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.

How much do you need in an ISA to target £1,101 monthly passive income?

Our writer explains why he thinks a Stocks and Shares ISA is a great way of investing in passive income shares. But how much is needed to earn £13,215 a year?

| More on:
ISA coins

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!.

Passive income is money earned from doing very little. And what’s not to like about that? My preferred way of generating a second income stream is to invest in stocks and shares.

But by reinvesting the dividends received – instead of spending them — I believe it’s possible, over the long term, for an individual to significantly increase their wealth and income.

Should you buy Supermarket Income REIT 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.

Some numbers

For example, putting £250 a month into a Stocks and Shares ISA for 25 years, at a rate of 6.75% (this is the annual average increase of the FTSE 100 from 2015-2024 with all dividends reinvested) would grow to £195,782. At this point, it could generate an annual income of £13,215 or approximately £1,101 a month.

And I reckon an ISA is the perfect place to hold a portfolio of dividend shares. That’s because all income (and capital gains) can be earned tax free.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

As a precaution, it’s a good idea to spread the risk across a number of positions. After all, dividends are never guaranteed and shares can go down as well as up. The precise number to hold depends on an investor’s appetite for risk, as well as the size of the portfolio, although 20 is often quoted as a good benchmark.

Once an ISA has been opened, funds deployed, and the target number of holdings has been established, the next thing to do is to find some stocks to buy.

Shopping around

One of my favourite income shares is Supermarket Income REIT (LSE:SUPR). Its simple business model involves maximising the rental income from its portfolio of supermarkets in the UK and France.

To maintain its status as a real estate investment trust (REIT) and, therefore, retain certain tax privileges, it must pay dividends each year equal to 90% of its relevant profit. Based on amounts paid over the past 12 months, the stock’s now (9 January) yielding 7.4%. In cash terms, its dividend is 4.7% higher than it was for its June 2021 financial year.

In December 2025, the group announced it had completed the acquisition of three supermarkets at a combined cost of £98m. This followed a busy November, when it spent nearly £350m on expanding its portfolio. Some of this was via a joint venture with Blue Owl Capital. It now estimates that its loan-to-value is 43% and its WAULT (weighted average unexpired lease term) is 12 years.

But it’s unlikely that its share price performance is going to match some of the more exciting stocks on the UK market. I believe taking a position is more about income than capital growth.

And with most of its acquisitions being funded by debt, its level of borrowing – and vulnerability to a higher interest rate environment – is something to monitor.

Worth considering

However, it has an impressive list of blue-chip tenants. The trust claims that its exposure to “investment grade clients” is now 75%. And the majority of its agreements provide for annual inflation-linked rent increases. Also, by whatever method people choose to buy their groceries — whether it be in-store, click and collect, or home delivery — a physical shop’s going to be needed.

On this basis, I think Supermarket Income REIT’s a dividend stock to consider. It’s one of many UK shares that I think could provide a generous passive income stream over the coming years.

James Beard has positions in Supermarket Income REIT Plc. 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.

More on Investing Articles

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Why is EasyJet stock suddenly a takeover target for US investors?

Andrew Mackie looks at easyjet shares jumping on US takeover talk — but is this a genuine re-rating or just…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Have investors got BT shares all wrong?

BT shares spiked during the 1990s telecom boom, then struggled for two decades. Harvey Jones says it's the future that…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

Looking for buying opportunities in June? Here’s 1 to consider from my Stocks and Shares ISA

The conflict in Iran is making one of the investments in Stephen Wright’s Stocks and Shares ISA volatile. But could…

Read more »

Row of blue European Union flags in Brussels.
Investing Articles

After crashing 13.7% today, is Wise now a stock market bargain at 805p?

Wise was one of the biggest fallers on the UK stock market today. What on earth is going on with…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

At 8% is this eye-popping FTSE 100 dividend yield simply too good to be true?

The dividend yield is to die for, but the share price is lacking in life. Harvey Jones examines whether this…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

UK investors are piling into this legendary S&P 500 growth stock while it’s down 50%

This US growth stock fell from $240 to $80 amid AI disruption fears. And investors are now aggressively buying it…

Read more »

Abstract 3d arrows with rocket
Investing Articles

£19,469 invested in BAE Systems shares 6 months ago is now worth…

BAE Systems shares have been charging higher of late. Is now the time to consider buying or is this top…

Read more »

Finger clicking a button marked 'Buy' on a keyboard
Growth Shares

Analysts think this growth share could rally a further 26% in the next year

Jon Smith talks through a growth share that's up 20% in the past month and could keep going based on…

Read more »