There are alternative ways to earn cash and never all of them contain working for it. Take the dividends from revenue shares, for instance. By shopping for into confirmed, worthwhile blue-chip companies, I could possibly be in line to share a few of the cash they pay out to buyers.

In apply, issues won’t be fairly as easy. Dividends are by no means assured and it could actually occur {that a} previously profitable enterprise sees its fortunes decline – with the dividend following.

So, deciding the method I take to constructing a portfolio of revenue shares is vital.

Setting the appropriate funding technique

I might attempt to enhance the possibility of getting the passive revenue I would like by touchdown on the appropriate funding technique.

For instance, I might unfold my funds throughout a variety of shares relatively than concentrating the cash in only one or two. £6,900 is ample to try this: I might purchase shares of 5 to 10 totally different corporations with it.

£500 per yr from a £6,900 funding would imply incomes a 7.2% dividend yield. I believe that’s potential whereas sticking to blue-chip FTSE 100 shares with stable information of profitability.

However I want to ensure I don’t let the tail wag the canine. Shopping for a share simply because it yields 7.2% right this moment doesn’t strike me as a sensible transfer.

As an alternative, I might search for shares in corporations with a robust, defensible place in an trade I count on to endure. Provided that I discover such a enterprise and just like the share price would I take into account shopping for it.

At that time, I might begin wanting on the yield.

FTSE 100 accommodates a number of high-yield shares

Presently, the FTSE 100 affords a variety of high-yield revenue shares I believe meet my shopping for standards.

An instance is insurer Aviva (LSE: AV).

Insurance coverage has been massive enterprise for hundreds of years – and I don’t see that altering within the coming years. Folks wish to shield their valuables towards the chance of loss and in some instances are even obliged to take action. If underwriting requirements are maintained, that may be a profitable enterprise.

Aviva has huge underwriting expertise. The corporate has well-known manufacturers comparable to Norwich Union. It has additionally streamlined its enterprise in recent times to deal with its key markets, such because the UK.

Meaning it might see greater adverse impression  on its earnings if competitors within the UK insurance coverage market results in decrease revenue margins.

However I believe the technique of taking part in to its strengths will hopefully assist the agency ship stronger long-term enterprise outcomes. That would assist it keep or develop the dividend.

Presently the dividend yield is 6.9%. If I had spare money to take a position, I might be completely satisfied to purchase the shares. As a part of a diversified choice of revenue shares, together with some with even greater yields, it might assist me hit the 7.2% goal I outlined above.