Stocks for income

I love receiving dividends. They give the shareholder a tangible return that the market's whims cannot take away. And they allow the investor to diversify his portfolio by re-investing the cash in a different company. And best of all they (nearly always) go up each year, normally at a rate greater than inflation.

So in theory you could spend the income from shares and still have more purchasing power the next year.

With this is mind I have managed to cut some monthly costs so that we can start building a high yield portfolio. This will be a fund of high yielding shares whose dividends we can spend.

It will take a few years before the income is anything like exciting but hopefully one day it will pay for a holiday each year.

Another challenge will be to buy companies that pay dividends on different months so that eventually some dividends are received every month. Companies like BP and British Land that pay dividends quarterly are very useful in this respect.

The first position in this portfolio? RBS of course. A yield of 10% and an earnings yield of 20%? I think the downside is factored in!

Another year, another portfolio. We now have four. Let's hope one of them can show a gain this year!