High-yielding dividend stocks are a good way to generate a second income while investing for the long term. Dividends are not guaranteed, but many companies offer reliable dividends.
For investors looking for reliable side income, I aim to build diversified portfolios of 15-20 shares. FTSE100 FTSE 250. These large companies are generally well researched by city analysts. In my experience, the absence of early warning signs is unlikely to bring an unpleasant surprise.
Below are three stocks I own or buy today for my income portfolio.
ITV: Turning point?
After temporarily falling below 60 pence in September, ITV (LSE: ITV) shares rose above 70 pence. I think 2023 will likely be a turning point for TV groups investing heavily in expanding their streaming services.
ITV is still the UK’s largest commercial broadcaster and also owns a valuable content production business, ITV Studios. The division provides programming for ITV and rival companies, reducing the group’s reliance on advertising.
I think ITV’s position as the UK’s leading television network will remain stable. The main risk I can see is that the company’s attempt to expand its streaming service will not yield the expected returns.
ITV’s stock price is pricing in bad news with a projected price/earnings ratio (P/E) of 8 in 2023. At this level, the stock offers a yield of 6.6%. We believe this business can offer attractive returns from current levels.
Foresight Solar: Long-Term Growth
Fossil fuels are not gone yet. However, I believe that renewable energy presents long-term growth opportunities.
One of my top picks in this area is Foresight Solar Fund (LSE: FSFL). The group invests in solar and battery projects in the UK and abroad. Foresight, for example, recently invested in his 50MW battery project in Scotland that will be connected to hydropower.
The Foresight Solar Fund’s dividend has steadily increased since its listing at the end of 2013.
The stock is currently trading just below its book value of 123 pence, with a dividend yield of 6%. This rating looks attractive to me.
There is a risk that regulatory changes to the UK electricity market will impact future earnings, but Foresight’s strategy seems like a good bet on the long-term demand for clean electricity.
Imperial brand: cigarettes pay 7%
my final choice is imperial brand (LSE: IMB). The FTSE 100 Tobacco Group’s performance has improved significantly over the last few years. Annual profit has risen from his low of £1bn in 2019 to £1.6bn last year.
Imperial’s dividend was well covered by free cash flow and the group’s net debt fell from a 2017 high of £12bn to a safe £8.5bn.
Of course, there are some ethical concerns with this strain. There is also the risk that demand for tobacco will continue to decline in the long term.
But I think Imperial’s expected dividend yield of 7.1% looks safe for the foreseeable future. For investors looking for a second income, I think it’s worth a look.
First published in The Motley Fool UK, how to invest £3,000 in high yield stocks for a second income.
Roland Head works for ITV and Imperial Brands Plc. The Motley Fool UK recommends Foresight Solar Fund, ITV and Imperial Brands Plc. The views expressed about the companies mentioned in this article are those of the author and may differ from official recommendations on subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering diverse insights makes us better investors.
Motley Fool UK 2023