3 ways I aim to generate £250 a month in income from UK dividend shares

first_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. See all posts by Jonathan Smith UK dividend shares are companies that pay out income to shareholders. If I buy shares in the business, then I become a shareholder. In this way, I’m entitled to the dividend paid out, and can work out my payment amount depending on how many shares I own and the dividend-per-share. Over time, I should be able to build up my dividends to a level I’m happy with. In this case, I’d like to generate £250 a month.To begin with, I need to assess how much I can afford to invest. This will then dictate which UK dividend shares I need to buy in order to make £250 a month.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…Each UK dividend share offers a constantly changing dividend yield. This calculation looks at the ratio of the last dividend-per-share that was paid, relative to the current share price. The share price changes all the time, as does the dividend yield. However, if I’m looking to invest right now, the swings in the yield over the course of a day or two shouldn’t materially change my opinion.Investing an upfront sumThe larger amount of money I can invest upfront, the lower the dividend yield I need to target. For example, the FTSE 100 average dividend yield sits around 3%. So if I had £100k to invest, I could achieve my goal of £250 a month in dividend income just from the average yield.The benefit of this method is that I don’t need to take on high levels of risk for my investment. If it’s the average yield, the companies I pick at this level should be stable. The downside is that the initial investment needed into UK dividend shares is quite high.A second way would be to target a much higher dividend yield, enabling me to invest a smaller amount. I could buy several stocks that offer a yield between 6% and 7% instead. At this level, I’d only need to invest around £46k to begin with to make £250 a month. This is much easier on my cash demands, so could be preferred. However, I do need to watch out as I’m targeting the highest dividend yields possible in the FTSE 100 index. In most cases, the higher the yield, the higher the risk associated with the income payments.Regular investments into UK dividend sharesInstead of going for an investment into UK dividend shares all in one go, I could look to invest every year, quarter or month. I’d prefer to make monthly investments. If I invested once a year, I could have missed out on some opportunities within that year. After all, the market moves quickly (think about the stock market crash and reversal last March/April).If I invested £1,000 a month, I could build up to my level of £250 a month in income. As with before, I could choose the dividend yield to target. This would impact how long it would take for my pot to build up. At a 3% yield, it would take me just over seven years. At a 6% yield, I would hit the mark in-between years three and four.Of course, I have to remember that my returns aren’t guaranteed and I could lose money as well as make it. For that reason, I’d diversify my investments to ensure I’m not over-exposed to one company or one sector. 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. 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. 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Enter Your Email Address Jonathan Smith | Monday, 14th June, 2021 3 ways I aim to generate £250 a month in income from UK dividend shares Image source: Getty Images Simply click below to discover how you can take advantage of this.last_img read more