Regardless of the inventory market having fun with a rally in 2024, there are nonetheless loads of investing alternatives to safe a chunky second revenue. Throughout the FTSE 350, roughly 70 shares are at present providing a dividend yield of not less than 5% or extra. And just below 80 companies are sitting on a consecutive dividend mountaineering monitor file of not less than 5 years or extra.

In different phrases, there proceed to be great revenue alternatives to capitalise on. And in the long term, investing the £20,000 annual ISA allowance right now might yield greater than £250 a month passively. Right here’s how.

Terrific revenue alternatives

Traditionally, the FTSE 100‘s provided a dividend yield of round 4% a yr. However relatively than injecting cash into an index fund, buyers can get a bit extra selective by selecting particular person shares straight.

There’s no denying this investing method comes with better danger and requires way more effort by way of research, analysis, and portfolio administration. Nevertheless, when executed efficiently, it opens the door to way more spectacular returns and passive revenue potential.

Take into account dwelling renovation enterprise Howden Joinery (LSE:HWDN). The corporate’s a vertically built-in designer and provider of fitted kitchens that works straight with tradesmen and contractors. As homes within the UK proceed to age, demand for dwelling renovation has elevated through the years. And it’s a tailwind that Howden’s been busy capitalising on.

Proper now, shares supply a reasonably unimpressive dividend yield of two.4%. Nevertheless, whereas this payout doesn’t look spectacular right now, it’d steadily change over time.

Why? As a result of since 2013, dividends have elevated by virtually 300%. And consequently, buyers who purchased and held shares 10 years in the past are actually incomes an annual yield nearer to eight%, in addition to reaping a complete shareholder return of 252% over the identical interval.

In different phrases, a £20,000 ISA again in 2013 would now be value near £76,000 with Howden-like returns versus the £37,960 that may have been earned with a FTSE 100 index tracker. Following the 4% withdrawal rule that interprets right into a second revenue value £3,040 (simply over £250 a month) versus £1,520.

Nothing is risk-free

Howden Joinery’s development potential nonetheless seems robust, in my view. Administration has been closely investing its in infrastructure to help better capability and demand, in addition to lately increasing into the realm of fitted bedrooms and worldwide markets.

Nevertheless, penetrating new alternatives and areas comes with its personal set of challenges that may make it fairly troublesome for Howden to take care of its historic momentum. In different phrases, there’s no assure it might proceed to ship spectacular share price and dividend efficiency.

However, it serves as a superb instance of how, when inventory selecting is executed appropriately, buyers can considerably enhance their monetary prospects and earn a chunky second revenue.