Stock market rally: how I’d unearth UK shares to make a passive income today

first_img Our 6 ‘Best Buys Now’ Shares Peter Stephens | Monday, 8th February, 2021 Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. Stock market rally: how I’d unearth UK shares to make a passive income today Making a passive income from UK shares may now be more difficult following the recent stock market rally. It has pushed the FTSE 100 around 30% higher since the depths of the 2020 market crash. That’s meant many companies now offer lower yields than they did just a few months ago.As well as lower yields, it’s arguably easier to overlook potential risks after a market rise. Investor confidence may be high. This can lead to greater optimism regarding potential income streams.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…As such, using an investment checklist could be a worthwhile starting point. This will help identify financially-sound businesses that offer good value for money in current stock market conditions.Focusing on a passive incomeOf course, every passive income investor is likely to have different criteria when investing in shares. However, their approach may focus on key areas. These include dividend yield, income reliability, as well as a company’s capacity to increase shareholder payouts in the coming years.As such, it may be a prudent move to focus only on those companies with sufficiently high dividend yields to merit further analysis. Then, focusing on their dividend affordability could be a good move. After all, there’s little point in holding stocks with high historic yields that are now unaffordable in present economic circumstances.The affordability of a company’s passive income can be assessed through simple measures such as comparing its dividend payouts to its net profit. Similarly, analysing its latest updates may provide guidance on how it’s performing. It also offers management views on paying out capital to shareholders. This may build a picture on how affordable its dividend could be in 2021 and in the coming years.Dividend growth opportunitiesOnce companies with high and affordable dividend yields have been found, it may be a sound move to focus on their potential to offer a growing passive income. A similar checklist approach may be useful in this area. Although it’s likely to be more subjective because dividend growth is often closely linked to profit growth.However, it’s also worth assessing areas such as a company’s competitive advantage, its forecasts and whether it’s likely to need to reinvest capital in future. These could indicate whether it offers dividend growth potential.By discounting companies that lack such appeal, it may be possible to further whittle a long list of companies down. This smaller number of attractive passive income opportunities could provide a resilient and growing dividend in the long run.The appeal of a checklistEven a very limited and simple checklist can be a beneficial approach to unearthing dividend shares. Not only does it mean unattractive stocks are excluded, it can also instil discipline in an investor’s methodology.This may be especially attractive after the recent stock market rally, when it’s all too easy to become overly bullish about the passive income opportunities that may be available in an expected economic recovery.center_img Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. 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. FREE REPORT: Why this £5 stock could be set to surge Get the full details on this £5 stock now – while your report is free. See all posts by Peter Stephenslast_img read more