The Motley Fool

The ultimate $1 million income portfolio

On the weekend, 20 Australians became instant millionaires after splitting a big lotto jackpot 20 ways. There’s a good chance many of those that won over $1 million will spend all of that within a few years with little to show for it.

If you’re a winner, and would prefer to use the win to build a tremendous share portfolio and secure your family’s future, you’ve come to the right place! The three main options available to you that will provide liquidity and income are to place your money in term deposits, invest in government or company debt, or invest in a portfolio of high-quality, high-yielding stocks on the Australian Stock Exchange.

Income from a well-picked portfolio of shares will return between 6% and 8% per annum before income tax, well above that of term deposits and government debt (3% to 4%). Company debt is another option, and can produce similar income returns to stocks, but that can wait for another day.

My top 10

I would spread my winnings between theses 10 stocks to produce a reliable income stream.

Telstra Corporation Ltd (ASX: TLS)- 5.6% yield, 8% gross yield, strong cashflow and market position

Insurance Australia Group Limited (ASX: IAG)- 5.7% yield, 8.1% gross yield, growing business, dominant market position

Sonic HealthCare Limited (ASX: SHL)- 4.3% yield, 5.2% gross yield, good market share, international exposure

Woodside Petroleum Limited (ASX: WPL)- 5.3% yield, 7.7% gross yield, long-life quality assets, strong cashflow

National Australia Bank Ltd (ASX: NAB)- 6.3% yield, 9.0% gross yield,  turnaround on track, exposure to growing house prices

Stockland Corporation Ltd (ASX: SGP)- 6.4% yield, 6.4% gross yield, residential and commercial building exposure, solid track record

Santos Limited (ASX: STO)- 3.2% yield, 4.6% gross yield, new projects set to make Santos an income star

Coca-Cola Amatil Ltd (ASX: CCL)- 5.2% yield, 7.5% gross yield, strong yield as the company recovers

CSR Limited (ASX: CSR)- 4.1% yield, 4.1% gross yield, building materials demand likely to remain strong

Webjet Limited (ASX: WEB)- 6.8% yield, 9.8% gross yield, market underestimates earnings recovery potential

So there you have it, an average pre-tax yield of 7.04% will provide an income of $70,400 a year.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie

Related Articles...