My Shares and Shares ISA objective is to intention to construct up a passive revenue pot over the long run. And with so many nice dividends on the FTSE 100 proper now, I believe I’ve an opportunity of doing properly.

Not simply dividends

However that jogs my memory of the primary mistake I wish to keep away from in 2025. I wish to be sure I don’t focus solely on dividend shares.

Suppose I’d purchased some Nvidia inventory 5 years in the past. It affords a forecast dividend yield of a paltry 0.03%. And that wouldn’t purchase me a lot of life’s necessities.

However I didn’t wish to take any revenue over that point, so I’d have reinvested any dividends anyway. And the worth of my Nvidia funding would have soared by greater than 2,000% right now.

So if I wished revenue now, I may promote Nividia and purchase a FTSE 100 dividend inventory. And I may bag a a lot greater annual revenue than had I began out with solely dividend shares.

Beware the most important

Whereas constructing up that passive revenue pot, it’s complete returns that matter, not the most important dividends. That’s why I’ve at all times averted a number of the shares with the most important yields, like Vodafone (LSE: VOD).

The cell phone big was well-known for paying large yields, with out actually bringing in sufficient in earnings. The yield reached 10% and extra, which could sound nice for passive revenue traders.

However over the previous 10 years, Vodafone shares have misplaced 70% of their worth. By way of complete returns, that’s not an incredible general efficiency. And different shares with decrease yields however higher share price performances may have constructed up to increased potential passive revenue.

Vodafone has slashed its dividend for 2025, in order that’s an revenue blow too. Nonetheless, it does give us an opportunity to re-evaluate for the long run.

Keep coated

The Vodafone dividend for the previous few years has not been coated by earnings. And that may be a clue that it won’t be maintained in the long run.

If I have a look at a number of the largest FTSE 100 yields right now, I see Phoenix Group on a ten.6% yield, and M&G at 10.2%. However forecasts present little or no cowl by earnings within the subsequent few years.

The character of the insurance coverage and investing companies means the dividend sustainability will be extra sophisticated than that. I do really like each these firms, and I believe they may each be good passive revenue investments.

But it surely does give me trigger for warning. And on steadiness, I believe I want the 7.3% forecast dividend yield from my Aviva shares. The Metropolis reckons that ought to be properly sufficient coated by earnings.

Hold investing

And, even with these three specifics coated, there’s yet one more mistake to keep away from. And that might be to not use as a lot of my 2025 Shares and Shares ISA allowance as I can.