2 investment ideas to earn passive income in 2023

Earning passive income is one of the investment priorities this year. To achieve this, I want to buy high-yielding dividend stocks that can provide other income. In the long run, I hope the money I get from my investments is enough to secure my financial independence.

Multiple UK shares offer attractive returns. I’ve been looking for it FTSE 100 and FTSE 250 for inspiration and settle on two companies that can be a good choice for your passive income portfolio in 2023.

Let’s explore each one.

Aviva

Aviva (LSE: AV.) shares currently sport a 6.6% dividend yield.

The FTSE 100 insurer’s share price has fallen 21% in the past 12 months. At this rate, I think it could be a good value investment for me.

Aviva provides wealth, pensions and insurance solutions for 18.5 million subscribers in the UK, Ireland, and Canada.

The investment policy is relatively defensive, centered on government and corporate bonds with limited exposure to stocks and emerging markets.

The company’s solvency II ratio is 215%. This exceeded the target by 180%. The company’s liquidity position indicates a healthy balance sheet and a sustainable dividend.

Indeed, the company plans to launch a new share buyback program in March to accompany its one-year financial results.

In my view this will add value to shareholders in a prudent manner, as the company waits for clarity on its annual performance before deploying capital.

In line with the wider insurance market, the business faces ongoing risks from high inflation. Rising prices have pushed up the cost of claims that can weigh on Aviva’s share price.

However, I can’t see much evidence of weakness in the latest financial results. I want to buy it.

ITV

ITV The shares (LSE: ITV) also have a market leading yield at 6.5%.

The FTSE 250 broadcaster’s share price has fallen 35% over the past year. I think this could be another opportunity to scoop up cheap dividend stocks.

The media outfit trades with a price-to-earnings ratio of just 6.5. This looks like an attractive level for me to enter a position, with shares apparently priced for bad news.

The UK’s biggest commercial broadcaster launched its new streaming service, ITVX, in November. It plans to invest over £800m into this project.

The financial impact remains to be seen, but I think this is an exciting development that could revive the company’s ailing fortunes.

Of course, businesses face risks as they reduce advertising costs. A poor financial result could destroy the positive momentum that has lifted ITV’s share price since September.

I will wait until the full year results on March 2nd before investing. However, barring any nasty surprises, the stock looks undervalued to me now and I will add it to my portfolio.

My passive income portfolio

If I invested £1,000 between Aviva and ITV, my combined holdings would generate an annual return of over £65.

What’s more, reinvesting the dividends in a Stocks and Shares ISA bundle means I can benefit from the compounding effect over the long term.

By allocating some cash in these two dividend stocks in 2023, I can take an important step on my journey to financial independence.