in an ISA could deliver a £16,000 second income appeared first on The Motley Fool UK.

With this in mind, here are two passive income ideas from the FTSE 250 worth exploring for an ISA.

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.

Infrastructure

3i Infrastructure (LSE:3IN) is an investment trust that has stakes in unlisted infrastructure firms. Through these, it aims to provide shareholders with a medium-term total return of 8%-10% per year, including a progressive annual dividend.

To give an example, it first invested in Belgium’s TCR in 2016. Since then, this lessor of airport ground support equipment has grown tremendously, even with Covid throwing a huge spanner in the works. It now operates at more than 237 airports in over 24 countries.

In March, 3i Infrastructure sold its 71% stake in TCR for expected net proceeds of €1.14bn, crystallising around a 19% per annum return over the life of the investment. Needless to say, that’s excellent.

With €300m of this profit, it plans to take a majority stake in the Lefdal Mine Datacenter in Norway. It says this data centre campus has “80 megawatt of fully let capacity, 10-year availability-based contracts across its customer base, and an attractive earnings growth outlook“.

Unfortunately, one big fly in the ointment here is DNS:NET, a German telecoms provider. The trust’s currently assessing restructuring options for this holding, but there’s a risk it will be written down to zero when FY26 results are reported in July. 

Despite this, 3i Infrastructure is still on track to deliver a 13.45p dividend. This would represent a 6.3% increase. For FY27, which has just started, analysts expect the dividend to rise to 14.3p.

At the current share price, this translates into a forward dividend yield of 4.3%. For a well-run infrastructure fund whose portfolio firms’ debt is mainly fixed rate or hedged, that’s an attractive starting yield. 

Healthcare landlord

The second passive income idea is Primary Health Properties (LSE:PHP), which is the UK’s largest pureplay healthcare REIT. It has a £6bn portfolio of 1,142 properties, including GP surgeries, medical centres and private hospitals.

From these, it receives rent, most of which is distributed to shareholders in the form of dividends. 76% of rent is currently funded directly or indirectly by the UK and Irish governments, with another 13% coming from established private hospital operators.

Last year, adjusted earnings per share rose 4% while the dividend edged up 3% to 7.1p. For this year, Primary Health Properties is confident that it can increase this another 3% to 7.3p.

Assuming this is met, which of course is never entirely guaranteed, it would be the trust’s 30th consecutive year of dividend growth.

What’s more, after falling 11% since February, the stock’s forward-looking yield has risen to a very attractive 8%.

Of course, no company is perfect, as a disappointing 36% decline in its share price over five years shows. REITs are highly influenced by interest rates, so if borrowing costs head higher this adds risk.

However, with an ageing population and the government rolling out more community-based care, the long-term prospects for the healthcare sector look bright.

Plus, the REIT has teamed up with pension fund giant USS to grow its portfolio without shouldering all the capital.

The post 2 passive income ideas for a Stocks and Shares ISA appeared first on The Motley Fool UK.

Here are two ideas I like right now.

A safe pair of hands?

First up is the Murray Income Trust (LSE:MUT). The stock has a current dividend yield of 4.41%, which hasn’t fallen below 4% for the past five years. It has 26 years’ worth of consecutive dividend growth, making it one of the most reliable in the FTSE 250.

For those unfamiliar, the business is an investment trust that aims to provide a high and growing income alongside capital growth. It does this by investing mainly in large, established UK-listed companies across almost all sectors. The trust makes money by collecting dividends from the companies it owns, and hopefully through capital appreciation if those shares rise in value.

As a result, the dividend is sustainable because it’s based on a variety of businesses paying, which the trust simply collects. Therefore, it’s lower risk than if the income were solely dependent on one firm.

Another reason to like the stock for income is due to the structure of investment trusts. Regulation allows them to retain some income in reserve during good years and use it to support dividends when markets are tougher. For income investors, that smoothing effect can be incredibly valuable and is a key reason why payouts tend to be more consistent than many individual shares.

In terms of risk, the five top holdings account for 25.1% of the overall portfolio. That’s quite concentrated, so if any of these underperform, it could be a significant drag on performance.

Stable tenants

Another stock is Primary Health Properties (LSE:PHP). It can boast 25 years’ worth of consecutive dividend growth, with a dividend yield of 7.79%. Over the past year, the share price has fallen by a modest 2%.

The recent share price weakness largely stems from macro forces rather than company-specific problems. As a real estate investment trust (REIT), the firm is highly sensitive to interest rates. Concerns about higher UK rates driven by energy inflation have weighed on the stock, which remains a risk going forward.

However, I still believe it’s a great income stock to consider. Its dividends are underpinned by government-backed rental income, with most tenants NHS-related. In my eyes, this makes cash flows about as defensive as they come.

Looking ahead, the outlook appears encouraging. Demand for modern primary healthcare facilities is rising, driven by an ageing population and a structural shift away from hospitals towards community-based care. That should keep the dividend strong.

Overall, I think both stocks have strong income potential going forward, which supports their strong track records and could be considered by investors.

The post 2 UK shares with over 20 years of consecutive dividend growth appeared first on The Motley Fool UK.

In my view, this represents one of the stock market’s best dip buying opportunities to consider. A £5,000 lump sum invested today buys 5,411 shares in the FTSE 250 company. With recent price weakness boosting the dividend yield to 8%, income investors could secure a £400 second income this year alone.

I expect it to remain an excellent dividend provider for decades to come.

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.

Huge dividend yields

You see, Primary Health Properties’ dividends have risen every year since the mid-1990s. Furthermore, they’ve grown by an impressive 8% on average over the period, meaning dividend yields have averaged 5.1%.

That’s above the FTSE 100 long-term average of 3% to 4%. This in part reflects the defensive nature of its operations — doctors remain in consistently high demand, eliminating problems such as poor rent collection and properties lying empty.

Yet past performance isn’t always a reliable indicator of future returns. So why am I confident the real estate investment trust (REIT) can keep delivering growing dividends?

One major reason is the enormous structural opportunity it enjoys. In a nutshell, demand for healthcare services is rising sharply as the UK population booms. Not only that, but the number of elderly people in particular is growing at breakneck pace, a demographic whose medical needs are naturally high.

Against this backcloth, spending on new GP surgeries, diagnostic centres, and the like, along with updating existing facilities, is tipped to rise strongly. Last year, the government launched its first national capital fund for primary care estates since 2020, underlining the urgent need for investment, with the number of over-65s tipped to rise 20% during the next decade.

What’s the catch?

So if Primary Health Properties is so robust, why has its share price slumped, you ask? It comes down to interest rate expectations. Following recent conflict in Iran, expectations of rate cuts by the Bank of England are in tatters. Markets are now pricing in two rate hikes in 2026, in fact.

This creates a problem for REITs, by depressing asset values and driving up borrowing costs. This is troubling for the firm, whose debt pile has grown following its August acquisition of rival Assura. But it’s weathered similar challenges before and should get this under control over time, helped by asset sales and cost cutting.

In the meantime, investors can likely expect further large and growing dividends, supported by REIT rules on shareholder payouts. These state at least 90% of annual rental profits must be paid out.

The post £5,000 buys 5,411 shares in this 8%-yielding passive income stock! appeared first on The Motley Fool UK.

Well, Legal & General, Primary Health Properties (LSE:PHP) and Taylor Wimpey have been three of the four most popular shares bought by AJ Bell customers over the past week. And it’s not hard to see why, because after the recent pullback sparked by the Iran conflict, this trio now yield 9.2%, 7.8% and 8.8%, respectively.

But is now really such a rare chance to build high-yield passive income?

What’s a correction?

To clarify, a stock market correction is a decline of 10% to just under 20% in the value of an index from its most recent peak (20% and over is a crash). The FTSE 100 entered one yesterday (23 March), before jumping higher after President Trump said the US was talking to Iran about ending the conflict.

However, the FTSE 250 index is still 11% lower than it ended February, so remains in correction territory. The implication is that investors are less confident that domestically focused mid-cap companies can weather the sudden inflationary spike triggered by the war.

So, is this really a good time to go rummaging around the FTSE 250 for bargains? Well, it might be if history is anything to go by.

You see, the last correction before today’s was almost a year ago when Trump dropped his tariffs bombshell. The FTSE 250 pulled back around 11.5% inside two weeks back then.

Fast forward to now, the index has returned roughly 24% since its 7 April low, including dividends. And that’s after the recent 11% haircut!

The correction before that was back in 2022. And had someone made a £10,000 investment in September of that year, when the mid-cap index bottomed out, they would now have over £15,000, including dividends.

Once-in-a-decade chance?

It may be misleading to say that corrections are once-in-a-decade chances to make huge returns. Historically, such potentially life-changing opportunities tend to be more common during full blown stock market crashes.

But corrections are still relatively rare, and therefore great opportunities to bag higher dividend yields. Returning to Primary Health Properties, is this FTSE 250 real estate investment trust (REIT) worth a look? I think so.

As a major healthcare property owner, the majority of rental income is funded directly or indirectly by a government body. And we’re talking over 1,100 properties across the UK and Ireland, including GP surgeries, medical centres and private hospitals.

Since the Iran war started, the share price has slumped almost 15%. This reflects fears that interest rates are going up, creating a risk that the REIT will have to refinance debt at less attractive rates. And that could result in disappointing dividend growth in future (or even a cut).

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, Primary Health Properties has 30 years of dividend increases under its belt. And the dip gives us that juicy 7.8% yield, which is enough to generate £780 in annual passive income from £10,000, assuming the dividend is paid.

The prospect of higher interest rates clearly adds risk to the investment case here. But with an exceptionally high, stable occupancy rate of 99%, I feel this ultra-high-yield stock is worth considering for a dividend portfolio right now.

The post Stock market correction: a once-in-a-decade chance to build big passive income? appeared first on The Motley Fool UK.

But even by these standards, Primary Health Properties (LSE:PHP) is an extra special investment trust. This is because dividends here have risen every single year since the mid-1990s. Not even economic downturns, banking crashes, and pandemics have derailed its ultra-progressive dividend policy.

Yet Primary Health shares have slumped 15% in value from their highs of 109.5p for 2026. The good news is this has pumped the forward dividend yield up to 7.9%, one of the highest among the UK’s listed REITs.

The question is, is this FTSE 250 dividend champion now too cheap to miss?

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.

Growth opportunities

I hold Primary Health shares in my Self-Invested Personal Pension (SIPP). So you’ll probably already have an idea of where I’m leaning here.

So let’s get discuss the good things before dealing with the risks. For me, the main attraction is the trust’s focus on the ultra-defensive medical property segment.

This REIT owns 1,142 properties such as GP surgeries, diagnostics centres, and community hubs. As Primary Health itself notes, its portfolio enjoys “strong fundamental demographic characteristics, supported by a positive political backdrop and the need for greater investment in healthcare infrastructure to support the delivery of services in local communities.”

In other words, the trust is benefitting from:

• Growing demand for healthcare services as the UK population rapidly ages
• Government policy that prioritises primary healthcare facilities to cut costs and hospital waiting times
• Years of underinvestment that creates a significant opportunity for capacity growth and the creation of up-to-date facilities

Defensive star

I’m confident these factors could fuel healthy dividend growth for years to come. However, that’s not the only reason why I love this trust’s focus on healthcare.

Unlike REITs that operate in more cyclical sectors, Primary Health trust doesn’t have to worry when economic conditions worsen. That’s especially important today as the UK economy heads towards ‘stagflation’ (low growth and high inflation). Occupancy levels were an impressive 99% in 2025, underlining its resilience.

But as I say, there are risks of buying Primary Health shares. With the Middle East conflict dragging on, the Bank of England could hike rates in the near term to control inflation. This could supercharge the trust’s borrowing costs, and explains that recent share price decline.

A top REIT at low prices

But I’m confident inflationary pressures won’t harm the trust’s ability to keep paying large and growing dividends. In fact, with roughly 40% of its rental contracts linked to RPI, it’s well placed to weather a period of high inflation.

Along with having that near-8% dividend yield, Primary Health shares trade at a 7% discount to its net asset value (NAV) per share of 99p. Is it one of the best cheap dividend stocks for investors to consider today? I think the answer’s an emphatic yes.

The post Down 15% and a yield of 7.9%! Is this REIT dividend champion now irresistible? appeared first on The Motley Fool UK.

Is this a better option that drawing down a percentage of your portfolio each year, though? I think so, and here I’ll explain why.

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.

Drawdowns vs dividends

The problem with withdrawing cash from your ISA or pension is you’re gradually eroding your capital. This can reduce your future income potential and raise the risk of running out of money later on.

This is especially problematic if you draw down more than 4% of your portfolio each year. Another issue is you might not want to limit your income goal to such a low percentage. Realistically, it could significantly reduce one’s chances of hitting financial goals in retirement.

Let’s say you’ve been investing regularly for 30 years and have a Stocks and Shares ISA of £500,000. At this level, withdrawing 4% from your ISA each year would generate a £20,000 annual passive income. But why settle for that, when you could enjoy double that amount with 8%-yielding dividend shares?

Living comfortably

A £40,000 dividend income today, combined with the full State Pension, would provide an annual passive income above £50,000. That’s well above the £43,900 that Pensions UK says single-person households need today to retire comfortably.

So what’s the drawback? The problem, of course, is that dividends are never, ever guaranteed. What’s more, dividend shares with greater yields sometimes expose investors to greater risk — for instance, a high yield can signal a company the market thinks could cut shareholder payouts.

Yet investors can take steps to keep this risk to a minimum. Careful research to separate the dividend traps from the true income heroes is essential. So is building a diverse portfolio of 15 or more shares, covering different industries and parts of the world to spread risk.

A heroic income share

Primary Health Properties (LSE:PHP) is one of the bet shares out there for targeting a reliable passive income. I hold it as part of my own diversified dividend portfolio.

Annual dividends have risen here consistently since 1997. Not only that, but they’ve grown at a healthy annual average of 8%. The reason why? By focusing on the ultra-defensive medical sector, the rental income Primary Health receives remains stable across the economic cycle. But that’s not all — a large percentage of its rental contracts are inflation-linked, leading to steady earnings growth over time.

There’s no guarantee this dividend stock will keep on delivering. Changing NHS policy could damage demand for GP and other health services, and with it demand for surgeries and the like. But I’m confident the company will, as the UK’s ageing population supercharges demand for primary healthcare to take the strain off hospitals. It’s one of my favourite income stocks right now.

The post I plan to retire in comfort with passive income stocks! Here’s why appeared first on The Motley Fool UK.