That’s never been more true than it is now. While other investors are busy trying to figure out the implications of AI agents and GLP-1 drugs, dividend investors are just sitting there collecting cash.

Keeping it simple

Companies have a choice about what they do with their cash. Some of them invest it to try and grow their future revenues and profits, while others return it to shareholders as dividends. 

With the first type of business, investors need to pay attention to what management is doing. As an example, Meta Platforms is spending heavily on AI infrastructure. 

Is that going to work out? My strong suspicion is that even the firm’s management doesn’t know for sure, but it’s something investors can’t afford to ignore – it’s their money that’s being spent.

In other cases, companies use their profits to acquire other businesses. UK industrial conglomerate Halma is a great example of an organisation that does this a lot. 

In this situation, investors have to pay attention to the deals that the firm is doing, especially as it gets bigger. The desire to do more deals to keep the growth going can create a risk of overpaying.

When a company returns its cash to shareholders, though, these questions go away. Instead of trying to work out what the business does with the cash, investors can spend it themselves.

REITs: the ultimate simplicity

Real estate investment trusts (REITs) might be the ultimate in passive income simplicity. These are firms that let properties to tenants and are required to distribute the income to investors.

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.

One of the best examples is Realty Income (NYSE:O). The company owns a portfolio of retail assets and investors have enjoyed dividend payments every month for over three decades. 

A closer look at the firm’s strategy reveals the source of this consistency. It focuses on high-quality tenants to minimise the risk of defaults and uses triple-net leases to limit maintenance costs. 

Realty Income’s average lease has another nine years to run, so the business is also more predictable than most. And the majority of contracts include built-in increases to offset inflation.

One thing investors do need to pay attention to is the firm’s upcoming debt. Some of this matures before the average lease is due for renewal, so higher interest costs might mean lower margins.

No business is entirely automatic. But for investors looking for a company that has a simple, uncomplicated model, this might be one of the best examples around. 

And relax

In general, investors who own shares in REITs don’t have to worry about the complicated noise that the stock market is currently struggling with. They just need to focus on two things.

One is whether tenants are going to be able to pay their rent. And the other is the firm’s ability to manage its balance sheet effectively while returning cash to shareholders. 

On both counts, I think Realty Income scores very highly. So I think it’s a great stock for investors looking for monthly passive income to check out.

The post Passive income doesn’t have to be complicated appeared first on The Motley Fool UK.

A 5.3% dividend yield’s also nothing to take lightly. But I think UK investors need to be a little bit wary of some of the hidden costs that come with investing in this type of asset. 

Reliability

Realty Income’s a real estate investment trust (REIT) that owns a portfolio of properties mostly in the retail sector. And the company’s theme is reliability. 

The firm specialises in securing long-term contracts with reliable tenants, which minimises the risk of rent defaults. On top of this triple-net leases mean rising maintenance costs are limited.

One downside to this is that it also limits the scope for increasing rents, meaning Realty Income has to buy and sell properties to generate growth. But it’s done this very well in the past.

There’s nothing at all wrong with focusing on resilience first and foremost and the company has increased its dividend every quarter for more than 25 years. Over time, that growth adds up. 

Dividends

Realty Income currently pays $0.27 (around 24p) per share in monthly dividends. At today’s exchange rates, it looks as though the number of shares needed for a £1,000 a month second income is 4,692.

There is however, a catch. As a UK investor, dividends I receive from US companies are subject to a 15% withholding tax (30% for investors who don’t fill out a W-8BEN form). That means the actual number of shares I need to target that £1,000 a month in dividends is more like 5,536. And that’s quite a significant difference from an investment perspective. 

With the stock trading at $61 per share, that’s the difference between $286,212 (£213,556) and $337,696 (£251,971). In other words – I’ll need an extra £40,000 over time to offset those taxes.

Staying closer to home

I’m not in a position to make that kind of an investment right now. But these are the kind of calculations that UK investors need to make when thinking about their long-term returns. 

Dividends from US companies come with a 15% withholding tax and a Stocks and Shares ISA can’t get you around this. And that kind of drag on returns is something to take seriously.

It’s also worth noting that a number of UK REITs come with attractive yields at the moment. They don’t typically pay monthly dividends, but they trade at lower valuation multiples. This is something that private equity investors have been looking to take advantage of in the last couple of years. But I think there are still some opportunities that are worth considering. 

Maximising returns

There’s a lot to like about Realty Income. In terms of passive income, it might well be one of the highest-quality businesses available on the stock market right now. 

Investing however, is about more than finding good companies. Investors also need to think about valuation and how much of their expected return they’ll actually be able to keep.

That’s why I’m looking past Realty Income at the moment. I think there are more attractive opportunities for UK investors to take a look at closer to home.

The post Could 4,692 shares in this quality REIT net me a £1,000-a-month second income? appeared first on The Motley Fool UK.

That said, UK stocks have lost some of their lustre from a dividend perspective more recently. Underlying dividends (which also exclude special dividends) dropped 0.6% in 2024, representing the second successive year of declines.

On a global basis, shareholder payouts rose 6.6%, according to Janus Henderson.  In the US, underlying dividends were up 8.7% year on year.

Taking a global view

That isn’t to say London’s now a bad choice to shop for a second income. Spire Healthcare — a share I hold in my Stocks and Shares ISA — hiked the ordinary dividend 320% in 2024, for instance. Dozens of other UK shares raised theirs by triple- and double-digit percentages too.

But last year’s performance shows the wisdom of searching the world for dividend stocks and not just sticking to the UK. Ageas is one such dividend share I’m considering for my own portfolio. The Belgian insurance giant has raised dividends during 11 of the last 12 years. The only exception came during 2020 — then the business froze cash rewards at the height of the pandemic.

Ageas is highly cash generative, and is tipped to keep raising dividends despite macroeconomic risks. Its forward dividend yield is an enormous 6.6%.

I’m also taking a close look at Enel. The Italian energy producer has raised dividends every year since 2015. This stability reflects the inelastic nature of power demand and the reliable cash flows it provides. A focus on renewable energy can create some turbulence during periods of unfavourable weather. However, the firm’s portfolio of gas-fired plants helps limit any damage.

The dividend yield here is 5.7%.

A top US dividend share

Looking further afield, Realty Income (NYSE:O) is a US share I’ve long admired for its dividend growth record. Investor payouts have risen for 112 consecutive quarters. This means annual dividend growth since the 1994-listed real estate investment trust (REIT) stands at a healthy 4.2%.

I also like Realty Income because of the frequency of its dividends. The self-styled ‘Monthly Dividend Company’ has paid cash rewards roughly every four weeks for 56 years. This gives investors quicker access to dividends for potential reinvestment.

Reflecting its REIT status, Realty Income is obligated to pay at least 90% of annual earnings from its rental operations out in dividends. This is in exchange for juicy tax perks. But this doesn’t guarantee a large and growing dividend on its own. Profits can fall during economic downturns when rent collection and occupancy issues may spring up.

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, this rule can still make it a more dependable dividend payer than most other stocks when earnings sink. What’s more, the company has roughly 15,600 commercial properties locked down on long-term contracts, a powerful cushion from possible downturns.

Realty Income’s forward yield’s a chunky 5.4%.

The post Chasing a passive income? Check out these 3 top global dividend shares appeared first on The Motley Fool UK.

Yet, its ability to generate passive income is poor, in all due to respect. This reflects unfavourable tax rules that see companies prioritise share buybacks over dividends. The S&P 500’s high composition of growth shares, where reinvesting to build earnings takes precedence over handing spare cash back to investors, is another reason for its underperformance.

However, I wouldn’t say investors should ignore US shares when building a passive income portfolio. Here I’ll show you how individuals could target a £1,000 second income each month with a portfolio of S&P 500 dividend shares.

Top REITs

The index is home to almost 30 real estate investment trusts (REITs) today. So, we’ll start by looking at two of them: Realty Income (NYSE:O) and UDR. The dividend yields on these property stocks are a meaty 5.5% and 4.7%, respectively.

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.

REITs can be an excellent way to target passive income, though investors must be mindful of interest rate pressures that can depress asset values. Under sector rules, a minimum of 90% of trust profits from rental activities must be distributed by way of dividends.

Realty Income is one of the most reliable S&P 500 income stocks out there, in my view. Shareholder payouts haven risen every year since the mid-1990s:

What’s more, dividends have grown at an average yearly pace of 4.2% since then, outpacing the rate of inflation.

Realty Income’s focus on retail and industrial clients leaves it vulnerable to weakening economic conditions. However, its demand that tenants have “a service, non-discretionary and/or low-price-point component to their business” helps it to weather tough times and maintain strong occupancy levels and stable rent collection.

Furthermore, with some 1,600 clients tied down on long-term contracts, its portfolio can cushion client-specific setbacks to deliver solid returns.

More dividend heroes

There are plenty of other non-REIT income stocks to consider as well. Ford, for instance, carries a 5.3% forward dividend yield. I’m confident in its investment prospects as truck, electric, and commercial vehicle sales soar. However, it may face higher trade tariff costs in future.

Telecoms giant Verizon, meanwhile, is in a prime position to grow profits as the digital economy grows. I think that could help offset the challenges it faces in the form of high capex spending requirements. The prospective dividend yield here is 6.2%.

The final stock that I think is worth considering in this mini portfolio is Kraft Heinz, which also has a 6.2% yield for 2025. Competitive threats are mounting, but I think beloved brands like Heinz Ketchup and Philadelphia should help it maintain excellent earnings stability.

Targeting a £1k passive income

Dividends are never guaranteed. But a diversified portfolio like this can protect investors from shocks and provide a smooth return over time.

Based on this stock portfolio’s average yield of 5.6%, a £215,000 investment spread equally among its constituents would generate a monthly passive income of £1,000.

Sure, that £215,000 is a decent chunk of change. But it’s a realistic target for investors with a disciplined approach to investing. Someone investing £500 a month could achieve that in 17 years, assuming an average annual return of 8%.

The post Here’s a 5-stock S&P 500 portfolio to consider to target a £1k monthly passive income appeared first on The Motley Fool UK.

Investors, however, need to be careful when it comes to this type of investment. While receiving cash distributions every month is nice, the numbers need to stack up over the long term…

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.

Dividend income

At the moment, 30-year government bonds yield 4.9% in the US and 5.4% in the UK. Compared to that, Realty Income shares look like a very attractive passive income opportunity.

The stock currently has a 5.6% dividend yield. And the firm has increased its distribution at an average of 4.2% per year since listing on the US stock market in 1994.

Past dividend growth doesn’t guarantee future increases. But Realty Income’s impressive track record hasn’t come about by accident – it’s the result of skilled management.

The headline numbers are attractive, but what you see isn’t always what you get with investing. And UK investors need to be especially aware of how returns can be lower than expected.

Hidden costs

The first thing UK investors need to keep in mind is taxes. Distributions from US companies are subject to a 30% withholding tax, though this falls to 15% for investors with a W-8BEN form.

In the case of Realty Income, it means the 5.6% yield is actually more like 4.75%. That means UK investors should expect a lower starting return than government bonds currently offer.

Inflation is another issue. Both the Bank of England and the US Federal Reserve are aiming for 2% currency depreciation per year, which would cut the starting return to 2.75% in real terms.

That’s less than half the 5.6% investors might have initially expected. But the bigger problem is that the annual dividend growth rate has slowed to 2.2% over the last five years, rather than 4.2%.

Long-term returns

A starting yield of 5.6% with 4.2% growth is very different to a starting yield of 4.75% with 2.2% growth. And the contrast can be quite dramatic over a 30-year time period.

Investing £10,000 at the former rate for three decades generates £32,477 in passive income, with £1,846 in year 30. The lower return, however, brings in £19,885 in total and £893 in the final year.

The higher number is what UK investors might hope for from a £10,000 investment in Realty Income shares. But I think the lower one is a more realistic expectation in real terms after taxes.

That’s why it’s important to pay attention to the various factors that can weigh on real returns. Sometimes investors can find themselves getting much less than they initially expected.

US stocks

I used to have a big (by my standards) investment in Realty Income. The reason I don’t any longer is that I think I’ve found better opportunities in the UK. 

Over the long term, I’m not sure the potential returns are exciting. A combination of inflation, a slowing growth rate, and withholding taxes make me wary of what I might get back.

The post Is this US REIT a top buy for long-term passive income? appeared first on The Motley Fool UK.

Tariff tensions are back

At the start of April, the announcement of tariffs on global trading partners led to a sharp decline in the S&P 500. As the situation improved and a 90-day negotiation period was established, the market rallied. Yet we’re now in a position where this grace period is ending, with letters being sent out to nations detailing potential tariff rates.

Of course, it’s possible that any backlash means the US administration kicks the can down the road again. However, if not, the market could revert to panic mode as investors absorb the potential negative impact that tariffs could have on the US economy.

Interest rates remaining high

Thanks to strong labour market data and a lack of inflation concerns, investors are expecting the US Federal Reserve not to cut interest rates as aggressively as previously thought. Typically, the lowering of interest rates is a good thing for the stock market. A lack of reduction could put pressure on stocks to continue heading higher.

For example, I’m staying away from Realty Income (NYSE:O). It’s a real estate investment trust (REIT) that owns and manages freestanding commercial properties across the US. Impressively, it pays out its dividend monthly!

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.

Its revenue comes almost entirely from long-term rental contracts with tenants. Yet the revenue is offset partly by financing costs. It borrows money to acquire properties and grow. High interest rates mean debt remains expensive. If investors need to adjust their view on rates staying higher for longer, sentiment towards Realty Income could become less favourable.

However, some might be happy to ride out any potential share price correction due to the generous 5.61% dividend yield. The share price is up 8% over the past year, indicating it can be resilient despite challenging market conditions.

Valuations look stretched

The final red flag I’m observing is the valuation of companies within the index and even the index average. For example, a good metric is the price-to-earnings ratio. It’s currently 29.69 for the S&P 500. This is well above the fair value benchmark figure of 10 I use, and almost double the corresponding ratio figure for the FTSE 100.

This doesn’t mean that the index can’t continue to rally, as not all stocks within it are overvalued. But it does highlight the need to be selective when it comes to allocating money.

The post 3 red flags I’m seeing right now for the S&P 500 appeared first on The Motley Fool UK.

Alexandria Real Estate

What it does: The company specialises in creating, acquiring, and managing life science campuses in key innovation hubs.

By Oliver Rodzianko. Alexandria Real Estate (NYSE:ARE) is my favourite passive income investment at the moment. It’s renowned for long-term price growth as well as its juicy 4.5% dividend yield.

Also, it’s currently down nearly 50% from its all-time high, so it doubles up as a dividend and a value investment.

The business has stable tenants in leading biotech, pharmaceutical, and technology companies. This provides stable and long-term lease agreements. The life sciences sector is positioned for continued growth amid technology innovation. Therefore, I’m very bullish on it.

That being said, the concentrated focus on the life sciences and technology sectors makes the company susceptible to downturns in these industries. So, it’s wise for me to not rely solely on Alexandria Real Estate for my dividend income.

I bought the shares earlier in the year, and I’ll be adding to my position regularly as long as the valuation remains appealing.

Oliver Rodzianko owns shares in Alexandria Real Estate

HSBC

What it does: HSBC is a global bank operating in over 60 countries, with a special focus on Asia. Across the globe, it serves over 40m customers.

By Charlie Keough. One of my favourite shares for passive income is HSBC (LSE: HSBA). The stock sports a thumping 7.5% yield. That has been steadily rising in the last couple of years.

That includes a 90% increase last year when its payout rose from 31 cents per share to 61 cents. Alongside that, it completed $7bn worth of share buybacks.

HSBC recently offloaded its Canadian unit. With the proceeds raised, the firm plans to pay shareholders a special one-off 21 cents dividend this year. That takes its yield closer to 10%, making it one of the highest on the FTSE 100.

I do have one main concern with HSBC. It’s heavily invested in Asia and this has caused the bank issues lately. The Chinese economy isn’t firing on all cylinders. It has struggled for growth. As such, HSBC has been directly impacted.

But in the long run, I expect its focus on the region to pay dividends (quite literally!). I hope to add to my position in HSBC soon.

Charlie Keough owns shares in HSBC.

MONY Group

What it does: MONY Group operates savings platform Moneysupermarket.com and cashback site Quidco

By Paul Summers. My investment in Moneysupermarket.com owner MONY (LSE: MONY) a few years ago is still to generate a profit. However, I’ve been more than happy to stay invested for the passive income the company churns out.

This stock yields currently yields 5.7%. That’s far more than I’d get from owning a fund that simply tracked the FTSE 250. But it’s not so high that I’m doubting whether the money will eventually hit my account.

To be sure, the mid-cap operates in a hyper-competitive space. There’s a question mark over how much it can grow from here as well. However, a rise in energy switching as deals get more competitive should help. 

Although it may mean losing that lovely income stream, I also wouldn’t be surprised if MONY was subject to a takeover bid or two in the near future.

Paul Summers owns shares in MONY Group

Realty Income

What it does: Realty Income owns and leases a portfolio of real estate assets, primarily focused on retail properties.

By Stephen Wright. I’ve owned shares in Realty Income (NYSE:O) for some time now. And I don’t anticipate selling them any time soon. 

The company is a real estate investment trust (REIT) that leases retail properties to its tenants. The majority of its business comes from the US.

Operating on a triple net lease basis helps reduce the overall costs – and risk – for the firm. It means tenants pay for things like insurance, taxes, and maintenance.

A couple of its largest tenants – the likes of Walgreens Boots Alliance – have found themselves in trouble lately. And that increases the risk of unpaid rent.

Realty Income has a highly diversified portfolio, though. As a result, the overall impact of any individual tenant getting into difficulties is limited.

For the foreseeable future, I’m looking to keep collecting dividends from the company. It’s been remarkably stable in the past and I think the outlook is decent from here.

Stephen Wright owns shares in Realty Income.

The post 4 stocks that Fools own for passive income appeared first on The Motley Fool UK.

Setting up a Stocks and Shares ISA

When I first started investing, I didn’t know about Stocks and Shares ISAs. I wish I did because the tax benefits are astounding. I can invest up to £20,000 per year in this type of brokerage account and pay no tax on my capital gains and dividends. In my opinion, this is undoubtedly the shrewdest way to invest as a British citizen.

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.

Typically, I look for yields above 4%, but it’s possible to find much higher. I also look for investments where the share price has risen over decades so that my initial investment doesn’t lose value.

If I average a 5% yield across a £20,000 portfolio of 10 to 15 companies, and this rises by 5% a year in value, I can expect it to be worth £32,575 in 10 years and to receive dividends of £12,575 over the period.

Realty Income is my top choice

My favourite way to invest for dividends is in real estate investment trusts (REITs), which are companies that operate rental properties across various sectors.

I’m most bullish on Realty Income (NYSE:O) because it has a high dividend yield of 5%. Also, its 10-year median yield is 4.5%. My favourite element of this investment is that it pays money out to shareholders monthly. Investors famously refer to it as the ‘monthly dividend company’ in light of this.

Over the past 10 years, this investment has grown in price by nearly 43%. This is a 3.6% compound annual growth rate, which is slightly lower than my ambition of 5%. However, I have to bear in mind that as the shares appreciate in value, the dividends go up. If I bought Realty Income shares five years ago, it would currently yield 5.8%.

The downsides to dividend investing

The biggest risk here is that the company could cut its dividend payments. Past stability in yield is no guarantee of future results. Macroeconomic pressures can cause Realty Income’s tenants, which are mainly commercial companies, to go out of business. This could cause occupancy issues in a worst-case scenario, and issues with dividend payments.

This risk is currently slightly exacerbated as there’s high inflation in the US, which is where the REIT primarily operates. This is causing contractions in spending habits. That could result in businesses closing down certain stores if the country enters a recessionary period.

I’m still confident

Even given the risks, interest rates are due for cuts soon. This is usually good for REITs as it decreases the cost of borrowing, allowing businesses to finance lease terms more easily.

My dream is to have a portfolio that generates cash flow with little effort and still appreciates in value. There is no better investment than Realty Income for this, in my opinion. It’s likely one of the next investments I’ll make.

The post £20,000 in the bank? That could generate £12,575 in passive income over 10 years appeared first on The Motley Fool UK.

To do this, I need a diversified portfolio that I can add to throughout my life. Furthermore, I’ll also need the shares I own to have good dividends, with the aim of an average yield of 5%.

My £1m goal

I believe it’s possible to get to my £1m goal in about 30 years of investing. While this might sound like a long time, it’s certainly worth the wait.

To begin, I’d need £10k in cash to invest, and then I’d need to add £350 per month to my shareholdings. After 30 years, this would compound into £990,000 if I achieve an average annual return of 10% over the time frame (via capital gains and dividends).

Of course, the stock market can both rise and fall, so my returns aren’t guaranteed. However, I’m willing to take on a little risk to achieve my portfolio goals. The important thing is that I diversify well to limit the problems that could arise in any one industry or region.

Realty Income is my top choice

When choosing the right dividend shares, I’m primarily looking for two things. First of all, I want an investment that has a big yield. Secondly, I’m looking for a history of price growth, which means my portfolio value could still grow if I buy a stake.

Realty Income (NYSE:O), a leading US real estate investment trust, has both of these crucial qualities. Over the past 10 years, it has gained 38% in price, and it has my target yield of 5%.

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.

I also reckon the shares are good value for money. In real estate, investors highly regard a valuation ratio called price-to-funds-from-operations. This is similar to the price-to-earnings ratio, except it’s adjusted specifically for the real estate market.

Realty Income has a price-to-funds-from-operations ratio of 15, which is just above the industry average of 13.5. This business is one of the most successful real estate companies in the US. So, the relatively low valuation is a reason for me to be bullish.

Navigating risks is crucial

I have to remember that my £1m goal might not be achievable if there’s a period of macroeconomic weakness. Also, I might need to pull out funds for an emergency.

Furthermore, the property market in the US could take a downturn. This might lead to lower rental yields affecting my residual income goals. Also, as Realty Income hasn’t reliably delivered an average of 10% price growth a year, I’d likely need to start in growth and value shares and transition to dividend investments later when my focus is more on generating cash flow.

I’m not buying it yet

I’m not looking to expand my dividend income right now, and I already own one property company for cash flow called Alexandria Real Estate.

However, next time I decide to buy a high-dividend investment, Realty Income will be the first company I look at. Therefore, it’s sitting high up on my watchlist.

The post Here’s how I’d aim to have £1m in stocks to generate £50k a year in passive income appeared first on The Motley Fool UK.

Crocs

What it does: Crocs is the owner and distributor of footwear sold internationally under brands including Crocs and HeyDude.

By Christopher Ruane. I do not like Crocs (NASDAQ: CROX) shoes. But I do like the business.

Last year the iconic footwear firm saw revenues climb 14% while net income surged 46% to $793m. The current market capitalisation of $9bn makes the shares look cheap in my opinion.

The business benefits from strong international revenue growth (24% in the first quarter), positive momentum for the Crocs brand and increasing sales in other product lines such as HeyDude. I think there could be more value in this company than the current share price suggests.

Generic rivals to its core range of simple footwear is an ongoing risk to sales and profits. A weak retail environment in the US market could also hurt demand.

But Crocs is highly profitable and has a well-established business I think could keep growing. It is paying down debt and I expect it to continue buying back shares this year.

Christopher Ruane owns shares in Crocs.

Joby Aviation

What it does: Joby Aviation is an electric vertical take-off and landing (eVTOL) aircraft company building an air taxi service.

By Ben McPoland. I recently bought a few more shares of Joby Aviation (NYSE: JOBY). The Toyota-backed firm has built an electric air taxi designed to carry a pilot and four passengers. These eVTOLs fly at speeds of up to 200 mph and are near-silent, meaning there’s far less pollution and noise.

It plans to begin its ride-hailing service next year, initially in New York and Los Angeles. With partners Delta Air lines and Uber, it aims to reduce commutes between John F. Kennedy Airport and nearby areas from 1 hour to 7 minutes.

It has also signed an exclusive agreement to provide air taxi services in Dubai and sell aircraft to Mukamalah, the aviation arm of Saudi Aramco, which will introduce eVTOL aircraft to Saudi Arabia. Joby also delivered the first ever electric air taxi to the US Department of Defence last year. 

Now, this is a high-risk stock because the innovative company is pre-revenue and still has to get the final sign-off from regulators to begin commercial operations. Perhaps there will be delays. But the firm remains well-capitalised, with $924m in cash on the balance sheet at the end of March.

Ben McPoland owns shares in Joby Aviation.   

Realty Income

What it does: Realty Income is a US real estate investment trust that leases a portfolio of retail properties.

By Stephen Wright. I’ve been buying shares in Realty Income (NYSE:O) recently. The company has an outstanding track record of dividend increases and I think it can be a good source of income going forward.

The current dividend yield is 6%. That’s high compared to where it has been over the last decade and I think there’s a real opportunity at the moment.

Things have been tough in the industry lately. And the latest news is that Walgreens Boots Alliance – one of the companies biggest tenants – is planning on closing some of its stores.

Walgreens might be one of Realty Income’s largest tenants, but it only accounts for around 2.5% of the total rent. As a result, the impact on the overall portfolio should be limited.

That’s the benefit of leasing to a diversified tenant base. It makes the company resilient and puts it in a good position to keep increasing its dividend going forward.

Stephen Wright owns shares in Realty Income.

Unilever

What it does: Unilever is a multinational consumer goods company. It has over 400 brands, including 30 Power Brands.

By Charlie Keough. I snapped up some shares in FTSE 100 giant Unilever (LSE: ULVR) last month. There are a few reasons why.

Firstly, I want to bulk out my portfolio with defensive stocks. I want the majority of my holdings to be companies that have the potential to provide steady returns over the long run. Unilever fits the bill.

I also think the stock looks like decent value at the moment, trading on 20.2 times earnings and below its historical average.

Then there’s its dividend yield. At 3.4%, it’s far from the highest in my portfolio. But it’s reliable. And to me, that’s incredibly important.

The risks are that Unilever tends to sell higher-end goods, which come at a price. Therefore, during a cost-of-living crisis, there’s the ongoing threat that consumers switch to cheaper non-branded alternatives.

But Unilever has strong branding and this gives it an edge. This showed in its latest results, where for the first quarter the business posted 4.4% underlying sales growth and 2.2% underlying volume growth.

Charlie Keough owns shares in Unilever.

Vesuvius

What it does: Vesuvius is a market leader in metal flow engineering, providing solutions to handle molten metal in iron and steel foundries.

By Roland Head. I added FTSE 250 member Vesuvius (LSE: VSVS) to my portfolio recently. In my view, this 108-year-old business looks decent value right now.

In a trading update in May, CEO Patrick André confirmed that he expected 2024 results to be in line with existing expectations.

Broker forecasts suggest profits are expected to return to modest growth in 2024, after last year’s decline. City analysts are predicting stronger earnings growth in 2025.

The big risk here is the company’s cyclical exposure. Demand for Vesuvius’s services is linked global construction and industrial activity. If this slows in major markets such as the USA or India, results could disappoint.

Personally, I think a cautious outlook is already priced in. I bought the shares on less than 10 times 2024 forecast earnings, with a well-supported 5.2% dividend yield.

At this level, I’m happy to collect the income and wait for market conditions to improve.

Roland Head owns shares in Vesuvius.

Xtrackers MSCI World Momentum UCITS ETF

What it does: Xtrackers MSCI World Momentum UCITS ETF invests in global shares that exhibit strong price momentum.

By Royston Wild. I’ve been seeking ways to diversify my portfolio in recent months. I’ve been looking for ways to manage risk and to grab a slice of some exciting investment opportunities.

Xtrackers MSCI World Momentum UCITS ETF (LSE:XDEM) is an exchange-traded fund (or ETF) I feel enables me to do this effectively. It holds shares in almost 350 different companies.

The fund is focused on the US — as I type, a whopping 68.5% of its capital is tied into New York-listed companies. Its five largest holdings are Nvidia, Meta, Amazon, Broadcom and Eli Lilly.

But as its name implies, it also takes a pan-global approach and has holdings in Japanese, German, Dutch and Danish stocks, among others. It also offers exposure to many sectors like semiconductors, software, banks and mining, providing my portfolio with added diversification.

As you can see, this Xtrackers product is highly exposed to several cyclical sectors. So if interest rates remain high, I could endure disappointing returns in the near term.

But over time, I think the fund could be an effective way to hit my investment goals.

Royston Wild owns Xtrackers MSCI World Momentum UCITS ETF.

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