How I’d invest £4,000 today in income shares

first_img Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. 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. christopherruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo 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. Learn how you can grab this ‘Top Income Stock’ Report now Christopher Ruane | Monday, 24th May, 2021 center_img We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign.But with this opportunity it could get even better.Still only 55 years old, he sees the chance for a new “Uber-style” technology.And this is not a tiny tech startup full of empty promises.This extraordinary company is already one of the largest in its industry.Last year, revenues hit a whopping £1.132 billion.The board recently announced a 10% dividend hike.And it has been a superb Motley Fool income pick for 9 years running!But even so, we believe there could still be huge upside ahead.Clearly, this company’s founder and CEO agrees. See all posts by Christopher Ruane How I’d invest £4,000 today in income shares With £4,000 in my pocket and looking for passive income ideas, what would I do? I’d pick some UK income shares with attractive dividends and split the money evenly between them.£4,000 is enough to diversify. That allows me to reduce my risk if a company performs poorly in future. I’d put £1,000 into each of these four shares today.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…High yield sharesAn obvious place for me to start would be on the list of highest yielding UK shares. One of the names that consistently pops up is tobacco company Imperial Brands.With an 8.3% yield, it certainly qualify as an income stock. Tobacco is a highly cash generative business. Its maturity reduces the need to reinvest earnings into future growth opportunities. I think Imperial’s focus on its five key cigarette markets, where it is trying to build on its success, is a good strategic choice to mitigate declining cigarette volumes.The falling popularity of cigarettes in many markets remains a risk, though. It could hurt the company’s sales and profits. And many people will shun tobacco stocks on ethical grounds.Dividend shares that doubledIncome shares sometimes turn out to be growth shares too.Investment management firm M&G is an example. Its shares doubled in a year – but I could still get a yield of 7.7% by adding them to my portfolio today. That would be a prospective payout of £77 annually for my £1,000 investment.The company’s brand is an asset that I think should help it to grow in future. I also like the fact that the dividend is covered by earnings, even after a rise this year.But risks include any economic downturn reducing customers’ ability to invest, which would hurt revenues.Income shares in infrastructureFor income shares, I see attraction in dull-but-important businesses that reliably generate cash.An example is the infrastructure owner and operator National Grid. The company enjoys several advantages. One is the ongoing need for electricity, which should continue for decades to come. A second is the high entry costs for a competitor to replicate the company’s network. That makes it a natural monopoly, which gives it pricing power, albeit pricing that’s subject to regulation. Despite that, it yields 5.2%.One risk is shifting patterns of energy consumption due to a move towards permanent homeworking. That could require costly additional capital expenditure if the network needs to be changed to redistribute electricity from previously commercial areas to primarily residential ones.Income shares with a dividend growth recordWhile Diageo only yields 2.1%, that would still provide me with a prospective £21 of income each year for a £1,000 investment today.The Baileys and Smirnoff owner appeals to me for more than just its current yield, though. With its dividend history of increasing payouts annually for more than three decades, I see further income potential ahead. Diageo’s premium brand portfolio gives it pricing power. I think the company could be a beneficiary of people socialising heavily once the pandemic is a memory.But risks include a move away from alcoholic drinks by many consumers, which could lead to future sales declines. And as with all dividends, a record of past payouts is no guarantee of future ones. The Motley Fool UK’s Top Income Stock… Enter Your Email Addresslast_img

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