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I already own a handful of UK stocks in my ISA that have been paying me regular dividends. Three of them — HSBC (LSE:HSBA), Games Workshop and Aviva — have also thrashed the market over the past few years.
But for fun, I asked ChatGPT for a great UK portfolio that could throw off a grand a month in passive income. Here’s what the AI assistant came up with.
The portfolio
To pull in £12,000 per year, I could aim for a £200k ISA with a 6% yield. The three “bedrock” names that ChatGPT gave me were Legal & General, Aviva and National Grid.
It plumped for a 20% allocation to the first two, and 15% for National Grid. Then, Diageo, Unilever and British American Tobacco were included for growth income (rising payouts).
Looking at Unilever though, there’s not too much dividend growth forecast, while Diageo might even cut its payout when new boss Sir Dave Lewis starts next year.
Finally, to add some “jet fuel“, it went with City of London Investment Trust and Greencoat UK Wind from the FTSE 250.
| Allocation | Yield* | |
|---|---|---|
| Legal & General | 20% | 8% (9.1%) |
| Aviva | 20% | 7% (5.8%) |
| National Grid | 15% | 6% (4.1%) |
| Diageo | 10% | 2.7% (4.4%) |
| Unilever | 10% | 3.4% |
| Greencoat UK Wind | 10% | 6.5% (10.3%) |
| City of London | 10% | 5% (4.3%) |
| British American Tobacco | 5% | 9% (5.8%) |
Problems
Unfortunately, nearly every dividend yield given was wrong. For example, Diageo’s is 4.4% (not 2.7%), while British American Tobacco’ yield is 5.8% (not 9%).
Meanwhile, Greencoat UK Wind carries a mammoth 10.3% yield, much higher than the bot’s 6.5% figure.
Barring these inaccuracies, what do I reckon? Is this dividend portfolio any good? Well, it’s not bad. I already own shares of Aviva and Legal & General, and I used to hold British American Tobacco and Diageo.
But this crossover with my own portfolio makes me suspicious. Because it’s well-documented now that AI bots like ChatGPT can be overly flattering, even sycophantic.
In other words, they can parrot your own opinions/stocks back to you to curry favour. And ChatGPT knows my core portfolio because I uploaded it a while back for analytical purposes (something it’s great at if it has the correct data).
We know these [AI] systems make up answers, and they make up answers to please us — and that’s a problem.
Gina Neff, professor of responsible AI at Queen Mary University of London, speaking to the BBC.
As for Greencoat UK Wind, I think it glosses over the risks with this FTSE 250 stock. It’s fallen 40% in three years, pushing the yield north of 10%. So clearly investors have concerns about renewable energy stocks like this.
Personally, I wouldn’t want 10% of my income portfolio in this company. And I fail to see how City of London adds jet fuel when it only yields 4.3%.
One of my favourites
Somewhat surprisingly, ChatGPT failed to include any banks. But with a forecast 5% yield, I continue to see HSBC as a top income pick to consider.
The lender’s balance sheet is in great shape, while share buybacks continue at pace. Also, its Asia-focused investments are bearing fruit, with wealth income rising strongly in the last couple of quarters.
Naturally, US tariffs are not ideal for many Asian exporters, and this might hold back HSBC’s growth next year. But I think the bank stock is an excellent way to play the long-term growth of Asia’s leading growth economies.
In my eyes, HSBC is among the UK’s best dividend stocks.
