How I’d earn passive income for the price of a bus ticket each day

first_img christopherruane owns shares of Unilever. The Motley Fool UK has recommended Diageo, Morrisons, and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. See all posts by Christopher Ruane Working for one’s money can be hard. Between long hours, demanding deadlines, and managing workplace politics it’s no surprise a lot of people aren’t missing the daily grind right now. But work is an important source of income for most people. That’s why a lot of people now are keen to set up passive income streams – ways of getting money without having to work for it.Some of these are capital intensive, like buying a property and renting it out. But some passive income streams can be built for just a couple of pounds a day, the price of a bus ticket. Here I explain how.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Why I like shares for passive incomeMy own approach to passive income is that shares can be a good way for me to earn it. If I just tuck away a couple of pounds each day into a Stocks and Shares ISA, I will hardly miss it. But over time that can help me build a tax-efficient savings pot with which to invest in shares for passive income.Not all shares generate income. Some companies are in growth mode, so prefer to reinvest their profits in the business. That is why companies like The Hut Group wouldn’t be on my passive income list. While their shares may grow, I don’t expect them to pay dividends soon. Indeed, their boss said last month that he has no plans to start paying dividends and will instead focus on building the business.So for passive income I would look for a share I expect to pay dividends consistently in the future. Dividend policies can change, but a helpful starting place is the company’s payout history. Have they paid out dividends regularly in the past and do they look likely to have the financial means to do so in the future? Utilities are often a popular pick for this reason. Not only are they often substantial dividend payers, but a regulated pricing regime can provide forward earnings visibility which many non-utility companies don’t have. So, for example, the near-5% yield of United Utilities looks like an attractive passive income source.Keeping it passiveOne mistake many people make when seeking passive income is investing in shares and then spending hours every week monitoring them. That is a mistake in my view not because it isn’t right, but because it means the income isn’t passive. I’ve learnt that truly passive income should keep flowing in even if I go away for months or years and pay no attention.That’s why a popular passive income pick is old blue chip companies with fairly steady markets, such as Unilever, Diageo, and Morrison’s. Their fortunes may ebb and tide but in general, long-established companies which are cash generative are the sort of passive income pick which let me sleep at night without thinking about them. If markets change, for example, because shopping habits shift or alcohol consumption falls, the companies’ fortunes could change. However, one technique I have selected to help manage such risks is diversification. As I put a little money away often, I can invest in different companies on my passive income list. That way, even if one company I’ve discovered does badly, I would still expect to be earning passive income overall. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. 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