ISA investors who favour income over growth stocks continue to be spoilt for choice. Across the FTSE 100 and FTSE 250, I count 63 separate shares with dividend yields of 5% or above.

Like a kid in a candy store, the dilemma is which ones to choose. Here then, I’ll present a five-stock portfolio yielding above 6% to consider for passive income.

The ISA

Without further ado, here’s the quintet:

Two of these are from the FTSE 100 (Aviva and NatWest) while the other three are from the FTSE 250.

Primary Health Properties owns a £6bn portfolio of over 1,100 healthcare assets, including GP surgeries, NHS community health centres, and outpatient hubs. The attractive thing here is that majority of rental income comes directly or indirectly from a government body.

Meanwhile, Hollywood Bowl owns 95 bowling centres across the UK and Canada. ME Group operates over 49,000 vending machines across Europe, the UK, and Asia-Pacific, including ID photobooths, self-service laundrettes, and printing kiosks.

Aviva’s the UK’s leading insurance group, with almost 22m customers. NatWest is obviously an established high street bank.

The average yield of this portfolio is around 6.1%. Therefore, if an investor were to put £3,000 equally into each of these five stocks, they would hope to get back about £915 a year in passive income.

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.

Looking forward

However, it’s worth pointing out that these are the trailing yields. That is, they’re based on dividends paid over the past 12 months.

Looking ahead, City analysts expect all five dividends to be higher in a year’s time, albeit at different rates of growth. If we go off these, the portfolio’s forward-looking yield jumps to 6.6%. That would be enough to take annual passive income to just under £1,000.

Of course, it can be dangerous to assume anything with dividends. If consumer spending tightens further due to elevated living costs, then Hollywood Bowl and ME Group could see lower profits. And some of Aviva’s customers might cancel policies.

In the meantime, NatWest is facing the prospect of a potentially higher bank tax at the forthcoming Autumn Budget. And Primary Health Properties is sensitive to any further hikes in interest rates.

All of which is to say that dividend forecasts can’t always be relied upon. Nevertheless, this is clearly an attractive high-yielding portfolio on paper.

Generating plenty of cash

Before ending, I want to say a bit more about ME Group as it may be unfamiliar.

Beyond the chunky dividend yield, I like that this is a cash-generative business. After all, when a customer uses one of its vending machines, the payment is completed immediately before the service is rendered. Cash basically enters the bank account right away. 

The units also operate autonomously 24/7 without on-site employees. So this isn’t like the staffed Albert Square launderette in EastEnders.

The washing machines are typically installed in supermarket car parks, petrol stations and retail parks via revenue-sharing arrangements. Indeed, ME Group recently partnered with supermarket Asda, its largest laundry deal ever.

Clearly then, these mini-laundrettes are surprisingly popular. You can wash bulky items such as duvets that might not fit in a domestic washing machine. Revenue here grew 16.3% to £54.8m in the six months to 30 April.

Finally, trading at just 7.7 times forward earnings, the stock looks cheap. That’s why I think it’s worth checking out for a diversified income portfolio. 

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Ben McPoland owns shares in Aviva.