Here’s my plan to create a passive income from £200 a month

first_img See all posts by Andy Ross Passive income ironically takes work to achieve. It requires investment now so that it can grow and bloom and provide simple rewards further down the line. But I don’t have to have a big starting sum to get going. I’m happy to start with just £200 a month, which I’ll invest in the stock market so it can grow. Then I can be paid dividends by blue-chip companies.  Investing for a stream of growing passive incomeWith the objective in mind of creating a passive income from shares, I’d go about achieving this by focusing on buying quality companies. To create this, I think it’s best to look for companies that can continuously and reliably post sales growth, that have high returns on capital employed (known as ROCE), and that have strong margins.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…This tends to lead me towards blue-chip and often consumer goods companies such as Diageo, Unilever and Reckitt Benckiser. The former may have had some of its shine taken off by the pandemic. But most years, and in most economic cycles, it and the others perform well for investors. Especially those taking a long-term view of things.That makes them ideal for those looking to build a passive income from investing in the stock market.Investing for dividend yield and capital growthIt’s worth remembering the dividend yield isn’t everything. Often if the yield is very high it means other investors are worried. It also puts the dividend at greater risk of being cut. Furthermore, if a company prioritises the dividend, it might not be investing for growth back into the business.I feel that the large fast-moving consumer goods companies can provide a growing dividend that’s also sustainable, alongside share price growth. This combination for me is the ideal way to approach creating a passive income from investing £200 per month.But if dividend yield is more of a consideration, then AJ Bell has rounded up some of the FTSE 100 shares that should be among the biggest dividend payers this year. M&G, Imperial Brands, Polymetal, British American Tobacco and Evraz are the highest-yielding FTSE 100 shares.Looking back at my plan, it’s all about three core components: patience, consistency and choosing the right high-quality, established stocks. By focusing on dividend-paying shares with the potential for steady share price growth, I think any investor can create a passive income that could snowball in value. The more patient and more consistent, the bigger the snowball.The key is to remember that compounding will do a lot of the work for us if we stay invested, stay focused on the goal and allow time to do a lot of the work for us. Then we can sit back and watch the income pour in. Image source: Getty Images. 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. 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. Click here to claim your free copy of this special investing report now! Markets around the world are reeling from the coronavirus pandemic…And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away. Andy Ross | Sunday, 10th January, 2021 center_img 5 Stocks For Trying To Build Wealth After 50 Andy Ross owns shares in Diageo and Reckitt Benckiser. The Motley Fool UK has recommended Diageo, Imperial Brands, and Unilever. 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. Our 6 ‘Best Buys Now’ Shares Here’s my plan to create a passive income from £200 a month Enter Your Email Address Simply click below to discover how you can take advantage of this.last_img read more

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