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Even among those of us who invest for long-term passive income, we all have different preferences and different attitudes toward risk.
But there are a handful of stocks and sectors that I continue to turn to.
Very long term
I'm going to start with City of London Investment Fund (LSE: CTY), as an example of a type of investment that many people overlook.
Mutual funds can hold cash in the best years to maintain their payouts in the weaker years. And that helps people who want regular income. Now, like any dividend, it still can't be guaranteed, but it can alleviate the risk.
In fact, the City of London tops the Investment Trusts Association's list of Dividend Heroes, having increased its dividend for 58 consecutive years, currently at 4.7%.
However, this does show a potential risk. If the target is not met within a year, I think the share price could take a serious hit.
Diversity
With this confidence we get a mix of BAE Systems, Shell, HSBC Shares, AstraZenecaand many more. I would consider buying them all for dividends, but diversification in a single investment is a plus.
There are many other mutual funds with their own investment strategies. I always have at least one.
Two sectors
Next, I would like to highlight two sectors that have always occupied a prominent place among my passive income investments. I am referring to banking and insurance.
I bought some Lloyds Banking Group and Aviva I bought Lloyds shares a few years ago and still like both. As of today, I would go back to Lloyds, with an expected dividend yield of 5.1%.
Risk balance
Their exposure to the mortgage market adds a bit of risk and we could see volatility as long as interest rates are high. And I suspect this could last longer than we expect.
But I prefer that to the China risk that comes with something like HSBC, which has a forward yield of 7.5%.
And what is my chosen insurance today? Most likely… Legal and general For its 9% yield, I would take the cyclical risk for a long-term cash cow like that.
Two champions
I'll end with two passive income favorites that I've never bought, but have often thought I should.
One is British American Tobaccowhich is expected to yield 8.4% this year. It depends on the long-term future of tobacco, but alternative products could maintain that level for many decades.
And ethical concerns are for individual investors to decide.
Capital shock
National Network The other is the one that offers a yield of 5.8%. Its monopolistic position and relative clarity of earnings make it loved by many long-term investors.
But it did shake confidence a bit with this year's share issue, which diluted the dividend somewhat. After doing it once, the fear is that it will happen again.
Which one to buy?
There will be big differences in the stocks that each of us would feel comfortable holding over the next few decades. And I really think that's the time frame we need to think about.
But I firmly believe that we can all benefit by at least considering the stocks that other passive income investors like and own.
