See how much monthly second income an investor could earn from a £20k ISA

Creating a second income stream can be a huge source of comfort, especially at volatile times like today. My chosen method of doing this is by investing in FTSE 100 dividend stocks, which offer some of the most generous yields in the world.

Today, I’d reinvest every penny of shareholder payouts straight back into my portfolio, to buy even more shares. I’d only start drawing them as income after I’d finally stopped working.

Here are five FTSE 100 income heroes I think are worth considering today – just look at those yields!

FTSE 100 dividend shares with super-high yields

Stock	Sector	Trailing yield
Aviva	Life insurance	6.98%
M&G	Financials	10.68%
Land Securities Group	Real estate	7.41%
Sainsbury’s	Groceries	5.40%
WPP	Media	7.14%

Combined, they were generate an average yield of just over 7.5%. By investing a £20,000 Stocks and Shares ISA that would produce £1,500 in year one, which works out as £125 a month. That’s not too shabby, especially for something that can tick along quietly in the background. The income also happens to be tax free.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Dividend income isn’t guaranteed. Companies can reduce or cancel payouts at any time, particularly in tougher economic conditions. Also, these high yields are partly a reflection of falling share prices, after markets were rattled by President Trump’s tariffs.

Still, I think the long-term potential’s attractive. Especially from a solid name like Aviva (LSE: AV). The FTSE 100 insurer has had its share of challenges, but I think it’s emerged stronger. While recent volatility’s dented its share price, it’s still up over the past 12 months. And it’s more than doubled over five years.

That’s a remarkable return for a conservative, income-generating blue-chip, especially given all dividends are on top.

Aviva shares have given investors growth too

CEO Amanda Blanc has worked hard to turn Aviva around, cutting costs and exiting less rewarding parts of the business. The company has faced stiff competition and unpredictable stock markets, but it’s come through with solid numbers.

In its latest results, operating profit jumped 20% to £1.77bn, while assets under management rose 17% to £198bn. The dividend was hiked 7% to 35.7p per share. Aviva also completed its largest ever bulk annuity deal and saw wealth net flows climb 23% to £10.3bn.

The shares aren’t cheap at around 22 times earnings. That follows a 37% drop in earnings per share last year. I wouldn’t expect another 100%+ gain in the next five years. That’s remarkable growth for such a mature business, and followed years when the shares traded sideways.

That’s why it makes sense, in my view, to mix Aviva with other solid names when chasing income. M&G, Land Securities Group, Sainsbury’s and WPP all have attractive yields and offer exposure to different sectors. Each also has risks, so investors considering them should look closely before buying.

Diversification’s key. No stock’s risk-free, but by spreading across financials, property, consumer goods and energy, an investor could reduce their reliance on any single company or sector.

And with an average yield over 7.5%, a portfolio like this could provide meaningful second income over time. Investors should expect some ups and downs along the way, as we’ve seen lately.

The post See how much monthly second income an investor could earn from a £20k ISA appeared first on The Motley Fool UK.

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Harvey Jones has positions in M&g Plc. The Motley Fool UK has recommended J Sainsbury Plc, Land Securities Group Plc, and M&g 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.