Discover the Surprising Investment Required for a £1,000 Passive Income from Legal & General Shares!

Investing in blue-chip companies that pay dividends is a smart way to generate passive income. These well-established companies like Legal & General attract private investors looking to make extra money with minimal effort. The simplicity of this passive income strategy is what makes it so appealing.

So, how does this investment method actually work?

1. Buy shares of a company like Legal & General, and sit back to earn dividends whenever they are paid. It’s as simple as that.

2. Legal & General will announce its dividend during its final 2024 results on 12 March. The company plans to increase its dividend per share by 5% annually for 2024, bringing the annual dividend to approximately 21.4p. To target a £1,000 annual passive income, an investor would need around 4,673 Legal & General shares, costing approximately £11,355 at the current price.

3. Diversifying is crucial to mitigate risks. Legal & General should be just one part of a diversified portfolio to ensure stability and reduce potential losses.

However, what risks are involved in earning passive income through dividend shares?

• Legal & General’s plan to increase its dividend by only 2% annually starting the following year is not guaranteed. Market crashes or business performance issues could impact the company’s ability to deliver on this plan.

• Although the 2% growth is positive, Legal & General faces various challenges in a competitive market. Its recent sale of a US business may affect its profitability, as will the decrease in business size post-sale.

Despite these challenges, the appeal of owning Legal & General shares for passive income remains strong.

The Legal & General share price is 7% lower than it was five years ago, indicating potential risks involved in investing. A falling share price could lead to financial losses for the investor.

However, with a high dividend yield of 8.5%, many investors, including myself, find the passive income potential from Legal & General shares enticing. It’s important to weigh the risks against the rewards when considering investments for passive income.