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Do you want to finally set up your income streams this year?
It’s something many people think about, but few actually do.
A passive income plan doesn’t require a lot of effort. It doesn’t require much, including money.
He supports proven businesses
One confusing aspect of many so-called income theories is that they involve people entering a line of business in which they often have no experience.
I see two problems with that.
First: it’s just not. Second: That type of work may not be a good fit for one’s talents or passion.
The thing is, there are already many big blue-chip companies with proven business models that are very profitable. Many even pay some or all of that profit to people who invest in their companies by becoming stockholders.
That is in the form of benefits. FTSE 100 companies alone pay out more than £1bn a week on average in dividends.
So, instead of reinventing the wheel, I think it would make sense for the income hunter to drive his wagon to other proven businesses.
Benefits can be benefits, no work
An established business can run into unexpected difficulties, of course. Any company can decide to stop paying dividends as it chooses.
That explains why I think a smart investor, even with a small budget, will spread his portfolio of income stocks across several different companies.
When things work well, the benefits can be huge.
For example, currently the FTSE 100 is yielding 3.1% but I think an investor can comfortably target a 6% dividend yield while sticking to proven blue-chip businesses.
This means that, for every pound they put in today, the investor will hopefully earn 6p in passive income this year – and every year while they hold the shares, potentially for life.
Watching pennies turn into pounds
Although sixpence would be a welcome surprise in the Christmas pudding, it doesn’t exactly sound like the stuff of income dreams!
However, remember that was from just one pound, in one year.
Say someone invests £5 a day. In a year that can add up to £1,825.
At a 6% yield, that would mean around £110 in annual income.
They can choose to reinvest (compound) gains. Investing £5 a day and compounding it at 6% a year, it should be over £24k after ten years.
With a 6% yield, that would generate around £1,443 in annual income.
Choosing an investment vehicle
Of course, an investor needs a practical way to do this.
It can pay to compare share trading accounts, Stocks and Shares ISAs and trading apps.
Share of revenue that can be considered in 2026
One dividend stock that I think investors should consider is its income potential British American cigars (LSE: BATS).
I Lucky Strike The manufacturer has grown its share annually for decades – and intends to continue doing so. It yields 5.8%.
With its strong products, highly profitable business model and global distribution network, I see continued dividend growth opportunities here.
But the main danger is the decline in smoking rates. The level of British American cigarette sales is falling sharply and may continue to do so.
