2 ways I’m planning on boosting my income from FTSE 100 stocks with £96 a week

Making income from FTSE 100 stocks can be achieved via dividends and ‘trimming’ profits regularly, in the opinion of Jonathan Smith.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

At a time when job security has decreased, many people are looking for new ways of boosting their income. Some look to getting a second job, but this can take away a substantial amount of free time. In my opinion, one of the best ways I can achieve it is via FTSE 100 stock investments. Getting income from stocks can be achieved in several different ways, and can make a difference with less than £100 a week. So how’s this possible?

Types of income

One of the most popular ways of generating income from stocks is via dividend payouts. When I buy a stock, I’m entitled to a share of any money that’s paid out to the owners. If I own 1,000 shares and a dividend of 10p per share is announced, I’d get £100. This income is ‘passive’ in nature, as I don’t have to do anything particularly active in terms of trading stocks to get this money. 

You can also see the income gained from dividend payouts by comparing the dividend yield to a Cash ISA. Companies such as Vodafone and GlaxoSmithKline currently have yields in excess of 5.5%. By comparison, a Cash ISA will struggle to offer higher than 1%.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Another way of generating income from stocks is from taking profits. I recently wrote a piece that ran through how a £1,000 investment in some stocks would now be worth over £10,000. The point here is that you can actually use some of this profit as income. From your initial investment, you can always partially sell out of some shares. From the full amount you can take out 10%-20% as profit, but still be left with 80%-90% of the investment.

The caveat with this type of income booster from stocks is that it isn’t passive. You need to pick your investments carefully, and take profit when you think it’s the right time.

Investing less than £100 a week 

Even with £96 a week you can boost your income. Over the course of the year, this adds up to around £5,000. Let’s say we split this amount evenly into dividend stocks and growth stocks. The dividend-paying stocks help to boost our income straight away via regular payouts. And at the end of year one, compounded growth should enable 10% profit to be taken out of the growth stocks.

Assuming a dividend yield of 5%, and a 10% growth rate, the £96 a week quickly starts to add up. The £5,000 pot at the end of the first year should be able to generate £250 income in year two, with £500 available to be trimmed as profit from the other growth stocks. Now that the £96 regular investing has been established, the numbers are likely only going to increase as more time passes.

Overall, generating income from FTSE 100 stocks doesn’t have to be a difficult task. I can pick good companies with high dividend yields to supplement high-growth stocks that I believe will perform well into the future.

Our analysis has uncovered an incredible value play!

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

5 steps to building monthly passive income with a spare £10k

Christopher explains how an investor could aim to use some spare cash to start building regular passive income streams through…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

Tesla’s struggling. Could NIO stock benefit?

NIO stock has moved up very slightly this year, while Tesla has crashed. Our writer considers whether it might be…

Read more »

Two employees sat at desk welcoming customer to a Tesla car showroom
Investing Articles

Could Tesla stock be a brilliant bargain in plain sight?

Christopher Ruane sees some things to like about Tesla, but as its vehicle revenues have gone into sharp decline, is…

Read more »

British coins and bank notes scattered on a surface
Investing Articles

3 cheap FTSE 250 stocks with big dividends to consider buying right now

The FTSE 250's loaded with so many big dividend yields it's hard to know where to start. These three have…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Up 585%, could Rolls-Royce shares still go higher?

Christopher Ruane likes the Rolls-Royce business but is not so convinced by the value its current share price offers him.…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

I reckon a bull market’s coming! Here’s what I’m buying for my Stocks and Shares ISA

Hoping to capitalise on what he believes is an undervalued UK stock market, our writer’s added more of this FTSE…

Read more »

piggy bank, searching with binoculars
Investing Articles

The UK stock market looks undervalued to me. Here’s 1 growth stock to consider for a SIPP

Our writer explains why he thinks the UK stock market’s currently in bargain territory, and identifies one share potentially worthy…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Meet the FTSE 100 stock I’ve been buying this week

Despite a strong week for the FTSE 100, one stock fell 7% in a day. And Stephen Wright took the…

Read more »