We have some exciting news to share! The Motley Fool UK has now become The Twelfth Magpie -- an independent, UK-owned company, led by our long-serving UK management team — Mark Rogers, Chris Nials and Heather Adlington. In practical terms, it’s the same team you know, now fully focused on serving our UK readers and members.

Just as importantly, our approach remains unchanged: long-term, jargon-free, and on your side. This site is our new home, and there will be extra tweaks made across the coming few days as we settle in. So if anything looks a little off, please bear with us!

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.

I asked ChatGPT to name 3 brilliant passive income stocks for an ISA in 2026 and it said…

Harvey Jones is on the hunt for some FTSE 100 dividend stocks to generate a second income from his ISA, and decided to get some ideas from a chatbot.

| More on:
A senior man using hiking poles, on a hike on a coastal path along the coastline of Cornwall. He is looking away from the camera at the view.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Twelfth Magpie’s Premium Investing Services. Become a member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more, and get a free 'Best Buy Now' stock!.

I’m looking to invest around £3,000 in a Stocks and Shares ISA. With retirement roughly a decade, away, I’m looking to build a passive income on top of what I’ll get from the State Pension and Self-Invested Personal Pension.

So I decided to call in ChatGPT. I’d never allow artificial intelligence (AI) to pick stocks, because it struggles with facts and doesn’t have opinions of its own. But it can throw up a few ideas.

Should you buy Legal & General Group Plc shares today?

Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.

That’s why this could be an ideal time to secure this valuable research – Mark’s analysts have scoured the markets to reveal 5 of his favourite long-term ‘Buys’. Please, don’t make any big decisions before seeing them.

I was hoping for some surprise picks or insights, but it started by naming the two most obvious FTSE 100 income stocks I could imagine.

The first one is so obvious, I hold it myself, asset manager and insurer Legal & General Group (LSE: LGEN), which doesn’t coincidentally have the highest trailing yield on the blue-chip index, at 8.2%.

ChatGPT said it offers financial sector exposure with strong income potential, adding: “It benefits from recurring cash flows and its payout is generally well-covered by earnings”.

I’m unconvinced. Ideally, shareholder payouts should be covered twice by earnings. Legal & General’s dividend cover is just 0.94. That’s my biggest worry about this stock, yet ChatGPT showcased it as a key benefit. Worrying.

My second concern is that the Legal & General share price has underperformed, due to three years of volatile earnings. Although this might be an opportunity, giving its scope to play catch-up with sector rivals.

Either way, I think the shares are worth considering, for long-term income seekers. Legal & General has a strong balance sheet, and I believe the dividend should hold. No guarantees though.

British American Tobacco

The next tip was equally predictable, but maybe that’s not a bad thing. ChatGPT named British American Tobacco (LSE: BATS), calling it a globally-recognised tobacco business with a long history of generous dividends. It also noted that “yields have trended well above the FTSE 100 average thanks to consistent cash generation from established brands”.

The British American Tobacco share price is up 36% in a year, the dividend yield’s a thumping 6%, but the price-to-earnings ratio remains a modest 11. The FTSE 100 average is around 20.

AI doesn’t mention any risks so I’ll point out that cigarette makers are under constant regulatory scrutiny, and after a strong recent run, the shares may slow. But it may be worth considering with a long-term view, for those happy to invest in cigarette makers.

OSB Group

I asked ChatGPT to name one stock from the FTSE 250 and it picked OSB Group (LSE: OSB), which offers specialist mortgage and savings products. That surprised me, because it already tipped a stock from the financial services sector. I’m unsure this is the diversification I called for.

Like the big FTSE 100 banks, the OSB share price has had a blinder, soaring 75% in 12 months. Yet it’s still cheap with a price-to-earnings ratio of 7.7, while the trailing dividend yield’s a nifty 5.3%.

Its lending has been growing nicely and while falling base rates could squeeze net interest margins, they could also boost mortgage lending and reduce impairments. OSB has even been running a share buyback programme. This one merits further investigation.

ChatGPT has its uses but as my results show, it must be approached with caution. Investors must make their own decisions rather than rely on a robot.

Harvey Jones has positions in Legal & General Group Plc. The Motley Fool UK has recommended British American Tobacco P.l.c. 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 female couple boarding their plane at the airport to go on holiday.
Investing Articles

Can the Rolls-Royce share price reach £15.97 by the end of August?

The Rolls-Royce share price has had a solid run in the last year. Muhammad Cheema takes a look at whether…

Read more »

Santa Clara offices of NVIDIA
Investing Articles

Up 1,200% in 5 years, here’s why Nvidia could still be a brilliant value stock

An exciting new announcement that could reshape the PC industry has just pushed Nvidia stock... well, just about nowhere really.

Read more »

House models and one with REIT - standing for real estate investment trust - written on it.
Investing Articles

How investing £4.50 a day could set you on the way to a £1,505 monthly second income

How can UK stocks with high dividend yields help investors earn a meaningful second income from the price of a…

Read more »

Investing Articles

Up 103% with a P/E of 261 — is this FTSE 100 stock still worth buying?

One FTSE 100 stock is quietly moving higher while most investors are still looking elsewhere — is the market missing…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

The smart money thinks AI stocks look risky — but is there still a chance to buy?

According to fund managers, the AI trade is getting crowded. But they still seem to think it’s the place to…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Barclays shares are 11% below their 52-week high. Could they be a bit of a bargain to consider?

Overpriced or one of the FTSE 100’s hidden gems? James Beard takes a closer look at how the market is…

Read more »

Stack of one pound coins falling over
Investing Articles

Down 65% but yielding 6.7% – is this beaten-down UK stock now a generational bargain?

Harvey Jones says this UK stock is one of the worst FTSE 100 performers but there are sound reasons to…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is this FTSE stock really 46% undervalued?

Analysts reckon this FTSE stock should be worth nearly 50% more. James Beard considers why there’s so much positivity surrounding…

Read more »