2 stocks to consider turning a bare bones ISA into a £31,301 a year income machine

Profitable businesses can be good sources of extra income. But building a portfolio that can generate a reasonable income in a Stocks and Shares ISA takes time.

That’s why the most important thing investors need to look for is a company with strong long-term prospects. And I think there are a couple that might get investors off to a good start.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

Games Workshop

I think beginner investors right now would do very well to consider stocks Games Workshop (LSE:GAW). This stock company paid a dividend of 3%.

That may not sound like much, but there is something important to be aware of. That’s because the company has a poor record of increasing its distribution to shareholders over the past few years.

While a company has some strong intellectual property, Warhammer It is not a product that people absolutely need. That means there is always the risk of lower profits in a recession.

Despite this, the business has been surprisingly strong in the past. And while this is not a guarantee of future success, I think it is something that investors should pay attention to.

Supermarket Income REIT

Another investment that I think is worth researching Supermarket Income REIT (LSE:SUPR). The company is a real estate investment trust (REIT) that leases a portfolio of retail properties.

Currently, the stock comes with a dividend yield of 9%, so it can start returning more money to investors right from the start. And its existing leases have relatively long terms to run.

A risk that investors need to keep in mind is the fact that more than 50% of their income comes from two employers. And that puts it in a weak position when it comes to future rent increases.

Importantly however, Tesco has been increasing the number of its stores since 2020. And that’s a very good thing in terms of demand for Supermarket Income REIT properties over time.

From the beginning

Games Workshop is delivering strong growth and Supermarket Income REIT is delivering its first ever yield. Together, I think they can make a solid income portfolio.

In the last five years, the two together have managed to grow at an average of 15% per year. Combine that with an average initial yield at today’s rates of 6% and the result looks interesting.

Investing £100 a month at that rate of return could create a portfolio producing more than £1,500 a year in profits after 10 years (although that is not guaranteed). And the equation looks even more attractive in the long run.

Continuing to invest at that rate for 20 years increases the return to £7,375 a year and £31,301 after 30. And with a Stocks and Shares ISA, none of this is subject to dividend tax.

Invest regularly

From nothing, I believe it is possible to earn over £7,000 a year in dividends by investing just £100 a month. And this does not depend on being lucky with just one stock.

Games Workshop and Supermarket Income REIT are two stocks that I think could turn an empty ISA into an income machine.