I asked ChatGPT to build me the perfect second income portfolio and here’s what it said

Building a second income stream through investing is an attractive goal. With the right mix of investments, it’s possible to generate reliable passive income while balancing risk and long-term growth. So, I turned to ChatGPT for an answer: what does the “perfect” second income portfolio look like? Here’s what it came up with.

Dividend stocks: 40%

According to ChatGPT, dividend stocks form the foundation of a strong second income portfolio. The focus should be on companies with a track record of sustainable payouts and resilient cash flows. I agree entirely.

For UK exposure, Unilever, Legal & General, National Grid, and Diageo stand out. These businesses offer defensive qualities, with some benefiting from regulated revenues or strong global brands, the artificial intelligence (AI) platform stated.

On the US side, classic dividend aristocrats like Johnson & Johnson, Procter & Gamble, and Coca-Cola provide international diversification. Meanwhile, Realty Income is a REIT known for its monthly dividend payments.

It also noted that having some additional REITs, such as Segro and Tritax Big Box, brings further stability and income potential.

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Bonds & bond ETFs: 25%

A second income strategy benefits from fixed income to smooth returns and provide a buffer during market downturns such as iShares Core UK Gilts ETF.

Others: 35%

Starting with property, ChatGPT suggested invested 15% in a hands-off approach to commercial property REITs like British Land. I wasn’t sure how that’s entirely different from its initial REITs suggestion.

It then told me to invest 10% in P2P lending and private credit, which can offer attractive yields, although they come with higher risks. Finally, there was alternatives — 10% — such as infrastructure and renewables, with suggestions including Greencoat UK Wind (LSE:UKW).

Expected returns

According to ChatGPT, this portfolio aims to generate a 4%-6% annual income yield, with potential capital appreciation over time. While no investment is risk-free, this mix balances stability, income, and long-term growth, it said.

My take

There are certainly some strong suggestions above, and diversification is always an excellent idea. I’d question whether now is the right time to invest is some of those stocks, but I thought it would be good to circle in one company, Greencoat UK Wind.

Greencoat is a stock I used to own and it’s down massively since I last looked. The FTSE 250 firm invests in operating UK wind farms, delivering inflation-linked dividends (10.35p target for 2025) and capital preservation through reinvestment. As the UK’s first listed renewable infrastructure fund, it offers pure-play wind exposure. Managed by Schroders Greencoat LLP, it meets ESG standards and aligns with SFDR/SDR sustainability frameworks.

However, there are risks. It’s entirely exposed to the natural environment. In fact, management recently revised its long-term power generation forecasts downward after assessing UK wind speed trends.

Wind conditions are crucial for turbine efficiency, and following consultation with an expert third party—alongside recent below-average wind speeds — the company now expects a 2.4% lower long-term generation forecast, reducing net asset value (NAV) by 6.5p per share.

That’s a big downturn. However, it’s interesting to see that the stock is currently trading at a 26% discount to its NAV. As such, I’m going to add this one to my watchlist.

The post I asked ChatGPT to build me the perfect second income portfolio and here’s what it said appeared first on The Motley Fool UK.

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James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat Uk Wind 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.