2 UK shares I’ve bought for a passive income

first_img There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Our 6 ‘Best Buys Now’ Shares Image source: Getty Images Simply click below to discover how you can take advantage of this. Click here to get access to our presentation, and learn how to get the name of this ‘double agent’! Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. 2 UK shares I’ve bought for a passive income Don’t miss our special stock presentation.It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.That’s why they’re referring to it as the FTSE’s ‘double agent’.Because they believe it’s working both with the market… And against it.To find out why we think you should add it to your portfolio today…center_img Rupert Hargreaves | Thursday, 28th January, 2021 | More on: BATS DGE Rupert Hargreaves owns shares in Diageo and British American Tobacco. The Motley Fool UK has recommended Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I believe it’s relatively easy to generate a passive income from UK shares. Indeed, in my portfolio, I’ve a basket of blue-chip equities which I think will meet this goal. While there’s no guarantee they’ll continue to produce a passive income from now on, I’m confident in these companies’ outlooks. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The best UK sharesDiageo (LSE: DGE) is one of my favourite income investments. This is one of the world’s largest alcoholic beverage companies and owns landmark brands such as Guinness and Smirnoff vodka, which have strong customer followings. Unlike other industries, such as mining and construction which can be very cyclical, alcohol sales have increased steadily over the long term, in line with population growth. This has helped the company generate steady sales growth for the past five years. Indeed, revenue has grown at around 2% per annum since 2015. This steady growth has helped support Diageo’s dividend and its case as a passive income investment. The organisation has increased its payout at an average annual rate of around 4% over the same period. At the time of writing, the stock supports a dividend yield of 2.5%. Diageo has been able to use its size and scale to achieve steady growth rates in the past, which may continue.However, the business is almost certainly going to face risks. Rising costs could eat into profit margins, and jeopardise the group’s dividend. Other risks, such as a ban on alcohol sales in certain parts of the world, are also a threat to the company. This might seem like a distant threat but it’s happened in the past, so needs to be taken into consideration. Passive income investmentOne of the other UK shares I own in my income portfolio is British American Tobacco (LSE: BAT).  At the time of writing, shares in this company offer a dividend of around 7%. That is around double the FTSE 100 average.But investing in the tobacco sector isn’t without risk. Global cigarette consumption is in decline, and authorities worldwide are always looking for new ways to clamp down on smoking due to its detrimental health effects. Ultimately, these efforts may mean UK shares such as British American may lose most, if not all, of its customers. That would have a significant impact on group profitability and, of course, its dividend to shareholders. However, the war on tobacco isn’t new. For the past 40 years, the risks of smoking have been well-publicised, and cigarette sales have been steadily declining. Despite this headwind, British American has continued to register profit and sales growth.Since 2015, sales have more than doubled, and profits have increased by around 70%. Over the same period, the company has increased its dividend to investors by around a third. For these reasons, I’m happy to include the stock in my passive income portfolio, despite the ethical considerations and risks of owning a tobacco business. British American’s resilience over the past five years suggests to me the company can continue to push through the industry’s challenges. Enter Your Email Address See all posts by Rupert Hargreaves I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.last_img read more

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