Business & Investment

Two passive income UK stocks to buy

I think one of the best ways to generate passive income is to invest in UK stocks. Unlike other passive income strategies, stocks and stocks require just a few pounds of upfront investment and are available to anyone over the age of 18.

With that in mind, here are two UK stocks I buy for my passive income portfolio today.

Passive income champion

The first company on my list is the consumer goods giant Unilever (LSE: ULVR)..The dividend yield is 3.5%, and at the time of writing, the company FTSE 100..

Dividends are supported by income from the Group’s portfolio. Consumer brand.. Most of these are $ 1 billion brands and are well known and loved by consumers. This gives the company a solid competitive advantage and, in my opinion, a better income investment.

One of the major threats facing income investment is the threat of declining income. Dividends are paid from the company’s profits, so less cash can be returned to investors if profits decline. This can lead to reduced dividends.

However, in the case of Unilever, I don’t think we can expect a significant decrease in sales. Indeed, consumers will not stop buying products such as ice cream and deodorants in the midst of a severe economic downturn.

That said, consumers may reduce their purchases if costs begin to rise significantly. This is the most serious risk facing businesses today. Higher prices can postpone consumer purchases and increase group costs. This double headwind can undermine the company’s profit margins and put pressure on revenue.

Still, despite these risks, today we buy Unilever for our portfolio of passive income stocks in the UK.

UK stocks to buy

The other company I buy is an asset management group Schroder (LSE: SDR).. The dividend yield for this stock is 3.3% at the time of writing. Earnings per share covers 1.7x payments. I think there is plenty of room for dividend growth in the future.

Schroders is one of the most famous Wealth Manager countries. This is a competitive advantage. It should also benefit from rising stock markets and an increasingly wealthy elderly population. These two factors help the company expand its assets under management, and as a result, Commission income..

These factors can help support dividend growth.

The asset management industry is highly competitive, suggesting that we need to work hard to maintain market share. You may also face pressure from low-cost competitors and offer your clients the same service at a low price. Regulatory challenges can also increase costs and reduce profits.

Even after considering these risks and challenges, today we buy a company for a passive income portfolio. That’s because I believe it’s one of the best UK stocks to buy for income.

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Rupert Hargreaves owns a stake in Unilever. Motley Fool UK recommends Schroders (Non-Voting) and Unilever. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by exploring different insights, Better investors than us.

Two passive income UK stocks to buy Two passive income UK stocks to buy

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