Story by Cliff D’Arcy

The Motley Fool

Thanks to the cost-of-living crisis, some folk now have a second job, side hustle or other way to generate extra earnings. For example, renting out a room, parking space or driveway seems popular around my way. My solution is to make my money work harder for me by generating extra passive income.

Powerful passive income
The problem with passive income is that some earnings are a lot less ‘passive’ than others.

For example, I could become a buy-to-let (BTL) landlord, renting out property to tenants. But my life experience has shown how tricky and involved this can be. At the very least, I’d have to maintain and repair another property, as well as my family home. Therefore, BTL investing really isn’t for me.

Another option people pursue is blogging, blogging on YouTube or Instagram, publishing online and so on. But as a freelance financial writer, I already spend a lot of time sharing my opinions on screen. Hence, this is another no-go for me.

My two favourite forms of earnings
My two ideal forms of passive income come from my efforts to improve my finances. For the next few years, I’m concentrating on these two ‘money machines’.

1. Share dividends
   Dividends are cash payments made by some businesses to their owners — that is, shareholders. However, many listed companies don’t pay out any dividends. Some of these firms are loss-making, while others prefer to reinvest their profits into future growth.

What’s more, future dividends are not guaranteed. When companies get into trouble, some respond by cutting or cancelling their payouts. And if this happens, their share prices can slump.

By the way, some people claim that investing in shares is no better than buying lottery tickets. But I know that the National Lottery returns only half of ticket sales as prizes, delivering a loss of 50% for every draw. Conversely, the stock market has produced positive returns for investors over the long term.

In addition, when I buy shares, I know that I am buying part-ownership of businesses. If these firms are well-run and growing, then my shares should rise in value. Thus, I choose the companies I buy into very carefully, mostly from the UK’s FTSE 100 and FTSE 250, plus US powerhouses.

As my wife and I already have almost all of our wealth invested in shares, our share dividends are substantial. Even so, we keep investing these cash payouts into yet more shares to boost our future passive income.

2. Pensions

The blog portfolio currently has £500 for re-investment and a further £1,331 xd.

I don’t need to do anything apart from wait for the cash to hit the account.

GRS

Primary Health Properties PLC

(“PHP” or the “Company”)

Notice of Interim Dividend

The Company announces that the second quarterly interim dividend in 2024 of 1.725 pence per ordinary share of 12.5 pence each will be paid as to 1.45 pence by way of a Property Income Distribution (“PID”) and the remainder as an ordinary dividend on 17 May 2024 to shareholders on the register on 2 April 2024. 

Daily Express

What does a £150,000 pension pot give?

If someone had a £150,000 pension and they took the 25 percent tax-free cash as a lump sum, they would have £112,500 to spend or save or invest elsewhere.

The estimated annual income would therefore be £4,500 a year or £375 a month before tax, assuming they retired at age 66 and withdrew four percent a year.

TENT General meeting 22 Mar re- wind down.

VPC Awaiting timetable for return of cash

ADIG First return of cash 1st half 2024

LBOW Return of further cash, awaiting news.

Whilst the above will take several years to complete, the portfolio currently has 12 positions it will therefore require 2 new replacements.

Current fcast 8k of dividends.

Current target 9k of dividends.

Current Annuity Rate

Joint life 50%, 3% escalation, no guarantee at age 65 £4,994.00

which will fall as interest rates are cut and u have to surrender your 100k of capital

Primary Health Properties PLC – London-based real estate trust investing in primary healthcare facilities – Chief Executive Officer Designate Mark Davies buys 150,000 shares at 91.1 pence each in London on Tuesday, worth GBP136,650. He previously bought 100,000 shares at 92.40p each on March 6.

Davies was named as CEO in September, and will officially replace current CEO and founder Harry Hyman at the annual general meeting on April 24.

London current stock price: 91.99 pence, up 0.9% on Wednesday

12-month change: down 12%

12-month change: down 55%

The Motley Fool

How to follow Warren Buffett’s example and target a £500 passive income

Zaven Boyrazian, MSc

Warren Buffett is often viewed as one of the most successful investors alive today. After all, he turned a $100,000 lump sum into a $750bn enterprise called Berkshire Hathaway. And the firm is well on its way to breaching $1trn in the coming years.

This exceptional performance took a lifetime. But it demonstrates the power of compounding when left to run. So how did he do it?

For the most part, the ‘Oracle of Omaha’ has focused on value stocks. These are top-notch companies trading significantly below their intrinsic value. In other words, he bought low to sell high. And it’s a tactic I’d follow when looking to build a passive income portfolio.

Buffett and dividends
Investors who have been following Berkshire Hathaway for a while know that shareholders have been asking for a dividend from the firm for many years. After all, there’s around $50bn of cash & equivalents just sitting on the balance sheet as per the latest figures.
Buffett’s argument against paying a dividend is that he believes he can still earn a superior return on this capital in long run. And given his track record, I’m inclined to agree with him. But while he may not like the idea of paying a dividend, he’s certainly not opposed to receiving them.

In fact, some of his best investments have been dividend-paying companies. For example, Coca-Cola joined the Berkshire portfolio back in 1988, and the investment group has been systematically accumulating more shares over time.

The first good component of investing is know what you own, says Jim Cramer

Today, he owns around 400 million shares worth an estimated $22bn. That’s about an 8% stake in the overall business. And when looking at his original cost basis, the dividends from Coke have been steadily rising over the years, resulting in a 50% annual dividend yield.

Needless to say, investing in a company that can systematically increase its dividends every year can be exceptionally lucrative. And it’s the primary tactic I’d deploy to establish a second £500 monthly income stream in the long run.

Building an income portfolio
£500 a month translates into £6,000 a year. And assuming I can lock in a 5% total yield, that means I’d need to build a portfolio worth around £120,000. That’s obviously not pocket change. But by consistently investing a sizable sum, like £500 each month, it’s more than possible to reach this goal in the long run.

However, the waiting time could be significantly reduced if I’m able to identify another Coca-Cola stock. This is obviously far easier said than done. But it’s not impossible. So what traits should I be on the lookout for?

The most important factor, in my opinion, is free cash flow. Don’t forget dividends are funded by the excess earnings of a business. So a company that’s producing far more money than it needs to continue growing is likely an excellent candidate. Even more so if the company is offering goods or services that aren’t likely to diminish in demand for decades to come.

Having said all that, it’s important to realise even dividend investing carries risk. Top-notch enterprises can eventually be disrupted. And recent volatility has perfectly demonstrated how a changing macroeconomic economic landscape can throw a spanner in the works.

Nevertheless, Buffett has shown that prudent investing, paired with diversification and patience, can still yield incredible long-term returns.

££££££££££££££

Current blog portfolio blended yield 9%.

Compounded at 7% for nine years 19.5%.

Whilst still early days a ‘pension’ of 19.5%, which would allow

after drawdown some cash for re-investment to grow the Snowball.