How an income seeker portfolio might work in practice

Amount of income each month from the portfolio (2022)

Sticking To Stocks

For those with the time, the inclination, and who don’t want to pay the annual fee for a trust or a fund, there are plenty of stocks which pay attractive dividends.

The trick here is to make sure the dividends are covered by earnings and cash flow, and preferably they should be growing rather than shrinking so your income stream is steadily increasing.

Most firms have the same financial year and pay semi-annual dividends around the same time, so it will take some research in order to build a portfolio of reliable dividend payers covering all 12 months.

Some big companies, like oil firms BP and Shell, personal care group Unilever (ULVR) and the tobacco companies British American Tobacco (BATS) and Imperial Brands (IMB) pay quarterly dividends which makes life easier.

Also, some FTSE 250 and AIM companies pay quarterly dividends, although these stocks trend to be less liquid should you ever need to change your portfolio at some point in the future.