My plan for achieving £300 a month in passive income involves building a portfolio using dividend-paying shares.

There’s been a lot of weakness in stock prices over the past few months. And the problems have been made worst by the escalation of trouble in Eastern Europe.

Meanwhile, my stocks portfolio includes investments in several low-cost index tracker funds. For example, I’ve got trackers following America’s broad S&P 500 index and small-cap stocks in the US. And in the UK market, my trackers follow big-cap, mid-cap and small-cap stocks. And for spice, I’ve even got trackers following emerging markets around the world.

Dividends remain robust

And through the weak markets of the past few months, most of my tracker investments have fallen in value. However, one stands out for its robust performance. And that’s the tracker following the fortunes of London’s lead index, the FTSE 100.

I think of the Footsie as a high-yielding index because dividends feature strongly in my returns from the tracker investment. Right now, for example, the combined yield of all the stocks in the index averages out at just under 4%. And because I’m in the building stage of my investment career, my tracker is the type that automatically reinvests the income for me.

And I think the Footsie’s leaning towards dividends is what’s helping it remain strong now. High-yielding stocks often come from cyclical sectors, such as finance, housebuilders, commodities and others. And commodity prices have been surging, driving up the big oil and resources stocks, many of which feature strongly in the index.

Meanwhile, taking the roughly 4% yield of the FTSE 100 as a starting point, I can estimate how large my portfolio needs to be to deliver £300 a month in passive income. My calculations tell me a portfolio of £90,000 could deliver an income of £300 a month. That’s if the lump sum can earn 4% dividend income each year. And one way of achieving that could be to invest it in the income version of a FTSE 100 tracker.

High-yielding, defensive stocks

But that’s not the only way. I could also invest directly in dividend-paying shares. For example, in today’s market, I’d aim to invest in companies such as renewable energy specialist SSE, healthcare company GlaxoSmithKline, smoking products maker British American Tobacco and electricity-focused transmission company National Grid.

Those firms tend to have less cyclicality in their operations than some of the other big-dividend-paying stocks. So I see them as potentially enduring long-term investments. And that makes them suitable for the building stage of my portfolio as well. And I’d make regular monthly investments into such stocks. Then, along the way, I’d reinvest all the dividend income with the aim of compounding my way to the £90,000 target value.

Of course, there are no guarantees of a positive investment outcome. Businesses can run into operational difficulties and I could even lose money on shares rather than compounding my wealth. Nevertheless, the long-term record of the overall stock market is encouraging. And I’d take on the risks involved in owning shares in order to stand to benefit from the potential for gains over time.

Kevin Godbold owns shares in British American Tobacco. The Motley Fool UK has recommended British American Tobacco and GlaxoSmithKline. 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.

The Evraz (LSE: EVR) share price has somewhat tracked the worsening news around the Russia-Ukraine crisis over the past couple of months.

At the beginning of January, the stock was changing hands for more than 600p. As tensions with Russia increased over the following weeks, the stock fell to around 300p in the middle of February. When the crisis in Eastern Europe deteriorated two weeks ago, the stock plunged to a low of about 50p.

That said, it has since recovered to around 90p, as bargain hunters have bought into this struggling enterprise.

Uncertainty prevails 

It is clear to me why the Evraz share price is facing so much pressure. Its largest shareholder is Roman Abramovich, who is reportedly a close friend of Vladimir Putin.

At the same time, the group generated $5.5bn of its total $14.1bn sales tally in Russia last year. It has a significant presence in the region and like many steel producers, acquires substantial volumes of raw materials from the area. 

Even if the situation in Eastern Europe calms down tomorrow, I do not think the Evraz share price will ever return to previous highs. In my opinion, the damage has already been done to Russia. Any companies with exposure to the region may have to take significant losses on their investments. 

But Evraz is not a pureplay Russian steel producer. As noted above, the company only generates around a third of its revenues from the region. The rest of its operations are located across Asia, America, Africa and Europe.

As steel prices rise due to supply constraints, these operations may be generating windfall profits. This is something investors need to consider when analysing the business. It is facing some significant challenges, but there are also opportunities to take advantage of. 

As far as we know, these businesses are still functioning. As long as these divisions continue to produce income for the group, the company will have a value. Although, with the situation changing almost every day, it is impossible for me to estimate the value of these operations. 

Evraz share price outlook 

Considering all of the above, I think the Evraz share price will remain volatile for the foreseeable future. Until we have some clarity on how the situation in Eastern Europe will resolve itself, companies with exposure to the region are likely to remain out of favour with investors. 

Still, if a solution to the situation does materialise, the stock could rise significantly. If the uncertainty disappears, the business could be undervalued at current levels. 

Even though the stock may have potential in the best-case scenario, I am not going to buy it for my portfolio. I think there is just too much uncertainty surrounding the company and the economy in general right now. Until the situation stabilises, I will avoid Evraz. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Confidence on financial markets continues to sink as the tragic conflict in Ukraine unfolds. Market volatility reigns as traders and investors fret over how sanctions on Russia and soaring commodity prices could hit the economic recovery. Should I really be looking for UK shares to buy before the Stocks and Shares ISA deadline on 5 April?

The soaring cost of living means it’s becoming more important to use our money intelligently and to boost our investment returns. One way I’ll do this is by buying stocks using a tax-efficient ISA wrapper. I can invest up to £20,000 each year without having to pay a penny to the taxman.

This means I’ll continue to invest as much as I can before the Stocks and Shares ISA deadline. Any of that annual ISA allowance I don’t use before the new tax year is lost forever.

Rising risks to UK shares

Of course, I won’t go gung-ho and embark on a share-buying spree to beat the deadline. Acting in haste is never a good idea when making major decisions. And history is littered with unfortunate investors who spent their hard-earned cash on stocks without taking the time to do proper research.

I always buy UK shares with a long-term view in mind. That’s why I’m not massively worried by seeing my stocks portfolio sink in value as market volatility continues. I’m convinced the shares I own will eventually rebound robustly.

However, I’m aware that the crisis in Ukraine throws up massive new dangers that I need to consider. Russian warehouse operator Raven Property Group is a stock I think could thrive as e-commerce in the emerging market takes off. However, the possibility of long-term sanctions on Russia — a hazard that threatens to hit consumer spending there hard — means I won’t consider buying this share for the moment.

Why I’m investing in my Stocks and Shares ISA

I won’t be hurriedly buying shares before the Stocks and Shares ISA deadline then. The risks of doing this far outweigh any benefits I might receive by beating the taxman. But this doesn’t mean I won’t be using as much of that £20,000 allowance as I can.

This is because any money I park in my Stocks and Shares ISA doesn’t have to be invested in stocks immediately. I can put, say, £5,000 in my ISA and buy UK shares years from now if I so wish. The important thing is that the taxman won’t take a slice from any returns that I eventually make on that £5k.

You might be wondering when I intend to buy some stocks with that invested cash? The truth is I plan to go shopping straight away. Plenty of top UK shares have fallen sharply in price following market volatility. And plenty of great companies I’ve long had an eye on are trading at prices I consider too cheap to miss.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Boohoo (LSE: BOO) shares have been taking a beating recently. Yesterday, they fell over 7% alone and over the past 30 days, the shares are down 30%. This bearish trajectory has reversed some of the stock’s previous growth momentum. For example, between April and June 2020, the stock climbed over 112%. However, past returns should never be used as an indication of future performance. So, at the current price of 65p, should I be adding Boohoo shares to my portfolio? Let’s take a look.

ESG concerns

The firm’s business model rests upon the speedy design, production, and advertising of its products – fast fashion. This allows high volumes of garments to be created for low costs to the consumer. While this may sound promising on paper, Boohoo has been embroiled in numerous worker scandals as a consequence.

For example, in September 2020, a report by the Guardian indicated that workers at third-party suppliers were earning well below minimum wage in addition to enduring poor working conditions. The firm was also subject to a class-action lawsuit after being accused of misleading advertising in the US. In my opinion, these are some of the key reasons why investors have turned sour on Boohoo shares.

Another headwind Boohoo is going to have to contend with in the coming months is the threat of rising inflation. As prices rise across the world, it could pose a serious risk to Boohoo’s low-cost, high-volume operations. And supply chain issues have already impacted the firm, leading to 10-day delivery times to the US, which is a vital sales region for Boohoo.

In addition to this, the 2021 Q3 results, released in December 2021, have highlighted that the firm’s pre-tax margin outlook has been lowered from 9% to 6%. Factoring in tax, these margins will shrink further. Falling margins lead to reduced profitability which is the last thing Boohoo needs.

Reasons to be cheerful about Boohoo shares

Yet one reason that Boohoo shares do appeal to me, is the fact that the firm owns a pretty impressive arsenal of brands. It acquired a number of these retailers out of administration in 2021, the largest of which was Debenhams. In addition to this, its US distribution centre is expected to open in 2023, significantly expanding operations in the region. The US contributed to a quarter of revenues in 2021, so this seems like a great move to me.

Couple this expected future growth with the current price-to-earnings ratio of just 9.3, and Boohoo shares do look attractive to me. Perhaps the current share price could offer me a discounted entry position for future growth.

What I’m doing now

Yes, Boohoo shares are cheap, and the firm has some exciting plans ahead. However, I think that short-term rising costs could place a huge strain on the firm this year, especially considering its low margins. In addition to this, the ESG concerns are a big moral red flag for me. Therefore, I won’t be adding Boohoo shares to my portfolio any time soon.

Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo group. 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.

I don’t normally take geopolitics into account when deciding whether to buy UK shares. This is just one factor affecting their performance. Yet Russia’s brutal invasion of Ukraine is impossible to ignore, as it has plunged us into a frightening new era.

The FTSE 100 has fallen more than 500 points since Russian President Vladimir Putin shocked the world by sending in the tanks and troops. At time of writing, it stands below 7,000, and could have further to fall.

Decisions over whether to buy or sell UK shares seem trivial in comparison to horrific events in Ukraine, but they still have to be made. Some people may be ready to sell up and pile into cash and gold, but I’m not one of them.

UK shares will fall further

I plan to leave my money invested for at least another 10-15 years. With luck, this should give the FTSE 100 sufficient time to overcome current volatility and UK shares will fly to new highs. They should also generate plenty of dividends along the way.

Another reason I’m not selling my UK shares is that the impact of war on stock market performance is impossible to gauge, as history shows.

In 2014, when Russia invaded and annexed the Crimea, the US S&P 500 Index tumbled 6%, yet it quickly bounced back. It was the same story when the US invaded Iraq in 1991, and again in 2003. On both occasions, stock markets plunged more than 10%, but recovered their losses within months.

On the first day of trading after the September 11 terror attacks on the Twin Towers, the Dow Jones crashed 14%. By November, it was back. World War 2 followed the same pattern. US shares crashed when the Japanese attacked Pearl Harbor in December 7, 1941, but the Dow ended the war 50% up.

While war carries a horrendous human cost, stock markets soon find their footing. Just as they did after the financial crisis and Covid-19 crash. The main factor that affects share prices is still individual company performance.

Hostilities could be bad news for some UK shares, such as airlines, but may boost others, such as defence companies, oil explorers, gold miners and utilities.

I’m investing for the long term

I’m not saying UK shares will emerge unscathed. The big risk is that the war will send energy prices and inflation skyrocketing. This will squeeze consumers and businesses, and crush economic growth. Company profits will fall, and stock markets will follow.

I’m bracing myself for a few bumpy years. There’s nothing new in that, it’s been a bumpy millennium, yet I’ve still built up money for my retirement in that time.

I do that through buying UK shares when they look to be good value. Typically, I look for companies with loyal customers, solid revenues and pricing power. I reinvest all my dividends for growth, which means I passively pick up more stock when markets are down.

Of course the war could spin out of control. If that happens, I’ll have bigger things to worry about than UK shares.

Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK doesn’t hold any of the shares mentioned in this article. 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.

Every now and again, the stock market enters a period of higher volatility and turbulence. It can sometimes, but not always, precede a recession. Today, I’m looking at the best shares to buy in volatile markets.

During these periods, the shares that performed well in recent years might not be the best options for me for the coming year. Last year, several consumer stocks and industrials outperformed.

For instance, the Watches of Switzerland share price more than doubled, and Ashtead shares gained 74%. But I don’t think either are suitable for me in the current market environment.

Best shares to buy

I reckon the best shares to buy in turbulent times might be utilities or those in the consumer defensive sector. Companies in these sectors tend to offer slower growth than faster-growing parts of the market such as technology. But they’re relatively more stable in tough times.

Utility companies frequently offer higher than average dividend yields. If economic growth slows over the coming months or year, I reckon dividend income will become ever more important.

Right now, I’d consider shares in electricity provider SSE. It currently offers a 5% dividend yield. I like it even more knowing that it has been a regular dividend payer for nearly three decades. The future looks bright and SSE is in an area of focus for the coming decades. That’s because it’s one of the UK’s leading generators of renewable electricity.

9% dividend yield

The best shares to buy in the consumer defensive sector right now also offer greater than average dividend yields. For instance, one company that I reckon could be a stable option in tough times is Imperial Brands (LSE:IMB). Currently on a dividend yield of 9%, it’s one of the highest in the FTSE 100.

On a £5,000 investment, that’s passive income of £450 over one year. Bear in mind that dividends can be moved up or down. Management might make that decision based on its earnings. That said, I’m comfortable with this. Like SSE, it’s also a regular payer as it has paid dividends for 25 years.

What I like about Imperial Brands right now is that it offers products that have stable demand. Its products are relatively sticky in that sense. Yes, there are regulatory risks and changing consumer habits could limit growth over the long term. But overall, I’d buy these shares in tough times.

Defensive shares

Finally, BAE Systems (LSE:BA.) could be a god pick for me, I feel. Yes, its share price is already up by 33% this year, but I think there’s more upside to come. I’d certainly consider it for my Stocks and Shares ISA.

Several countries, including Germany and Denmark, have indicated their desire to boost spending on defence. The tragic events in Ukraine have aided this move and sales for BAE could rise. That said, geopolitical events can be fast-moving and unpredictable over the long term.

Even before recent events, shares in this aerospace and defence company looked attractive. Sales at BAE have steadily grown by 28% over the past five years. Profits have kept pace and margins have remained in double-digits.

Currently, these shares offer a dividend yield of 3.8%. It’s not the greatest yield of my top picks, but with the added potential of earnings growth, I reckon it’s an attractive option.

Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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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