7 UK shares that can boost my passive income

Many UK stocks are a good choice for investors looking for regular dividend income. At FTSE 100 has a higher dividend yield than the global index. What’s more, individual stocks listed on blue-chip benchmarks can deliver higher returns than the Footsie average.

Below are seven stocks that I consider buying for their passive income potential.

The tobacco giant

‘Sin’ shares are not for everyone. Many investors avoid investing in industries that raise difficult moral questions. However, with strict regulations to alleviate my concerns, I think tobacco companies are one of the best dividend stocks an investor can buy.

I already have it British American Tobacco sharing. The company has major global brands in its portfolio, including Lucky Strike, Pall Malland Rothmans. Another tobacco giant I consider is Imperial brandwho has Winston, Golden Virginiaand rice rice a roll of paper. Both are dividend heavy, offering 6.99% and 6.94% respectively.

Tobacco stocks are a good choice when inflation is high because of their strong pricing power and large cash flows. Of course, government intervention is a big risk facing these stocks because of public health incentives to reduce or eliminate smoking.

However, with new non-combustible products, the business is reinventing itself to combat the threat.

Banking stocks

The Bank of England just raised its base rate to 4%. When interest rates rise, banking stocks often outperform due to the beneficial effect on net interest rate margins. They also provide market-leading dividends.

I have a Lloyds shareholders. The black horse bank sports an annual yield of 4.03%. But I also think other FTSE 100 banks are good value investments right now. Barclays and HSBC yields of 3.33% and 3.64% respectively.

The stock’s price-to-earnings (P/E) ratio is quite low. P / E ratio Lloyds 8.74 – for Barclays 6.13, and for HSBC 12.19. In many of these, we hope to generate good results from the current share price level.

The banking sector faces downside risks from a declining housing market, which could impact mortgage books. However, I believe these concerns have generally been priced in and the shares look cheap to me now.

Telecommunications provider

Finally, I think the telecom sector can also generate good dividends. For emerging market exposure, I would consider investing Airtel Africa, which yields 3.95%. Another company making progress on the African continent is Vodafone. This stock yields 8.34%.

Airtel Africa recently confirmed double-digit revenue and EBITDA growth for the nine-month period ending December 31, as well as a 10.1% increase in its customer base to 138.5m, driven by soaring demand for mobile data and money services. Additionally, Vodafone posted 4.8% revenue growth in Africa for Q2 2023.

Both companies are facing pressure from competition as consumers shop around in the cost of living crisis. In addition, Vodafone has about the level of debt. These factors can weigh on the share price, but I see the large dividend yield as sufficient compensation for the risk.

Build a second income from UK stocks

If I earn a 5% return on UK stocks and fill up my Stocks and Shares ISA with a tax-free allowance of £20,000, I will have a passive income of £1,000 a year.

This is a good starting point for me to earn double income from stock market.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content in this article is provided for informational purposes only. It is not intended to be, nor is it, any form of tax advice. Readers are responsible for doing their due diligence and seeking professional advice before making any investment decisions.