Seven steps you need to follow

1. YOU can easily assemble a portfolio of income-friendly shares through an online share dealing account or fund platform managed by the likes of AJ Bell, Halifax, Hargreaves Lansdown and Interactive Investor. 2. ANY share purchases will incur a dealing charge plus 0.5 per cent stamp duty. 3. ALL online platforms now allow you to glean key income information on any shares you might want to buy – such as its dividend record, when divis are paid and how often (usually twice a year). 4. BEAR in mind that if you buy shares ‘exdividend’, you will not receive the dividend payment just declared. 5. IF held inside an Isa or pension, dividend income is free from tax. If income-friendly shares are held as part of an investment portfolio, the first £2,000 of annual dividends are free of tax. Any amount above this figure is taxable according to whether you are a basic (7.5 per cent), higher (32.5 per cent) or additional (38.1 per cent) rate taxpayer. 6. ALTHOUGH some investors will want to receive the dividend income as it is paid, others may prefer to have it automatically reinvested, buying yet more shares. A charge may be applied. 7. INVESTORS who are not prepared to buy individual shares can buy dividend-friendly investment funds or stock market-listed investment trusts.