2 high performance actions that could generate £ 1,000 in passive income of an investment of £ 20,000

For investors seeking to generate passive income, dividend shares of the United Kingdom can offer a constant cash flow.

He Ftse 100 The index has an average dividend yield of around 3.5% at this time. That is quite good, but there are some companies with 5% or more payments. That means that an investment of £ 20,000 could generate more than £ 1,000 in annual dividends.

Here are two known financial services companies that have strong and long records of constant dividend payments.

Insurance pensions and giants

Legal and general (LSE: LGEN) It is one of the largest financial services firms in the United Kingdom, specialized in pensions, life insurance and investment management. It has been a basic element of the FTSE 100 for years and is known for its solid dividend policy.

The action produces 8.8% while writing on February 24, significantly above the average feet.

During the last decade, the company has maintained or increased its dividend. This consistency is a key reason why many income investors follow the actions closely.

In its most recent update, the company reaffirmed its commitment to pay dividends, while recognizing the challenges, including the volatility of the current market and low margins.

The price of shares has had a mixed performance lately, moving in line with broader trends in the financial sector. Although it has recovered from some minimums in 2023, it still remains below the pre-pandemic levels.

Constant dividend payer

M & g (LSE: MNG) is another financial services giant. The company has a market capitalization of £ 5 billion and is better known for its investment and savings management products. Like legal & general, it has built a reputation for constant dividends payments.

The company currently has an even greater than 9.5%yield. That is one of the highest in the foot and means that an investment of £ 20,000 could return almost £ 2,000 in annual payments.

However, there are some risks to consider. The price of M&G shares fell by more than 10% in 2024, reflecting investors' concerns about economic conditions and potential pressure on profits.

While the company is still committed to maintaining its dividend, a performance sometimes sometimes indicates uncertainty. Recent actions of the price of shares increase the risk of a 'value trap' where investors are attracted to high yields only to see subsequent dividend cuts.

That said, M&G has a history of shareholders, and has declared that dividends are a key part of their strategy.

If the company can stop recent outputs and continue recovering its long -term profits, then strong dividend payments could continue.

Too good to be true?

When dividend yields rise so high, it is often worth asking why. The market can have a risks price for both companies since they are exposed to interest rate movements, regulatory changes and market recessions.

If the profits decrease, the dividends may be cut. This is just a reason why portfolio diversification is so important.

Investing a global sum of £ 20,000 in any of these two companies can be tempting, but I would prefer to spread my risk in many market actions to avoid the risk of concentration and large portfolio movements driven by one or two names.

Of course, these are just a couple of high performance actions that investors should consider. Others within the feet can offer £ 1,000 in possible annual dividends of the same investment while operating in different sectors and reduce the general portfolio risk.