Some of these will prove to be yield traps, but many others will be able to meet their high yields. This offers passive income investors a lot of choice and opportunity.

Here, I want to mention a trio of UK dividend stocks with yields above 5% that I reckon are worth examining more closely.

Property

Londonmetric Property (LSE:LPM) is a FTSE 100 real estate investment trust (REIT). After falling 20% over the past four years due to higher interest rates, this dividend stock is offering a juicy 6.5% yield.

Looking ahead, this is set to rise to around 7% in two years’ time. This is why I added the REIT to my own income portfolio a few months ago.

LondonMetric focuses on triple net lease properties, meaning tenants are typically responsible for most of the costs associated with the property. This provides the REIT with a relatively stable income stream. 

Additionally, half the portfolio is in the logistics and distribution sector, which should enjoy long-term growth due to the ongoing shift toward online shopping. Tenants here include Amazon, Next, and FedEx. 

We continue to believe that urban logistics remains the most attractive sub-sector with the greatest demand/supply tension and the strongest rental growth.
LondonMetric

The biggest risk ahead is if interest rates start rising again, as this would put pressure on property values and make borrowing more expensive. With inflation remaining sticky, this certainly can’t be ruled out (and dividends are never ultimately assured, of course).

However, due to the REIT’s quality assets, 98% occupancy rate and high starting yield, I think the risk’s worth considering.

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.

Banking

Turning to the FTSE 250 now, we have TBC Bank (LSE:TBCG). This is a fast-growing lender in Georgia, where it enjoys a significant market position alongside rival Lion Finance. It also operates a digital bank in Uzbekistan.

Despite a mouth-watering 295% share price rise over the past five years, TBC is still carrying a 5.6% yield. Moreover, due to robust growth, this is forecast to rise as high as 7.4% in 2027.

The fact that TBC operates across the less developed economies of Georgia and Uzbekistan adds risk. If either’s impressive GDP growth rates disappointed, the bank’s earnings growth could stall.

However, looking at the valuation, I can’t help feeling some of these risks are already baked in. I mean, we’re looking at a forward P/E ratio of 5.1, which appears too low.

Insurance

Returning to the FTSE 100 now, I want to briefly highlight Aviva (LSE:AV.). The UK’s largest diversified insurer is currently sporting a 6.1% dividend yield.

Again, when we peer ahead, though, this rises to almost 7% in 2027. Expected robust earnings growth will likely support the rise as the firm integrates the Direct Line acquisition, realising cross-selling opportunities across the enlarged group.

Given that Aviva focusses on just two markets today (the UK and Ireland, and Canada), any economic downturn in either could present challenges to growth.

But with management confident in achieving 11% growth in operating earnings per share between 2025 and 2028, the dividend prospects look attractive to me here.

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?

Ben McPoland owns shares in Aviva and LondonMetric Property.

The post 3 top passive income shares to consider with dividend yields above 5% appeared first on The Twelfth Magpie.

Perhaps this isn’t surprising, given Lloyds’ status as the UK’s largest mortgage lender. Investors favour its perceived stability, reliable dividends, and entrenched competitive position. Fair do’s.

However, I personally find the following pair of bank stocks more attractive today. Here’s why.

FTSE 250

The first one is TBC Bank (LSE:TBCG), a leading lender in Georgia. I’m bullish on this FTSE 250 stock for a few reasons.

Firstly, TBC has high long-term growth potential due to the emerging markets in which it operates (Georgia and Uzbekistan). Unlike the UK, these economies are growing quickly but still in the earlier stages of financial services penetration.

Plus, TBC enjoys a duopolistic position within the Georgian banking system, alongside the FTSE 100‘s Lion Finance. This dynamic (37% share of both loans and deposits) has helped the bank consistently deliver a high return on equity (ROE). We’re talking about mid-20s, which is excellent.

We operate across two highly attractive and complementary markets. Georgia provides a strong, well-established platform
where we generate consistently high returns, while Uzbekistan offers significant long-term growth potential as one of Central
Asia’s most dynamic and underpenetrated banking markets.

TBC Bank

Next is the dividend yield, which currently stands at 6.8% on a forward-looking basis. That’s significantly ahead of Lloyds’ 4.5% yield, while dividend cover is also slightly higher.

Finally, the stock’s valuation is much lower, with a forward price-to-earnings (P/E) ratio of 5.3 versus 9.3 for Lloyds.

Of course, the difference in valuation and yield probably reflect the higher risk profile (particularly political risk in Georgia). And while Uzbekistan is expected to record strong GDP growth of 6%+ this year, it’s also a bit of a wildcard.

On balance though, I like TBC’s high yield, low valuation, robust profitability, and strong long-term growth prospects.

FTSE 100

The second stock I prefer is HSBC (LSE:HSBA), which is up 57% in the past year.

Unlike Lloyds, Europe’s largest lender by market-cap operates in the world’s largest and second-largest economies (US and China/Hong Kong), as well as India (which is on track to become the third-largest within the next few years).

Therefore, HSBC has a truly global presence, and should capture some of the growth of the world’s largest economies moving forward. This includes high-net-worth individuals who have complex tax planning and cross-border needs.

According to Mordor Intelligence, the Asia-Pacific wealth market is projected to reach $41.8trn by 2031, up from $27.6trn in 2025. To capture this opportunity, HSBC has set up wealth hubs in China, Hong Kong, Singapore, Taiwan and Malaysia.

Admittedly, the flip side to HSBC’s Asia-focused strategy is that new regulations can come out of left field, especially in China. This adds political and regulatory risk that Lloyds’ shareholders don’t have to worry about.

But HSBC also offers a slightly higher forward yield of 4.8%, which I find attractive. Add in the banking giant’s long-term growth prospects alongside the dividend, and I think the stock is well worth considering.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Ben McPoland owns shares in HSBC and Legal & General.

The post 2 bank shares I like better than Lloyds today appeared first on The Twelfth Magpie.

Here are three mid-cap shares to consider than have forecast dividend yields above 4.5% today.

Dirt-cheap bank stock

TBC Bank (LSE:TBCG) is one of two dominant lenders in Georgia, the fast-growing country located at the crossroads of Eastern Europe and Western Asia.

The stock has done tremendously well, jumping almost 300% in five years, with dividends on top. Yet despite this, it still sports a sizeable 5.5% dividend yield.

But that’s the trailing yield. Looking ahead to 2026 and 2027, the figures jump to 6.7% and 7.7%, according to the latest forecasts. This shows how strongly the bank is growing (a 15% rise in net profit in Q1).

On top of this, the stock looks dirt cheap still. We’re talking about a forward price-to-earnings (P/E) ratio of 5.2!

Naturally, this is quite a rare setup, and I have to assume there’s a political risk premium being applied here. That’s because the political situation in Georgia remains tense, with more than 500 days of street protests in Tbilisi following 2024’s bitterly contested election.

Also, TBC is expanding into Uzbekistan. While this is another fast-growing economy with lots of potential, it’s also less developed. Net profit here actually dipped 4% in Q1.

Despite these risks, TBC continues to deliver excellent profitability, a high return on equity (25%), and is buying back shares. Pairing this with the cheap valuation and high dividend yield, this looks like an excellent dividend stock to consider.

Long-term growth potential

Unlike TBC, Hollywood Bowl (LSE:BOWL) is likely a much more familiar name. The company is the UK and Canada’s leading ten-pin bowling operator, with 93 centres.

The stock has jumped 16.5% in the past month. This follows a strong first half that showed revenue increasing 9.5% to £141.5m, with like-for-like growth of 2.6% in the UK (the firm’s largest market). Adjusted pre-tax profit rose 8.1% to £32.1m.

Hollywood Bowl did experience a decline in game volumes played, which is understandable given pressure on household budgets (an ongoing risk to bear in mind). But it was able to offset this with dynamic pricing and a 7.6% increase in spend per game.

Currently, the forward yield is an attractive 4.7% (the interim dividend due in July was just hiked 10.2%). The company has a strong balance sheet, proven strategy for identifying prime locations, and is targeting 130 centres by 2035.

Healthcare property

Finally, I want to highlight Primary Health Properties (LSE:PHP), which is a real estate investment trust (REIT). It owns over 1,100 assets, primarily medical centres, GP surgeries, and private healthcare clinics across the UK and Ireland.

What I like here is that the vast majority of rental income comes from (indirectly or directly) from government bodies. This makes it more resilient than a lot of other REITs, as evidenced by 30 consecutive years of dividend growth.

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.

That said, the stock won’t emerge unscathed if interest rates creep up over the next few years. This could cause refinancing pressure and put downward pressure on property valuations.

But the potential reward for taking on the risk? A massive 8% forward yield.

Should you invest £5,000 in TBC Bank 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 TBC Bank made the list?

Ben McPoland has no position in any of the companies mentioned.

The post 3 quality FTSE 250 stocks to consider with dividend yields above 4.5% appeared first on The Twelfth Magpie.

So why does a bank with that kind of growth still fly under the radar?

What makes TBC stand out?

I think the first thing to notice is the pace of growth. TBC currently boasts the strongest revenue growth of all 16 banks on the FTSE 350, with revenue up 16.17% year on year.

Its latest results also showed Q1 2026 profit of £101.1m, up 15% year on year, with return on equity (ROE) at 23.4%. That’s a strong mix for any bank, never mind one in the FTSE 250.

Here’s a quick snapshot of its core numbers:

• Market-cap: $12.57bn
• Dividend yield: 6.56%
• ROE: 23.73%
• Net margin: 36.14%
• Assets: £12.57bn
• Debt: £2.85bn

Those are solid figures, and the dividend looks well covered by earnings. But the story’s not just about the numbers on the page, is it?

Why’s the market cautious?

TBC’s based in Georgia, and that matters. The company warns that developments in Georgia, Uzbekistan, the Russia-Ukraine war, and the wider political and legal environment can all affect results.

That’s a real risk, because investors generally dislike uncertainty, especially when it comes from a volatile region.

Competition’s another issue. Lion Finance (previously Bank of Georgia) is larger and more profitable, but doesn’t offer the same income appeal. So while TBC appears to prioritise shareholders, Lion’s focused on scale and profitability.

Which matters more depends on the kind of investor you are.

A simple way to think about it

For a novice investor, I would frame TBC like this:

• A high-growth bank with a high dividend yield.
• Profitability’s strong, with ROE above 23%.
• The balance sheet’s sizable, but the region adds risk.
• It offers both income and growth appeal (albeit with volatility risk).

Encouragingly, Vakhtang Butskhrikidze, TBC’s chief executive, said in the latest results:

“I am pleased to report a strong start to the year for TBC Group as we continue to generate sustainably high profitability and robust growth.”

That’s a confident message – although markets tend to care just as much about risk as they do about confidence, don’t they?

What should investors do?

In my opinion, TBC looks like one of the most promising up-and-coming banks on the London Stock Exchange. But its geographical location makes it a high-risk/high-reward investment.

Naturally, it doesn’t have the ‘safety’ offered by highly-established names such as Lloyds of HSBC. The ‘Big Four’ banks are understandably favourites among major investment trusts — often considered foundational holdings in UK portfolios.

But their massive size makes their shares prices harder to move, limiting growth potential. That’s where a mid-cap like TBC shines.

For income seekers, the yield’s attractive. For growth investors, the share price momentum’s hard to ignore. That’s why I find it a compelling stock to consider, although only as a sattelite position in a much broader, diversified portfolio.

And it’s just one of several similarly attractive stocks I’ve covered recently, each with their own unique appeal.

The post How has this under-the-radar FTSE 250 bank grown 7 times faster than the FTSE 100 since 2021? appeared first on The Twelfth Magpie.

Pan African Resources (LSE:PAF) leads the pack, with a market-crushing return of 797%. Next comes a huge 348% gain from TBC Bank Group (LSE:TBCG), while Goodwin (LSE:GDWN) narrowly gets bronze with 313%. Note, none of these returns include dividends!

So, here we have an African-focused gold miner, an emerging markets bank (Georgia’s TBC), and family-run engineer Goodwin. An honourable mention should go to construction group Galliford Try, which has also returned around 312% over five years.

What has driven these extraordinary gains?

Benefiting from big investing trends

Pan African’s eye-popping gain can be summed up with one word: gold.

As a gold miner, its profits are highly leveraged to the price of the yellow metal. And even after the recent pullback, gold is still up by roughly 175% in five years.

When gold prices soar, a miner’s profits will often grow much faster than the price of the metal itself because extraction costs stay relatively fixed. As such, Pan African’s net profit has exploded from $44m in 2020 to an expected $470m this fiscal year (ending June). Wow!

Meanwhile, Goodwin’s benefitting from the defence and nuclear renaissance. It makes high-integrity castings, particularly those that don’t melt under extremely high temperatures. Not many companies in the world specialise in these.  

Bottom-line profits have grown at an annualised rate of 25% since 2020. And Goodwin investors have enjoyed lots of dividends along the way. 

Is either still worth considering?

The last time I wrote about Goodwin (in October), I concluded that the stock looked too pricey. Back then, the price-to-earnings (P/E) ratio was 60 while the dividend yield was just 1.4%.

Since then though, the Goodwin share price has crashed almost 40%. And now we have a P/E ratio of 24 and a 2.2% yield that may be worth considering.

Much of this loss came in a single day in March when Goodwin revealed it had lost two major tenders in its Mechanical Engineering division (worth about £60m). And it has delayed the dispatch of valves to some customers due to the Iran war.

Taking a longer-term view, however, it should have plenty of growth options across the European nuclear, aerospace and defence sectors. After all, it has finally dawned on Europe that these things are actually rather important in a fragmenting international order.

Pan African’s fate will, of course, be dictated by the gold price. Personally, I prefer Fresnillo from the FTSE 100 as it mines silver too. But both stocks could tank if gold does.

Ultra-cheap stock

Turning to TBC, I’m more bullish on this bank stock. It’s trading at just 5.7 times forward earnings, while offering a 6.2% forecast dividend yield.

Granted, any economic downturn in Georgia is a risk, while the political scene there is still on edge. But this economy is tipped to grow strongly for years, as is Uzbekistan’s (TBC’s second market).

The lender is extremely profitable, benefitting from its duopolistic position in Georgia and an increasingly digital-first approach. Given the extremely low valuation, strong growth potential, and generous starting dividend yield, I think TBC stock is still worth looking at today.

The post Meet the skyrocketing FTSE 250 stocks up by more than 300% in five years! appeared first on The Twelfth Magpie.

Yet the FTSE 250 index of growth shares isn’t just packed with companies that look cheap based on expected earnings. Many also have huge dividend yields that would put most FTSE 100 income-paying shares to shame.

Here, I’ll reveal one of my favourites, and explain why it’s on my own watchlist for when I next have cash to invest.

Emerging markets star

Emerging market companies like TBC Bank (LSE:TBCG) face an increasing threat following conflict in the Middle East. Why? These regions depend more heavily on non-bank investment for growth. And with interest rates tipped to rise, funding from institutional investors could dry up.

That’s not just my opinion. The International Monetary Fund (IMF) made this warning on Tuesday (7 April), noting that “portfolio flows to emerging markets tend to be more volatile than bank flows and are increasingly sensitive to global risk conditions“. For TBC, which provides banking services in Georgia and to a lesser extent Uzbekistan, this poses an enormous threat.

Higher interest rates in Georgia would be good for TBC’s margins. However, their impact on local loan impairments and banking product demand — combined with the possibility of that sinking overseas investment — could create a huge net negative for earnings.

Yet from an investment perspective, I feel these problems are more than baked into the bank’s low valuation. Right now it trades on a forward price-to-earnings (P/E) ratio of 5.9 times. With a 6% dividend yield for 2026, too, I think it could be one of the best FTSE 250 value shares to consider.

17.9% annual returns

Georgia’s economy has faced challenges before. But over the long term, it’s delivered spectacular GDP growth that’s powered financial services demand, typically 5%-6% over the last decade.

As the country’s largest bank, TBC’s been in the box seat to exploit this opportunity. And it’s done so spectacularly, growing its share price 276% since it listed on the London stock market in August 2016 as profits have soared.

With dividends combined, the total shareholder return comes in at 392%, representing an average annual return of 17.9%. That’s more than three times the broader FTSE 250’s average yearly return of 5.2%.

A FTSE 250 dip buy?

Ultimately, I believe TBC Bank’s long-term outlook remains intact. And given the company’s super-low valuation today, I think it’s a top share to consider on the dip.

Net profits clocked in at roughly $531m last year, and TBC’s set a profit target of $1bn by 2030. Given its strong structural opportunities, it’s a goal I expect it to steadily move towards, driving the share price to new peaks.

The post 6% dividend yields and a P/E below 6! Here’s a FTSE 250 bargain share to consider appeared first on The Twelfth Magpie.

The first number to nail down: how much capital do we actually need? 

If we’re targeting £10,000 a year from dividends, the answer depends on the yield we’re earning. At a 5% yield, we’d need a portfolio worth £200,000. At a 7% yield, that drops to around £143,000. 

Neither figure sounds trivial.

Of course, we don’t need to save £200,000 from scratch. We need to grow our portfolio — using a Stocks and Shares ISA and a largely underappreciated force: compounding.

Let’s run the numbers. An investor putting £400 a month into a Stocks and Shares ISA, earning an average 8% annual return, would have a pot worth approximately £235,000 after 20 years. That’s enough, at a 4.5% yield, to spin off £10,575 a year — a genuine second income, sheltered from tax.

The chart below shows how different monthly contributions stack up against the £200,000 threshold:

One aspect that jumps out immediately is the curve.

The first decade of investing can feel thankless. Contributions dominate and growth is modest. But somewhere around years 12 to 15, the compounding effect kicks in hard and the line bends sharply upward. That inflection point is everything.

It also explains why starting early beats saving hard. 

An investor contributing £300 per month from age 30 will typically outrun someone putting in £600 per month from age 40 — even though the late starter is doubling down. A decade of compounding is simply very difficult to replicate.

Where to invest?

But here’s something that trips up a lot of investors: building a second income portfolio doesn’t mean holding dividend-paying shares the whole time. During the accumulation phase — the years of growing the pot — many investors actually do better focusing on total return, holding high-growth shares that pay little or no dividend at all.

One stock that I find interesting from a growth perspective, while offering an outsized dividend, is TBC Bank (LSE:TBCG). The Georgian bank has compounded earnings per share at 34% annually since 2020 — yet trades on a forward PE of just 5.2 and has a price-to-earnings-to-growth (PEG) ratio of 0.4.

The forward dividend yield sits at nearly 7%, and that dividend has grown at over 40% a year over the same period, covered almost three times by earnings.

Return on equity of 23.8% and operating margins above 43% tell us that this bank is much more profitable than its UK focused peers. The market simply applies a steep discount for geography: TBC operates primarily in Georgia, and also in Uzbekistan, and that’s where the risk lives.

Specifically, Georgia remains an emerging market with real political volatility. Its proximity to Russia, the instability of the currency against sterling, and the potential for sudden capital flow disruption all mean that the headline numbers can deteriorate fast.

That said, I believe this is an investment worth considering. Georgia’s economy has been the fastest growing in Europe since the pandemic, and TBC still offers good value.

The post Here’s how to try and create a £10,000 second income portfolio appeared first on The Twelfth Magpie.

For long-term investors with cash at the ready, market weakness might actually be an opportunity rather than a reason for caution. Here are two UK-listed names I think deserve a close look.

UK aerospace

Melrose (LSE:MRO) is absolutely worth paying closer attention to. Many investors may not even realise that it’s a FTSE 100 company.

Spun out as a pure-play aerospace components business, the company holds a sole-source position for 70% of the products it produces. That means customers simply can’t go elsewhere. It’s genuine pricing power.

The business is currently undergoing a transformation and cash flow has just turned positive — something management called an inflection point. EPS grew nearly 70% in 2025 and is forecast to grow a further 14% in 2026 and 23% in 2027 — yet the shares trade on just 12.4 times forward earnings with a price-to-earnings-to-growth ratio of 0.9.

It’s not just me however. The stock’s down 28% from its 52-week high, and the analyst consensus price target sits more than 40% above the current price.

A risk to flag is the balance sheet. Net debt stands at £1.74bn. That’s manageable while aerospace demand holds up, but it does mean Melrose has less room for error than some investors might like.

A Georgian bank

TBC Bank‘s (LSE:TBCG) even less well-known but arguably more interesting from a valuation standpoint. It’s a Georgian bank — a dominant retail lender in one of Europe’s fastest-growing economies — with expanding operations in Uzbekistan.

The headline numbers are super-strong. The forward price-to-earnings is just 4.9 times.There’s a PEG ratio of 0.4 and a dividend yield of 7.37%, backed by a cover of 2.76 times and growing at a compound annual rate of over 17%. Revenue’s grown at nearly 25% annually over recent years, and return on equity sits at 23.8%.

What’s more, TBC’s largely insulated from the risks that started impacting Western banks in February — concerns about AI-driven white-collar job losses, mortgage stress, falling consumer confidence. Georgia and Uzbekistan are growing economies driven by demographics and rising consumer spending rather than knowledge-economy employment.

As with every investment, there are risks. Geopolitical exposure in the Caucasus, proximity to a war zone, Georgian lari currency fluctuations, and relatively thin analyst coverage with only four brokers following the stock.

Personally, I think these are all baked into the price.

My take

Neither of these is a guaranteed winner — no stock ever is. However, they’re two quality companies currently trading at a discount to fair value. I think they’re both worth considering.

The post These 2 UK stocks look cheap ahead of the ISA deadline appeared first on The Twelfth Magpie.

Here’s the thing about building a passive income stream from dividend stocks. The lower prices fall, the higher the yields go. And when those yields are reinvested (as any serious long-term investor should be doing), the magic of compounding starts to work in earnest.

A £500 annual dividend reinvested at a yield of 8% snowballs far faster than one reinvested at 5%. Over a decade or two, that gap becomes enormous. It’s not exciting or glamorous. It is however, remarkably powerful.

So while the headlines continue to scream about tariff wars and macro uncertainty, patient income investors might quietly be seeing a shopping window.

Taking a beating

Several high-quality dividend stocks have taken a notable beating since the trade war escalated, including mainstream names such as Standard Life and Legal & General. Both long-time stalwarts of the income investor’s playbook have drifted lower despite underlying businesses that remain fundamentally sound. That’s pushed their already-attractive yields even higher.

But it’s not just the household names worth examining. Lesser-known stocks, including TBC Bank (LSE:TBCG), Morgan Advanced Materials, and Bodycote, have also been caught in the crossfire, marked down in the broad sell-off despite dividend credentials that look compelling at current prices.

For example, TBC Bank’s down 15% since the war started in the Gulf. The forward dividend yield now sits at 6.9%. It’s a similar story at Morgan and Bodycote where the forward yields now sits at 5.7% and 3.8% respectively.

Could this be the moment to start building — or topping up — a portfolio designed to generate £1,000 a month in passive income? It might be. As billionaire investor Warren Buffett said: “Be fearful when others are greedy, and greedy when others are fearful”.

A deeper dive

TBC Bank remains one of my favourite opportunities in the current market. In the UK, I’ve been downsizing my positions in banks such as Lloyds and Barclays — and it was well-timed as they’re both well off their peaks. I think there’s also some AI-engendered credit risk here — white-collar job losses put pressure credit/mortgages etc.

However, there’s a degree of insulation from those risks in Georgia and Uzbekistan where TBC operates. Both economies are growing rapidly, driven by demographics and rising consumer spending rather than the kind of knowledge-economy jobs most vulnerable to automation. TBC’s also expanding its digital banking platform, Space, across the region — giving it a fintech growth angle that the market seems to be largely ignoring at current prices.

It’s also simply much cheaper than its peers in the UK, and even its main peer in Georgia. It trades at 5.3 times forward earnings and has a price-to-earnings-to–growth (PEG) ratio of 0.4. Coupled with a way-above average dividend yield, the valuation picture looks very compelling.

Risks? I’d be a fool not to admit that a prolonged Middle East conflict wouldn’t harm performance. Banks reflect the health of the local economy and Georgia’s geographical exposure to the conflict is obvious.

Nonetheless, I believe the undervaluation is compelling. It’s worth considering.

The post Stock market correction: time to create that £1,000-a-month passive income portfolio? appeared first on The Twelfth Magpie.

Playing the long game

An important note before we get going is regarding the use of a Stocks and Shares ISA. Within the ISA, dividends received from stocks aren’t liable for dividend tax. As a result, the full gross payment can be retained. This is important because over time, this can really add up and make a big difference. The current ISA year ends on 5 April, with the new year starting, so the £20k subscription limit resets.

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.

When considering the portfolio’s size, the key consideration is the annual yield. Put simply, the higher the yield, the smaller the ISA needs to be. At the moment, the FTSE 100 average dividend yield is 3.19%. The FTSE 250 is slightly higher at 3.52%. Yet some companies included in these indexes don’t pay out any income at all.

So by being active and stripping out low- (or no-) yielders, I believe it’s possible to have a sustainable portfolio yielding 6%. With this figure, we can then calculate that the ISA needs to be worth £500k in order to pay out £2.5k on average each month. Given the ISA limit, if starting from scratch, this would take 15 years to build with gains reinvested. Even though some may be put off by the long wait, the income does start compounding quickly. For example, after five years of investing £20k a year and compounding, the ISA could be worth £140k, generating a very respectable £720 a month in the following year.

Of course, dividends aren’t guaranteed. That means it’s not ideal to make assumptions decades in advance.

Turning to finance

One example of a stock that could offer sustainable long-term income is TBC Bank Group (LSE:TBCG). The stock is down 8% in the past year with a dividend yield of 6.87%. The business has two attractive parts. One is a dominant Georgian bank, with the other being a fast-growing digital operation in Uzbekistan. It makes money mainly from net interest income (taking deposits and lending at higher rates) plus fees from cards, payments and other services.

The dividend looks sustainable because the group is highly profitable and follows a sensible payout policy. That matters. A bank can only keep rewarding shareholders if it has enough earnings and capital left after growth. The company has both, and I don’t see this under threat any time soon.

I have a positive outlook for the firm, mainly stemming from continued growth in Georgia, which is becoming a cash cow. Then Uzbekistan adds the real juice, especially if the uptake in digital banking keeps going.

There are risks, of course. Georgia is still an emerging market, so economic or political shocks could hurt performance. Credit losses could rise if conditions worsen, and expansion in Uzbekistan might not go to plan.

Even with those concerns, I believe it looks like a solid dividend stock for investors to consider.

The post How big does my ISA need to be to make £2.5k in monthly passive income? appeared first on The Twelfth Magpie.