How much could I get in dividend payments by investing £5,000 in these 2 income stocks?

Andrew Woods calculates how much he could get paid merely by holding these two income stocks and whether it’s in his interest to do so.

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While growth shares can be a great way to accumulate wealth over the long term, investing in income stocks can be equally rewarding. With £5,000 to invest, I’ve found two firms that I think are worth considering for my portfolio. How much could I get paid in dividends? Let’s take a closer look.

Benefiting from higher interest rates

NatWest’s (LSE:NWG) share price has performed relatively well over the past year. In that time, it’s up 14%, while over the last month the shares have increased 2.5%. At the time of writing, they’re trading at 253p.

Created with Highcharts 11.4.3NatWest Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The banking firm has a dividend yield of 4.29% and paid a dividend of 10.5p in 2021. However, this hasn’t been terribly consistent over the past five years.

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YearDividend Payment
20170p
201813p
20190p
20203p
202110.5p

It’s also worth noting that dividend policies may be subject to change at any time.

If I took half of my £5,000 and invested in NatWest, I would get around 1,004 shares. With last year’s dividend payment, this could equate to an annual amount of £105, simply from holding the stock.

The business is currently benefiting from rising interest rates. These are important for banks, because they largely determine how much they can charge customers who want to borrow money.

It’s possible, though, that the cost-of-living crisis may deter potential customers from taking on even more debt in the form of loans or mortgages.

On the other hand, pre-tax profit came in at £2.6bn for the six months to 30 June. This beat the previous year’s £2.3bn and smashed expectations of £2.2bn. 

Flashing dividends

Meanwhile, Photo-Me International (LSE:PHTM) shares have climbed 31.8% in the past year and they’re up 39% in the last month. Currently, they’re trading at 107.5p.

Created with Highcharts 11.4.3Me Group International Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The photobooth and vending firm has a dividend yield of 2.77%, having paid a dividend of 2.89p for the year ended April 2021.

YearDividend Payment
20177.03p
20188.44p
20198.44p
20200p
20212.89p

My £2,500 would buy me about 2,326 shares. With last year’s dividend payment, this could provide me with around £67 of income per annum.

For the six months ended 30 April, revenue had grown 24.2% year on year. Furthermore, it had net cash of £41.4m.

However, it also reported that supply chain issues were becoming a problem and there was always the threat from further pandemic variants.

On the other hand, the company is forecasting revenue growth of more than 10% for the year to October 2022, although this is, of course, not guaranteed.

Overall, I could get just over £170 per year by investing £5,000 in these two companies. While this may not seem like a huge amount of money, it’s worth remembering that I’d receive this payment simply because I hold the firms in my portfolio. While there are risks, both businesses could be set for more growth, so I’ll add them to my portfolio soon.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

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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.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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