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I asked ChatGPT for the perfect passive income portfolio — and here’s what it sent me. The model blended UK dividend shares, income-focused ETFs, REITs, infrastructure funds, and bonds to deliver a balanced yield of around 4.5%.
The equity core included Legal & General, yielding about 8%, and National Grid, offering around 5.5%. British American Tobacco added a hefty 9% yield, while Vodafone provided about 7%, albeit with more volatility.
Unilever was included for “stability and dividend reliability”, paying roughly 3.5%. To diversify globally, the Vanguard FTSE All-World High Dividend ETF rounded out the equity exposure with a 4% yield.
On the property and infrastructure side, HICL Infrastructure and The Renewables Infrastructure Group both targeted around 6%. Meanwhile Supermarket Income REIT and Tritax Big Box generated 5%-6% through long leases with inflation-linked rent.
For fixed income, the Vanguard UK Investment Grade Bond ETF, iShares 0–5 Year Corporate Bond (IS15) and iShares UK Gilts ETF delivered 4%–5% yields with “lower volatility”. Finally, the Royal London Short Term Money Market Fund, offering 4%-5% for “liquidity and stability”.
What do I think? Well, there’s a lot to comment on. However, overall I’d suggest it’s quite a lot of investments to hold to essentially receive only 0.4% more than the yield on three and six months Gilts (UK government bonds) I bought last week.
ChatGPT has tried to demonstrate the importance of diversification through a wide range of investments. That’s great, but it’s worth noting that vehicles like ‘all-world’ ETFs are incredibly diversified anyway.
An investor seeking a hands-off approach might allocate part of their portfolio to broad, all-world investments and government debt, while taking a more conviction-driven approach with the remainder — holding a smaller number of carefully chosen positions.
Personally, I don’t invest for dividends. I invest for growth with the aim of taking a passive income at a later date. However, there are several investments I’m considering or own already that have strong passive income credentials.
I’m yet to add Fresh Del Monte (NYSE:FDP) to my portfolio, but it’s high up my watchlist.
Fresh Del Monte is a vertically integrated global agribusiness that grows, ships, and sells fresh and prepared fruit and vegetables under the Del Monte and MANN brands.
Its operations span farming, processing, logistics, and distribution — giving it strong control over quality and supply.
The shares trade at around 12.5 times forward earnings, with analysts forecasting 20.5% earnings growth this year and a further 9% in the following year.
The 3.4% trailing dividend yield is also appealing, particularly as payouts have grown meaningfully in recent years and are set to rise further.
I also like that the company also owns tens of thousands of acres of farmland, an asset base that provides long-term security and inflation protection in an era of dwindling arable land.
However, exposure to weather events and commodity-price swings can affect profitability. Even so, with solid fundamentals and tangible assets, Fresh Del Monte looks well worth considering.
The post I asked ChatGPT to build the perfect passive income portfolio and it said… appeared first on The Motley Fool UK.
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James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c., National Grid Plc, Tritax Big Box REIT Plc, Unilever, and Vodafone Group Public. 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.
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