I recently invested for the first time in Greggs (LSE: GRG) after the baker’s shares fell following full-year results. So far, though, my Greggs shares have continued heading in the wrong direction.

Selling on a price-to-earnings ratio of 12, Greggs looks like a bargain to me. But if that is the case, why are they not bouncing back from the post-results slump?

Things may get worse before they get better

Earlier this month, I was impressed by some of Greggs’ headline results. Sales grew by 11% year on year, for example, while pre-tax profit was up 8%.

Not everyone shared my enthusiasm, though – and I think they have a point.

Profits growing slower than sales is the opposite of what ought to happen for a company that has economies of scale in its business. Meanwhile, the headline growth in sales outstripped a more modest growth of 6% in like-for-like sales at company-managed shops.

That matters because growing revenues by opening lots of new shops can work (and Greggs is targeting 140-150 new shops this year, net of closures), but it typically requires significant capital expenditure.

The big concern, though, seemed to be the 2% growth in like-for-like sales in company-managed shops in the first nine weeks of this year. That suggests far lower growth than last year, raising questions about whether Greggs is running out of steam as it tries to get more out of its existing estate, for example, by opening more shops for evening as well as daytime sales.

If like-for-like sales growth falls further, I reckon Greggs shares might also head down further, even if total revenues at the chain continue to increase.

This still looks like a bargain to me!

Still, growth is growth. The company pinned its poor start to the year on bad weather hurting customer demand.

Even if Greggs achieved no like-for-like growth, its aggressive store opening programme could see revenues increase. So too could price inflation. Thanks to its well-known brand and some unique products, the FTSE 250 baker has pricing power.

In fact, even if like-for-like sales revenues were to remain flat (which I doubt will happen), I reckon Greggs looks tasty at its current price.

Pre-tax profits last year topped £200m. The company has a proven, scalable business model and can benefit from further economies of scale due to central manufacturing plants that prepare products to be shipped out to its shop network to be popped in the oven.

I think there is substantial space for Greggs to expand within the British Isles, even before it considers getting serious about the potential to grow overseas.

I see risks too. Changing high street usage could mean less passing traffic. Wage increases following the Budget will take a bite out of profits.

But as a long-term investor, although I recognise that Greggs shares could fall further in coming months especially if sales growth is weak, I also think the current price looks like a potential bargain. That is why I bought Greggs shares earlier this month.

The Stocks and Shares ISA is a brilliant way of generating passive income on top of the State Pension. 

Investors who put away as much of their £20,000 limit as they can afford each month can turbocharge their retirement savings. Even late starters can build huge sums, provided they put their backs into it.

Although returns from shares aren’t guaranteed, over the longer run, history shows they do better than cash. Albeit with volatility along the way.

Let’s be clear though, this won’t happen overnight. Investors shouldn’t try to build quickfire wealth by throwing a heap of cash at the next big thing. It’s much better to build a diversified portfolio offering both share price growth and dividend income.

HSBC is a top dividend payer

A 45-year-old investor still has more than two decades before State Pension age. This gives them time to build a substantial portfolio, although they shouldn’t waste it. 

FTSE 100 dividend stocks can be an attractive option. They provide regular cash payouts, and if reinvested, those dividends can compound over time. That’s on top of any growth when the share price rises.

One stock that stands out to me as worth considering is HSBC Holdings (LSE: HSBA). This global banking giant is forecast to yield 5.9% this year, rising to 6.25% in 2026 as the board lifts payouts.

HSBC has been in strong form, rewarding investors with billions in share buybacks alongside dividends. Better still, the share price is up 40% in a year, although there’s no guarantee this will continue.

Despite its stellar performance, it remains reasonably valued, I feel. Its trailing price-to-earnings (P/E) ratio is just 9.1, making it look cheap relative to earnings.

However, its price-to-book (P/B) ratio sits at 1.1. That’s higher than rivals like Barclays, which trades at just 0.6. This suggests HSBC may not be the absolute bargain it once was.

It faces geopolitical risks too, with one foot in China and another in the West. Those risks aren’t going away any time soon. That’s why diversification is key.

Dividends, growth and share buybacks

If an investor maxed out their £20,000 Stocks and Shares ISA allowance and secured an average dividend yield of 5% from shares like HSBC, they’d receive £1,000 in dividends over the next year. Plus share price growth on top.

But that’s just the start.

Historically, the FTSE 100 has delivered total returns averaging 6.9% per year, with dividends reinvested.

If a 45-year-old consistently invested their full ISA allowance every year until they hit 67, they could build a pot worth a staggering £1,034,977.

Assuming an average dividend yield of 5%, that could generate an annual passive income of £51,748, or £4,313 per month.

Of course, not everyone can max out their ISA. But even smaller investments can lead to a significant passive income stream.

For example, investing £300 per month for 20 years at an average 6.9% return could build a pot of £186,296. That could generate a second income of £9,315 a year with a 5% yield, or around £776 a month.

With the right strategy, private investors can build a passive income for the future. As the annual ISA deadline looms there’s no time to lose.

The GSK (LSE: GSK) share price has gone up and down over the last decade, but it’s never really gone forwards.

It’s down 1.8% over five years and 10% over the last 12 months. That’s a dismal showing from a stock that was once seen as a FTSE 100 jewel.

As a contrarian investor, I decided GSK has suffered enough and added it to my self-invested personal pension (SIPP) last year. I quickly found myself down 20%.

So what’s gone wrong? Pretty much everything.

Can this stock shine again?

GSK’s drug pipeline has looked on the dry side for years and with blockbuster treatments coming off patent, CEO Emma Walmsley chose to prioritise R&D over the once mighty dividend.

Spinning-off consumer healthcare arm Haleon was meant to provide a fresh start, but didn’t. Legal action in the US over heartburn drug Zantac hammered the share price, but as soon as that was settled, new US President Donald Trump’s chose Robert F Kennedy Jr for his secretary of health. He’s expected to get tough on big pharma.

As GSK limped on, Walmsley came under pressure, with US activist investors questioning whether she’s the right person to drive the much-needed revival.

To rub salt in the wound, rival AstraZeneca has grown into the UK’s biggest company under CEO Pascal Soriot’s leadership. Its market cap is now £180bn, three times the size of GSK’s. Embarrassing!

So is anything changing? Perhaps. The GSK share price is up 15% in the past three months.

Full-year results, published on 5 February weren’t perfect, but they weren’t bad. Revenue rose 3% to £31.4bn, though vaccine sales dipped 4%. Encouragingly, HIV drug sales grew 13%, and oncology revenue nearly doubled. 

The board is more confident in its drug pipeline, raising its five-year sales forecast from £38bn to £40bn.

Crucially, GSK announced a £2bn share buyback, its first in more than a decade. That’s a strong signal of confidence from management.

The stock still trades at a low price-to-earnings (P/E) ratio of just 9.5, making it look temptingly cheap compared to global peers. Mind you, the P/E was lower when I bought in, and that didn’t give me any protection.

Dividends, buybacks and a low P/E

The dividend yield has crept back above 4%. GSK isn’t the mighty income machine of yore, but it’s picking up.

Analysts are cautiously optimistic. The 19 brokers covering the stock have a median one-year price target of 1,660p. If they’re right, that suggests a modest 10% rise from today’s 1,513. I’d take 10%, if it actually happened. It might just about pull me out of the red.

GSK remains a work in progress. The shares are in recovery mode today, but legal issues, political uncertainty, trade threats and a competitive drugs market could derail it at any moment.

With a long-term view, I think GSK shares look worth considering as part of a balanced portfolio. They’re cheaper than AstraZeneca, which has a P/E of 18.5 and yield of just 2%. But for a supposedly defensive stock, it remains risky.

It has been an incredible 2025 so far for Rolls-Royce (LSE: RR). Last year saw a massive share price gain, as did the year before – but already in 2025, Rolls-Royce has moved up 35%.

But something has put me off investing in the stock – and the past several days have reminded me of why I decided not to buy Rolls-Royce shares at anything like their current price.

Civil aviation is a complex business

As the old saying goes, one way to become a millionaire is to start off as a billionaire and buy an airline.

Civil aviation is a highly complex business. There are huge numbers of moving parts and the potential knock-on effects of even a small event can be significant. Yet there is often little or nothing that airlines can do about it.

The past several days’ travel chaos resulting from a fire near Heathrow airport is an example. That is totally outside British Airways owner International Consolidated Airline Group’s control – but will surely hurt its business.

Rolls-Royce faces risks it cannot control

That brings me to Rolls-Royce.

One of the things that has long concerned me about its business model is the centrality of civil aviation. Yes, power and defence are also part of Rolls’ business. But civil aviation remains critical and so if it does poorly, it is hard for Rolls to do well overall.

That matters because civil aviation is prone to sporadic unforeseen challenges that can shut down demand almost immediately.

The closure of Heathrow is a small example, but it serves as a useful reminder of far more wide-ranging issues, from volcanic clouds to terrorist attacks and pandemics.

All of those can hurt passenger demand significantly, leading airlines to scale back spending on new engines or servicing existing ones that are being used less than usual.

Lots to like, but not the price

Why does that matter to me as an investor?

After all, Rolls has proven it can bounce back from such a challenge. The pandemic brought the venerable aeronautical engineer to its knees. But the Rolls-Royce share price has soared 548% in five years and reinstated its dividend.

A combination of solid business performance, tight financial discipline, and aggressive target-setting has helped excite investors about the long-term potential for the company.

All of that looks good to me too – and I would happily buy into Rolls-Royce if I could do so at what I see as an attractive price.

But it is trading on a price-to-earnings ratio of 27. I see that as racy for a mature industrial company operating in a historically cyclical industry that itself has a long track record of big swings in performance.

With the right margin of safety that would be something I could live with. As the Heathrow meltdown has shown once more, however, civil aviation is a fragile industry prone to significant disruption at zero notice that it outside airlines’ control.

That poses a demand risk for Rolls-Royce and the current share price offers me an insufficient margin of safety to reflect that risk, in my view. So I have no plans to invest.

Gold recently hit an all-time record high price. But rather than try and build my wealth by buying the yellow metal, I am focussed on the UK stock market.

It has also been doing quite well lately, as it happens.

Like gold, the FTSE 100 index of leading blue-chip companies listed on the London stock market also hit an all-time high this month.

But that only tells part of the story, as far as I am concerned. Here is why I am putting money into British shares right now.

The value of a productive asset

I remember billionaire investor Warren Buffett being asked why he did not invest in gold many years ago.

His response was that gold buyers paid some people to dig the precious metal out of one hole in the ground, before it was moved to another hole in a ground that they paid other people to guard.

In other words, gold is an unproductive asset. By contrast, a gold mine can be a productive asset: owning it, one could potentially benefit from any profits made by mining and selling gold.

In general, I like shares of productive assets. Owning a tiny part of British American Tobacco, for example, I earn a sliver of money every time someone buys a packet of Lucky Strike cigarettes, thanks to the company’s dividend.

Dividends are never guaranteed. If a share I own loses all its value, I own nothing but a piece of paper. With gold at least I would own a glimmering paperweight. So, although, I am not buying gold, I am not just buying any old shares willy-nilly either. Instead, I am scouring the stock market for what I think are potential bargains.

On the hunt for mispriced gems

That may sound odd. If the FTSE 100 has hit a record high, why would there be bargain shares still available?

The FTSE 100 is only one part (albeit a significant one) of the London stock market. Even within it, though, some shares are doing much worse than the index overall.

Take JD Sports (LSE: JD) as an example. It has tumbled by a fifth so far this year.

Over the past five years, JD’s share price has gone nowhere (up a fraction of one percentage point), compared to a 66% gain for the FTSE 100.

But I recently added to my holding of the FTSE 100 sportswear retailer. Multiple profit warnings in the past year have shaken City confidence and I do see risks, from higher costs due to global tariffs to potentially weaker consumer demand if the economy slows.

Browsing in JD’s flagship Oxford Street shop last week, though, business struck me as fairly brisk. I reckon its proven formula, deep customer insight, global reach and exclusive products can all help JD deliver profits long into the future.

Its share price fall looks overdone to me for the long-term prospects I see when considering the business and poring over JD’s financial reports.

It is just one of the possible bargains I see in the UK stock market right now.

For many, passive income is that elusive dream that seems to exist only in fairy tales. Yet it needn’t be that way! A popular and reliable way to achieve it is through dividend stocks. By investing in companies that regularly distribute profits to shareholders, a hassle-free and steady income stream is within grasp. 

This guide details why dividend investing can be a great way to start earning an income on the stock market.

Why dividend stocks are great for passive income

Many UK companies pay a portion of their profits to shareholders, known as dividends. Here’s why they are an excellent choice for passive income:

• Unlike capital gains, dividends provide income without the need to sell anything.
• Reinvesting dividends helps the investment grow, thereby increasing future payouts (the snowball effect).
• Dividend-paying stocks tend to be more stable, making them attractive for long-term investors.
• Many companies increase dividends over time, helping to retain purchasing power.

How to choose the best dividend stocks

Dividends are never guaranteed so it’s important to choose reliable stocks. Here are key factors to consider when picking the best ones.

• Dividend yield: the yield is the percentage of the stock price that’s paid out annually. While high yields are tempting, an extremely high yield can signal financial trouble. A yield between 4% and 7% is often a sweet spot.

• Dividend growth history: ideally, look for companies with a long history of increasing dividends. I always look for a minimum of 10 years of consistent growth.

• Payout ratio: the payout ratio measures how well a company can afford to cover its dividend payments. A ratio of 100% means it’s spending all its spare cash on dividends — which isn’t sustainable for long. Ideally, I aim for stocks with a payout ratio below 70%.

• Financial strength: strong companies with steady revenue, manageable debt, and good profit margins are more likely to sustain and grow dividends. Always review the balance sheet and check the latest annual report to get an idea of a company’s stability.

Example of a high-yield dividend stock

Let’s apply the above points to a popular FTSE 100 dividend stock.

LondonMetric Property (LSE: LMP) is a UK real estate investment trust (REIT), which means it must distribute at least 90% of its profits to shareholders. This structure makes it a dependable dividend payer, ideal for passive income seekers.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

It’s also good for beginners as its business model is straightforward: it generates income from renting properties and passes most of the profits to shareholders. 

However, REITs rely on interest rates, which can impact borrowing costs and property valuations. Economic downturns can also limit demand for logistics properties, curbing rental income and hurting profits. Such risks should always be factored in.

Its dividend yield typically fluctuates between 4% and 6% — a good range for an income-focused portfolio. To match inflation, it’s been increasing its dividend at a rate of 5.27% over the past 10 years.

Make the dream come true

Building passive income with dividend stocks is a popular method that’s helped many investors build long-term wealth. By selecting quality dividend stocks, reinvesting payouts, and maintaining a long-term mindset, a reliable income stream is achievable. 

Whether aiming for extra income in retirement or a way to supplement earnings, dividend investing is a strategy worth considering.

In March 2000, at the peak of the biggest stock market bubble in history, the Nasdaq Composite Index topped out at 5,000 points. By the end of 2002, the tech-heavy index had crashed 78%. In today’s euphoric, momentum-driven market, could the same fate be unleashed on investors?

Forget fundamentals

John Templeton once famously said that “bull-markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria”. By the late 1990s, people were giving up their jobs in droves to become day traders. Making money was as easy as taking candy from a baby.

Back then companies were going public on little more than a PowerPoint presentation and slapping ‘.com’ at the end of the company name.

But it wasn’t just non-profitable companies that reached crazy valuations; well established names did too. Back then Cisco Systems was valued at 37 times sales and had the biggest market cap. In the rush for routers and internet hardware, it was the clear leader. The parallels with Nvidia today are unnerving.

The internet was revolutionary

Out of the ashes of the dot.com crash, established names did survive and ultimately thrive. Amazon, which had crashed 97%, came back – but it would take a decade to do so.

But the stars of the internet revolution were new name, on the whole, with revolutionary business models. Meta and Alphabet pushed the internet’s evolutionary path in a completely different direction. The old darlings of Cisco and Vodafone were cast aside. To this day, neither share price has recovered.

Today, investors are betting on AI, or should I say one form of AI, large language models. The path for Nvidia, Microsoft, and the rest of the Magnificent 7 stocks is laid out right in front of them. A long tail representing trillions of dollars is there for the taking. Enter DeepSeek and maybe the future AI path is not so obvious after all.

First mover advantage

Any business school will teach you that first mover advantage provides a company with a clear competitive edge. I believe it does. But timing is important too.

History is littered with examples of companies that were at the forefront of pioneering a new technology and yet did not go on to become the eventual winner.

Xerox, through the invention of the photocopier, created the ‘office of the future’ but surrendered leadership to Canon. General Magic released an early version of a smart phone in 1994. It went bankrupt in 2002.

Xerox failed because it believed bigger photocopiers was what customers wanted. General Magic failed because dial-up modems couldn’t handle large amounts of data.

As I said, the internet did turn out to be revolutionary. But most of the early leaders were nowhere to be seen once the race had run.

I have absolutely no doubt that the promise of AI will be just as revolutionary as the internet was 25 years ago. But whether that means that Nvidia or any of the other tech giants will be at the centre of it, to me it’s simply too early to say. If investors’ bets turn out to be wrong, this bubble will undoubtedly burst.

I wonder how many people have watched Tesla (NASDAQ:TSLA) shares soaring and hoped for a price slump so they can snag a top buying opportunity?

I’m one of them, as I’m spectacularly poor at spotting the best growth stocks while they’re cheap. Well, maybe I have my chance now after the size of Tesla’s shocking price fall so far this year.

We’re looking at a slump of close to 40% since the calendar flipped over to 2025. And that would be enough to slash a £10,000 investment down to £6,000.

Big fall, bigger bounce?

There have been far bigger falls in Nasdaq tech stocks in the past. And some of the best of them went on to become multiple multibaggers in the following years. A lot of people have retired wealthy even by buying before those early falls, never mind the investors who managed to get in during the big dips.

So what should investors do about Tesla now? Normally, I’m a big believer in ignoring the hype and sidelining the personalities. And just stick to the fundamentals with my anti-distraction blinkers firmly strapped on!

The trouble is, Tesla’s future does look unbreakably tied to CEO Elon Musk right now. And he’s a very hard person to ignore.

Warren Buffett, the billionaire head of Berkshire Hathaway, emphasises the importance of top-quality management with a focus on long-term commitments. And when he has his eye on the ball, I rate Musk as among the best of them.

But his attention span sometimes seems to be, well, let’s say variable. If I owned Tesla shares, I’d probably wake up every morning wondering what new flight of imagination might have captured his fancy today.

Fundamentals

Anyway, let’s try to look past all that for now and have a squint at the fundies. The first thing that strikes me is that forecasts for 2025 still have Tesla on a big price-to-earnings (P/E) ratio of 93.

What’s the problem with that, we might ask? We’ve seen P/Es for Nasdaq stocks way over a hundred plenty of times. And a good few have still gone on to generate huge profits for investors.

That’s true, but it’s the comparisons that worry me a bit. High-flyer Nvidia, worth more than the entire FTSE 100, still has a forecast P/E of only 27. Apple and Microsoft are on equal multiples of 29.

There really does seem to be some disjoint here. Is Tesla’s electric vehicle potential really worth three times the value of the AI outlook for Nvidia? These other three could be cheap. Or Tesla could be overvalued. Or something else — the trouble is, I’m not sure what.

Market mood

Right now, it seems clear to me we’re in one of those sentiment-driven market moods. And it could take a while for cold, hard, fundamentals to win through again.

Until then, I don’t think my nerves could take the strain of risking any money on Musk. But I definitely wouldn’t write off Tesla as something that tech growth investors should consider.

Fear is gripping the US stock market and one FTSE 100 fund is feeling the heat. I’m talking about Scottish Mortgage Investment Trust (LSE:SMT), which manages a portfolio of global growth stocks from public and private markets. It has significant exposure to American technology companies.

With the S&P 500 entering correction territory last week, the Scottish Mortgage share price has unsurprisingly taken a nasty dip. As a shareholder, I’m debating whether it’s worth adding to my position following the recent sell-off.

Here are my thoughts.

A long-term investment

Scottish Mortgage’s mission is to “maximise returns over the long term“. Monthly share price fluctuations are par for the course for all FTSE 100 stocks, but volatility can be especially pronounced for this investment trust.

To understand why the stock’s suffered recently and where it could go next, it’s helpful to look at its top portfolio holdings.

Currently, the fund’s largest position is SpaceX, Elon Musk’s rocket company. Since it’s an unlisted stock, there’s no share price data available. Private equity accounts for around 26% of the portfolio today, which brings significant growth opportunities for investors that they can’t access elsewhere in the FTSE 100 index. Early gains are often the best.

However, unlisted shares are difficult to value, more susceptible to failure, and tend to be considerably more illiquid than their public counterparts since there’s no established market to buy and sell them. Prospective investors in Scottish Mortgage shares should note the greater risks they’re adopting and the faith they’re putting in the management team’s judgment.

The other top positions — MercadoLibre, Amazon, Meta Platforms, and TSMC — are all large-cap growth stocks caught up in the sell-off. Scottish Mortgage’s share price has fallen broadly in line with the declines experienced by this group. Notably, there’s still a 10% discount for the trust’s shares relative to the portfolio’s net asset value (NAV), although that gap has narrowed considerably in recent months.

More pain to come?

Arguably, Scottish Mortgage is a stock that thrives in a fair-weather environment. When bullish sentiment’s running high and investors are piling cash into growth stocks, the fund’s likely to benefit. Conversely, when uncertainty looms and risk appetites dwindle, the trust lacks the defensive qualities that many other FTSE 100 shares have.

Although US stocks have rebounded a little in recent days, I’m not sure we’re out of the woods. With an unpredictable president in the White House and the US economy possibly on the edge of recession, there’s a strong chance Scottish Mortgage shares could fall further.

That doesn’t concern me too much. I plan to hold my shares for many years and remain optimistic about the fund’s long-term growth prospects, even if the short-term outlook’s hazy.

Nevertheless, I’m not rushing to buy more shares just yet. My average trade price was lower than today’s level of £9.64 and I’m comfortable with my present exposure. Should the share price continue to fall into deeper value territory, I might be tempted to buy more.

For potential investors who don’t own the stock, I think it’s worth considering. But a high risk tolerance is essential.