One of my core investment goals is to create a decent passive income to fund my retirement. Its a task that is becoming even more urgent as the pressure on public spending grows.
I don’t know when I’ll be able to claim the State Pension. And I have no idea whether it will provide enough to fund my retirement plans.
What I do know, however, is that I won’t be taking a chance. So I’m investing regularly in UK shares to help me build a healthy passive income for when I eventually retire.
I have about £1,000 to invest in my Stocks and Shares ISA in October. This is made up of dividends I’ve already received and new capital I plan to use. Here are two income stocks that I’m thinking of buying for my portfolio.
Primary Health Properties
I like the excellent returns that share investing produces. But I also appreciate the security that a savings account like a Cash ISA affords.
Investing in a real estate investment trust (or REIT) can help me to enjoy the best of both worlds. Like any London Stock Exchange share, these property stocks can also go up and down in value. But they also have excellent safe-haven qualities.
REITs can provide protection against inflation. This is because the rents they charge and the value of their properties usually increase when broader prices do.
Furthermore, they usually produce stable rental income which allows them to pay decent dividends regardless of economic conditions.
Primary Health Properties (LSE: PHP) is a REIT that offers investors an extra layer of security, too. This is because around nine-tenths of the rents it receives from its healthcare properties are bankrolled by the government.
I expect the company to produce solid long-term dividend income as Britain’s ageing population drives demand for primary healthcare facilities. That’s in spite of the danger posed by uncertainty over the future of the NHS.
Primary Health Properties’ share price has tanked 18% during the past month.
As a consequence, its dividend yield has leapt to 5.8%, a level I find highly attractive.
The Coca-Cola Company
Soft drinks giant Coca-Cola (NYSE: KO) doesn’t offer the mighty dividend yield of the aforementioned REIT. But a 7% share price fall since early September has driven it to a healthy 3.2%, above its usual level.
This has made Coca-Cola shares an even more appealing way for me to boost my passive income.
The beverages maker has raised its annual dividend for — wait for it — an incredible 60 years in a row. Past performance is no guarantee of future rewards but there are many reasons I expect Coca-Cola to remain a top dividend stock.
Sure it faces extreme competition from other drinks companies. But no other has the exceptional brand power of Coke, nor the colossal financial strength to develop and market its drinks to stay ahead. It generated a colossal $38.7bn of net operating revenues last year.
These are incredible competitive advantages which make Warren Buffett such a fan (his stake in the company is valued at a staggering $25bn). It’s been a brilliant long-term stock for Buffett. And I think it could be for me, too.