Considered one of my major investing targets is to construct a portfolio of shares that present a long-lasting passive earnings. By specializing in high quality companies with dependable dividends, I hope to take pleasure in a rising earnings stream a few years after I cease full-time work.

If my investments carry out rather well, I’ll even have the ability to retire early, though there’s no assure of this. And one firm I’d take into account holding in my dividend portfolio for my journey is FTSE 100 financial institution Lloyds.

Protected however uninteresting?

This excessive road stalwart’s the UK’s largest mortgage lender. Its enterprise mannequin’s constructed round merely taking deposits and lending them to customers and companies.

I like Lloyds’ simplicity in comparison with another UK banks. It solely operates within the UK and stays away from funding banking, the place earnings may be much less predictable.

Nevertheless, the truth is that huge banks haven’t all the time been nice investments. Though harder laws since 2008 have made UK banks safer than they was, they’re additionally much less worthwhile.

On steadiness, I believe there are additionally different engaging earnings alternatives elsewhere within the FTSE 100.

A tasty 7% dividend yield

One high-yield inventory on my radar is insurance coverage group Aviva (LSE: AV.). Shares on this £13bn group at the moment provide a 7% dividend yield. That would make a helpful contribution to my earnings targets.

The corporate’s steering is for the money price of the dividend to rise by a “mid-single digit” proportion annually. In keeping with the newest dealer forecasts, Metropolis analysts count on Aviva’s dividend to rise by at the very least 7% a yr in 2024 via 2026.

Primarily based on these estimates, the earnings yield on an funding in Aviva shares as we speak may rise to eight.3% in 2026. That’s tempting.

What ought to I be frightened about?

Admittedly, Aviva’s dividend historical past isn’t excellent. Underneath earlier administration, the corporate’s been pressured to chop its payout 3 times within the final 20 years, most lately in 2019.

Like banking, insurance coverage can be a extremely regulated enterprise with complicated accounting. For a personal investor like me, it might be exhausting to identify issues prematurely. Alternatively, this enterprise is carefully adopted by Metropolis specialists and is a a lot less complicated enterprise than it was just a few years in the past.

Since taking cost in 2020, CEO Amanda Blanc has offered off a lot of Aviva’s abroad operations. This has streamlined the enterprise so it’s targeted on market-leading operations within the UK, Canada and Eire. Profitability’s improved.

Dependable forecasts

One remaining attraction for me is that Blanc’s constantly met the monetary targets she’s set for the enterprise. Debt’s been lowered in keeping with her earlier steering. The dividend’s growing as anticipated. Working revenue’s additionally up.

I place numerous significance on corporations delivering what they promise. In my expertise, it’s top-of-the-line methods to gauge the standard of a administration crew. Can they do what they are saying they’ll do?

Aviva shares at the moment commerce on 10 instances 2024 forecast earnings, with a 7% dividend yield. I reckon that’s an affordable valuation. I’d be comfortable so as to add the shares to my portfolio as we speak, if I had the money and was searching for a brand new monetary inventory to purchase.