How I’d invest £20,000 in an ISA and aim for dividend income for life

Rightly or wrongly, I am optimistic about the prospects for business and the stock market. And I haven’t felt as bullish for years. So, I want to invest in stocks and shares to generate lifetime dividend income.

A challenging year for investors

Last year was a challenging one for investors. Many stocks have fallen, such as cyclicals, defensives, speculative businesses and other types of stocks that I can think of. And it is difficult to avoid a downward drag on the capital value of diversified portfolios. Therefore, I tip my hat to investors who come in 2022 with a profit.

Indeed, what started out as a ‘stealth’ correction for stocks gained traction to become a highway in many cases. But the viewer FTSE 100 the index may not notice much because it is well maintained. However, it is characterized by a large weighting in energy stocks that benefit from higher commodity prices.

And now, as the market turns bullish again, the Footsie is moving higher. Indeed, my tracker investments after the index have been a source of stability for my portfolio. And I originally justified the investment by considering the FTSE 100 as a decent dividend payer. Currently, the yield is only at 4%.

I have been satisfied with the investment performance of Footsie. And if I invest £20,000 in an ISA now to make a profit, I’ll put some money into a FTSE 100 tracker.

Diversify among defensive stocks

But that’s not the only investment I made. For me, one of the best times to start investing in stocks and shares is when the market is coming out of a bear phase. Like now. You see, bear markets, corrections and set-backs can reset businesses and stocks. Excessive revaluations can be cleared from the market by these events. And it can be easier to find a decent business at a fair price.

But I will focus on companies that have defensive operations to support dividend-led investments. Indeed, cyclical clothing can produce great results. But these dividend payments may not be stable over the long term. They may stop all together for a long time. So, my main focus is on companies operating in sectors that tend to be more resilient during general economic downturns.

For example, my watch list contains names such as J Sainsbury, Imperial brand, National Grid, GSK, Unilever and so on. I will research defense businesses like that and aim to add them to my portfolio. But only if satisfied with the fundamentals of each business including the potential to pay progressive (increasing) shareholder dividends.

However, even if I choose defensive stocks and research them carefully, there is no guarantee of positive long-term investment results. All businesses may experience operational challenges from time to time. And all stocks come with risks as well as potential positives.

However, lately I have been investing on my own. And I believe it’s a good time to put £20,000 into a Stocks and Shares ISA.