Forget NS&I Premium Bonds and Income Bonds. I’d buy UK dividend shares for a passive income


first_img “This Stock Could Be Like Buying Amazon in 1997” Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Peter Stephens | Saturday, 10th October, 2020 Holders of NS&I Premium Bonds and Income Bonds are set to find it more difficult to make a passive income in the coming months. Low interest rates mean the returns on both products, as well as other bonds and cash savings accounts, are set to be extremely low.As such, buying UK dividend shares could be a sound move. Their high yields, growth potential, and low valuations may allow you to achieve a worthwhile income return. They may also deliver impressive capital returns in the coming years as the stock market recovers from the recent crash.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Obtaining a worthwhile passive incomeMaking a passive income has been more difficult for many people since the global financial crisis. It prompted historically-low interest rates that sent the returns on bonds and cash savings accounts to lower levels. However, the coronavirus pandemic has pushed interest rates even lower. And they could even move into negative territory. As such, making a generous income return from bonds and cash savings account has become almost impossible.It may even be the case that some savers and bondholders experience a negative return once inflation has been factored in. This situation could be detrimental to their long-term financial futures, since it would mean a loss of spending power.Buying UK dividend sharesWhile making a passive income has also become more difficult for investors in UK dividend shares, many companies continue to make generous shareholder payouts. Certainly, a wide range of FTSE 100 and FTSE 250 stocks have cut, or cancelled, their dividends this year. However, the stock market’s low price level means those companies still paying dividends now offer high yields, in many cases.Therefore, it’s possible to obtain a significantly higher income return from a portfolio of shares than from NS&I Premium Bonds and Income Bonds. Furthermore, dividend growth is likely to return across many companies as the economic recovery takes hold. This may mean you enjoy a high income return that grows at a faster pace than inflation over the coming years. By contrast, low interest rates look set to remain in place for some time.Managing risks from UK sharesOf course, making a passive income from UK dividend shares is far riskier than holding NS&I Premium Bonds or Income Bonds. The recent stock market crash highlighted the ongoing risks that face investors.However, by holding a diverse range of stocks, you can reduce overall risks. Furthermore, investing in companies with solid financial positions and affordable dividends may improve the resilience of your income stream over the long run.With dividend yields substantially ahead of interest rates, the additional risks from holdings stocks may be worth taking in order to generate a higher passive income in the coming years. Enter Your Email Address See all posts by Peter Stephens Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Forget NS&I Premium Bonds and Income Bonds. I’d buy UK dividend shares for a passive income I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images. last_img read more