5 passive income stocks I aim to hold for life

Building a reliable passive income stream takes patience and a long-term view. That’s why I plan to hold the following five dividend-paying stocks for life.

Each one has a solid track record of rewarding shareholders with regular payouts and steady growth. All of them have been paying dividends for more than 20 years except OSB Group, which has delivered 11 consecutive years of returns, but shows promise of becoming a future dividend hero.

Aviva

Aviva‘s long been one of the most dependable insurers in the UK. With a simple business model focused on life insurance, general insurance, and asset management, it generates steady cash flow and has returned billions to shareholders in recent years. Its dividend yield currently sits around 5.9%, with annual growth of around 7% over the past five years. That kind of consistency is exactly what I look for in a passive income stock.

OSB Group

OSB Group‘s a relatively newer name but one with strong potential. Specialising in buy-to-let and residential mortgages, the bank has carved out a profitable niche in the UK lending market. It offers a dividend yield of around 6.7%, and the payout has grown roughly 5% a year over the last half-decade. While it hasn’t been around as long as the others, its financial performance and payout discipline give me confidence for the long term.

HSBC

When it comes to scale, it’s hard to ignore HSBC, the largest bank in the UK and one of the biggest globally. It’s a cornerstone of many income portfolios, offering a dividend yield near 6%. For four straight years it increased its dividend at a rate of 5.6%. With exposure to Asia and a solid balance sheet, HSBC continues to offer both stability and growth potential.

TP ICAP

TP ICAP is more niche. It’s one of the world’s largest interdealer brokers, acting as an intermediary in financial markets where liquidity is thin and expertise is essential. It’s a rare kind of business with high barriers to entry and dependable income streams. Its dividend also yields around 6%, with four straight years of growth at a rate of almost 9%. For those seeking diversification within the finance sector, TP ICAP adds something a little different.

Legal & General

Legal & General‘s (LSE:LGEN) a financial services giant offering pensions, insurance, and investment management. It has long been regarded as one of the most reliable income shares on the FTSE 100, with a dividend yield often above 8%. Even in challenging times, it’s maintained payouts.

However, recent years haven’t been kind. Revenue and earnings have fallen three years in a row. Net margins are down to just 0.67%, and the stock’s price-to-earnings (P/E) ratio of 90 raises serious valuation concerns. Dividends are no longer well covered, and if earnings don’t recover, a cut may be on the cards.

That said, the price-to-sales (P/S) ratio of 0.42 suggests the shares aren’t expensive relative to sales, and Legal & General’s long track record of putting shareholders first makes it a stock worth considering.

For me, these five stocks represent the foundation of a portfolio designed to generate income for decades to come. But as always, diversification‘s critical and staying invested for the long haul is what makes passive income truly work.

The post 5 passive income stocks I aim to hold for life appeared first on The Motley Fool UK.

Pound coins for sale — 31 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More reading

HSBC Holdings is an advertising partner of Motley Fool Money. Mark Hartley has positions in Aviva Plc, HSBC Holdings, Legal & General Group Plc, OSB Group, and Tp Icap Group Plc. The Motley Fool UK has recommended HSBC Holdings and Tp Icap Group Plc. 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.