I don’t know anyone who would turn down the idea of earning passive income, especially in 2026. What could be better than generating extra cash to help keep the wolves from the door?
Fortunately, the stock market provides such an opportunity, even if it involves more risk than throwing money into a cash savings account. All an investor essentially needs to do is buy a stock, sit back, and let the business and its managers work for them.
From little acorns…
When we talk about passive income from shares, we mean dividends. These are a proportion of the profit made by a company and distributed back to its owners (us investors), usually twice a year.
In the early days of investing, this might amount to nothing more than a few pounds. However, over time (and with a bit of luck), they should increase in value. This is especially likely if the owner reinvests what they get back into the stock. The more shares they own, the more income they should receive, at least in theory.
Importantly, not all stocks pay dividends. Moreover, not all those that do are created equal. Plenty of companies run into trouble for various reasons and are forced to reduce or even cut their cash returns completely.
But there are also a good number of UK-based firms that have shown they can consistently deliver.
Passive income powerhouse
One example, at least in my view, is financial services titan Aviva (LSE: AV). Its forecast dividend yield for 2026 stands at 6.6%, as I type.
Using this as a guide, a £10,000 investment in the company might deliver dividends of around £660. This isn’t an exact science because share prices are always moving. When the share price goes up, the yield goes down and vice versa, all other things remaining equal.
But Aviva’s income credentials go beyond that monster yield. In recent years, management’s record of increasing its total dividend has been solid.
This isn’t surprising given the progress CEO Amanda Blanc has made in streamlining the business to become more focused on its home market. Operating profit jumped 25% to £2.2bn in 2025, helping the insurer to hit its 2026 targets a year early.
A word of warning
As enticing as this all looks, dividends are never guaranteed, regardless of which stock we’re talking about. Like all companies operating in the financial sector, Aviva’s outlook is always tied to the health of the economy. When the next crisis arrives (and we can be reasonably confident that one eventually will), things could get tough.
This is precisely why I said ‘forecast yield’ a little earlier. This simply means that analysts have done their sums and made a prediction on how much might be distributed to holders for every share they own as things stand. It’s not nailed on.
But this, of course, underlines why we’re such fans of spreading money around the market at The Twelfth Magpie. Owning several income-generating stocks still doesn’t guarantee anything. But it reduces the risk that comes from only backing one horse (or business).
So yes, I reckon Aviva could act as a great starting point for a new investor to consider. It’s far from the only option though.
Should you invest £5,000 in Aviva Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva Plc made the list?
Paul Summers has no position in any of the shares mentioned
