For anyone with a chunky lump sum sitting in the bank, the stock market offers an immediate route to a second income.
Even with a basic FTSE 100 index tracker, it’s possible to instantly start earning a new dividend income stream without having to do anything beyond hitting the Buy button. But for the disciplined stock-pickers willing to put in more effort, the results can be far more impressive.
To demonstrate, the overall FTSE 100’s currently offering a dividend yield close to 3.1%. That means someone with £100,000 to spare can instantly start earning a roughly £3,100 annual passive income. But if that money was targeted towards high-quality individual stocks, the yield can be far more impressive.
Take LondonMetric Property (LSE:LMP) as a prime example. With a yield sitting at 6.6%, that same £100k investment could generate around £6,600 in passive income – more than double index investors are expected to earn.
So is this a no-brainer buy for income investors right now?
An all-weather portfolio built for long-term income
Let’s start with a quick introduction. LondonMetric’s the UK’s leading triple net lease (NNN) real estate investment trust (REIT). In simple terms, the business is a commercial landlord, collecting rent from its tenants who are also responsible for property maintenance, insurance, and property taxes.
The result is a highly predictable and cash-generative business model. And today, its property portfolio spans £7.6bn of assets across logistics warehouses, food stores, drive-throughs, healthcare facilities, hotels, and entertainment venues.
With management leveraging the strength of its balance sheet, the business continues to acquire new properties and expand its reach. But growth’s also happening organically as well. With 49 rent reviews completed so far in 2026, with an average uplift of 16%, cash flow continues to grow.
In other words, even with an impressive 6.6% yield, dividends could expand even further in the coming years. That certainly sounds promising, but where’s the risk?
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What could go wrong?
Higher interest rates have generally wreaked havoc across the real estate sector in recent years. For LondonMetric, the business has proven to be remarkably resilient, thanks to the quality of its underlying portfolio and tenant base. But for the wider sector, conditions are proving to be quite tough.
As previously mentioned, management’s taking advantage of the circumstances to execute acquisitions and mergers at a discount. And while that’s certainly exciting, it also introduces some undeniable execution risk.
If acquired properties fail to live up to expectations, the firm’s balance sheet could take a painful hit, particularly as LondonMetric’s using a notable amount of debt to fund these takeovers.
So far, these deals appear to be sucessfully creating value. But with interest rates remaining elevated for longer than initially expected, the margin for error isn’t the widest right now.
A risk worth taking?
LondonMetric’s built something genuinely rare in UK real estate: a growing, well-covered, sector-leading income stream with 17-year average lease lengths and a management team that’s compounded value through multiple cycles.
That’s why, despite the genuine risks, I think LondonMetric shares are worth considering while the share price remains relatively undemanding and yield attractively high. That’s why I’ve already added this business to my second income portfolio.
Should you invest £5,000 in LondonMetric Property Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?
Zaven Boyrazian owns shares in LondonMetric Property.
