Here is a simple 5-stock dividend portfolio with a yield of 7.5%.

Building a portfolio of stocks capable of generating large amounts of income has never been easier. Today, there are a lot of shares in the London Stock Exchange which give high yields.

Here, I will put together a hypothetical stock-stock portfolio with a yield of 7.5%. With a £10k investment, this type of portfolio can generate around £750 a year. And I think all these stocks should be considered.

Generating income

In the table below, I’ve listed five popular dividend stocks and their forward-looking yields. I have also shown how much income each stock can earn from a £2,000 investment.

Products from the stock vary. But if I were to put £2,000 into each of these five stocks, I would be looking at a total annual income of around £750.

That’s a decent amount of income from a £10k investment. That’s a lot higher than I can get in a savings account.

What is the catch?

There are a few things I should point out here.

First, the yield figures I put in the table above are forecasts from analysts. They may be inaccurate and should not be relied upon (note that yields change slightly daily depending on share price movements).

And benefits are not guaranteed. Companies can cut or reduce them at any time.

Vodafone it is one company that has lowered its payout in recent years. Additional cuts cannot be removed.

The second thing to note is that each company faces its own risks. And this may lead to a loss of share value (which may reduce returns from income).

Take it British American cigars (LSE: BATS), for example. It faces a challenging backdrop today due to the worldwide government crackdown on tobacco and vaping products.

In retrospect, it’s not very productive of revenue growth. This could put pressure on earnings and earnings in the coming years.

Another issue here is the increasing focus on ESG/sustainability within the investment community. This could affect sentiment about the stock and limit share price gains.

Now, I don’t want to sound too bearish on British American Tobacco. Because there’s a lot to like about the stock, including a very low price.

It is worth pointing out that this year, the company is forecast to generate more than £26bn. Therefore, there is still a demand for its products.

It is important to understand, however, that it faces risks and may see weakness in the share price in the future. This applies to all the stocks I mentioned.

More stocks are needed

Given that each company has its own risks, five stocks aren’t really enough to build a solid income portfolio. If I were serious about building a proper dividend stock portfolio, I would want to own at least 15-20 stocks.

The good news is that it’s not hard to find some of the most productive ones in the UK market. If anyone is looking for investment ideas, they can find plenty right here The Motley Fool.