The bulk of my portfolio is made up of dividend shares. Inflation has wreaked havoc in the last few years. To protect myself against this, I’ve been on a mission to generate some passive income.
A fresh year is upon us. But I intend to keep to the same methods I’ve been using. While inflation is falling, I’m keen to pick up cheap shares with meaty yields. With the income I receive, I’ll reinvest this. Over time, this should help my pot grow.
Here are two shares I plan to pick up this month and hold for the years to come.
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Legal & General
I own a host of shares across a range of sectors, and by diversifying I offset risk. That said, Legal & General (LSE: LGEN) holds a relatively large weighting in my holdings. I first opened a position in the stock in January 2023 and have been slowly topping up my position since then. As I write, I’m up around 12.3%. With that, I intend to keep buying more shares.
It won’t come as a surprise that my main attraction to the stock is its 8% yield. That places it firmly as one of the FTSE 100’s highest payers. On top of this, in the last decade, its dividend has seen steady growth.
Of course, dividends are never guaranteed. Companies can reduce or cut them altogether. We only have to look at the pandemic to see this. However, initiatives such as the firm’s cumulative dividend plan provide me with optimism that it’s keen to return value to shareholders. As part of its four-year plan, which ends this year, it aims to return up to nearly £6bn in dividends.
There are risks with the stock. Its assets under management took a hit last year as investors tightened their belts and opted to keep their money tucked away. This may continue in the upcoming months.
However, I buy for the long term. With that, I’ll continue to snap up shares with any spare cash I have.
Games Workshop
Another stock I own and intend to keep buying shares in is Games Workshop (LSE: GAW).
Like Legal & General, it provides a passive income opportunity. At 4.6%, its yields slightly lower. However, this still tops the Footsie average of around 4%.
I’m also bullish on the long-term future of the business. It has produced stable growth in the last few years. I fully expect this to continue in the years ahead.
One reason for this is due to its recent deal with Amazon, which will see its Warhammer universe developed into a series of film and TV content. This highlights how the business is keen to diversify its revenue streams. It will also expose the brand to millions of new customers worldwide.
The biggest threat to the business is competition. As the industry continues to grow, larger players are being attracted to the space, including names such as Disney. On top of that, a trading update in December highlighted a slowdown in core revenues. This will be something to keep an eye on going forward.
Regardless, with a loyal customer base, I expect Games Workshop to keep excelling in the times ahead.
