How I plan to make a passive income by investing in UK dividend stocks

first_img FREE REPORT: Why this £5 stock could be set to surge Our 6 ‘Best Buys Now’ Shares See all posts by Peter Stephens How I plan to make a passive income by investing in UK dividend stocks Making a passive income from UK dividend stocks could be a worthwhile move over the long run. At the present time, over 20 FTSE 100 shares have yields that are in excess of 4%. And, looking ahead, they could potentially offer dividend growth in the coming years in a possible economic recovery.Of course, investing money in any shares comes with high risks. There’s never any guarantee of dividends or capital growth from any company. However, such risks can be reduced, but not completely eliminated, by diversifying among a wide range of stocks.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Buying UK dividend stocks with attractive yieldsInvesting money in UK dividend stocks with attractive yields is likely to be an obvious first step when seeking to make a passive income. At the present time, it may be possible to obtain a higher yield from FTSE 350 shares than elsewhere. However, ensuring those yields are relatively reliable and affordable could be crucial in generating a worthwhile income that lasts over the coming years.Meanwhile, it’s also important to analyse a company’s track record of dividend payouts. Other factors include how affordable its shareholder payouts are based on profitability, as well as its comparative offering versus sector peers. These could all be a means of obtaining a high, yet robust, income return.While such checks may not always pick up on potential warning signs that lead to lower dividends in future, they can help to lessen that risk to some extent.Focusing on dividend growth to make a passive incomeAlthough inflation is relatively low at the present time, that may not always be the case. Therefore, buying UK dividend stocks that can offer the prospect of a rising passive income could be a sound move. They may be able to offer some protection against inflation in the long run, in terms of retaining or improving an investor’s spending power.Identifying which stocks can offer dividend growth is never an easy task. It’s likely to be more of an art than an exact science. However, look out for companies with solid earnings estimates, large dividend cover and a strong financial position. These may be less impacted by the wider economy’s performance and may offer greater scope for dividend growth.Reducing risks from buying income sharesAs mentioned, investing money in UK dividend stocks comes with high risks relative to many other assets. Although those risks can never be reduced to zero, they can be lowered by analysing the companies being purchased and assessing their financial position.Risks can also be limited by diversifying across a wide range of companies. This may lead to a more resilient passive income that offers greater scope for growth in the long run. The result may be a more robust outlook from a portfolio of UK dividend shares. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address Peter Stephens | Friday, 5th February, 2021 Simply click below to discover how you can take advantage of this. Get the full details on this £5 stock now – while your report is free. Image source: Getty Images. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.last_img read more