If you are looking for passive income from shareholder dividends, we recommend diversifying your investment across multiple stocks.
But the reality for me is that the surplus funds will be available in relatively small chunks, not enough to buy multiple positions. Therefore, it is common to choose one stock for 100% of your investable funds.
The rest of my existing portfolio is spread across several names. But I still choose that stock every time as if it were the only investment I was allowed to make. That’s why we choose carefully after doing thorough research.
I think being focused on things like this is a good state of mind for investing. Every move deserves full attention and thought. He looks more like a sniper with a rifle than a farmer who has made a huge mistake.
The stock I’m currently paying attention to for passive income is MONY (LSE:MONY), which provides savings and personal financial services.
I’ve liked the FTSE 250 business for a while. There are some great brands like MoneySuperMarket and MoneySavingExpert. Most people will be familiar with the company’s comparison website. Personally, I find it helps me keep my expenses within my budget when purchasing energy, insurance, and other services.
But what I like most about this business is its long track record of steady cash flow inflows and modest shareholder dividend growth.
But despite Citi analysts’ solid earnings forecasts for this year and next, the stock is trending lower. Perhaps it is due to the general economic uncertainty and the decline in revenues from the company’s activities in the energy sector. But whatever the reason, I feel now is an opportunity to focus on stocks.
As I write on October 23rd, the share price is 195p. At this level, the forward dividend yield in 2025 is above 6.7%.
At first glance, the valuation looks attractive, and that kind of yield could be a big boost to my passive income portfolio. By comparison, the FTSE All-Share Index has an expected yield of just around 3.7%.
But are payments to shareholders sustainable? One risk is that competition from other players may increase in the coming years. Another possibility is that insurance companies and other service providers may stop working with MONY.
Nevertheless, October’s third-quarter trading update included a positive outlook statement despite weakness in the company’s energy products.
The directors are confident that the business will be able to achieve its full-year forecast for 2024. This means normalized earnings are likely to increase by about 26%, according to Citi analysts.
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MONY seeks to protect its niche in the market by applying technology to its activities and constantly testing new products. So far, this strategy has worked well, with an impressive multi-year financial and trading record.
We are fully invested at this time. However, MONY is at the top of my watch list and ripe for further study. I plan to buy this stock for passive income with the goal of owning it for at least 5 years.
The post Consider investing 100% of your money in this stock for passive income appeared first on Motley Fool UK.
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Kevin Godbold has no position in any stocks mentioned. The Motley Fool recommends Mony Group Plc. The views expressed on the companies mentioned in this article are those of the writer and may differ from official recommendations we make on subscription services such as Share Advisor, Hidden Winners, or Pro. At The Motley Fool, we believe that considering diverse insights makes us better investors.
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