the London Stock Exchange It’s a favorite for passive income investors, with many high-quality stocks offering generous dividends. With most of them faltering recently due to conflict in the Middle East, dividend yields are now higher than they were a month ago.

Easter Monday (April 6) marks the start of the new ISA year, when a new £20,000 tax-free allowance kicks in. So the first trading day will be Tuesday (April 7).

But what level of passive income is on offer for someone looking to invest the full £20,000 at once? Let’s take a closer look.

Please note that tax treatment depends on each client’s individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, and does not constitute, any form of tax advice. Readers are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

Passive investing

Understandably, some investors don’t want the hassle of picking individual stocks. Instead, they invest in index-tracking funds, which is equivalent to holding the entire market.

This is a powerful strategy for some people. As John “Jack” Bogle, the father of passive investing, once advised: “Don’t look for the needle in the haystack. Just buy a haystack“.

Investors who bought the UK equivalent of a haystack – FTSE 100 index – On April 7 last year he performed very well. During this period, the blue-chip index rose about 30%, with dividends at the top.

The FTSE 100 index yield is currently 3.2%. So the investor parks £20,000 in something like Vanguard FTSE 100 UCITS ETF She hopes to generate around £640 in passive income.

Of course, dividend yields are never constant. Some Footsie companies could reduce their payouts if the global economy declines.

Turn to FTSE 250 indexwhere returns have not been strong over the past 12 months, the yield rose to 3.6%. So income here could be a little higher (£720 or so), assuming the UK economy isn’t damaged by a protracted war with Iran.

Active investing

Alternatively, an investor can take on more risk by looking for individual stocks that offer above-average dividend yields. There are plenty of these all over London today.

For example, the portfolio below yields 7.14% and would therefore generate around £1,428 from the £20,000 split equally between the five stocks. This is based on its excess returns, which may not be the same going forward (dividends may fall or rise).

Infrastructure income

Given HICL’s infrastructure, this looks like a very attractive stock in the FTSE 250. After falling 24% in three years, the return has risen to 7.1%.

Infrastructure funds are sensitive to interest rate changes. So, if the Bank of England raises interest rates, the stock price could come under further pressure.

However, operationally, confidence is going well, with management reiterating its confidence in paying its target dividend of 8.35p for the year ending today (31 March). And 8.5 pence for the following year. This gives returns of 7.1% and 7.2%.

HICL recently disposed of its stake in the A63 motorway in France, the second largest asset in its portfolio, at 8.4%. It is encouraging that this sold at a premium of 21% compared to its last valuation calculated in September.

Then yesterday, HICL announced that it had increased its stake in Cross London Trains by around £52 million. It expects this to add more than 1p to its net asset value (NAV) per share upon completion.

I think HICL, which is trading at a massive 24% discount to NAV, is worth a high income check.