FTSE shares have a reputation for being a lucrative source of passive income. That’s because many companies listed on the London Stock Exchange have some of the most generous dividend policies in the world. But how much money do investors need to put to work to aim for a £30k second income?
Crunching the numbers
At a yield of 4%, an investor aiming to earn a £30,000 annual dividend income would need to have a £750,000 portfolio, ideally in an ISA, to take advantage of the tax benefits. However, following its impressive rally over the last 12 months, the FTSE 100‘s payout currently sits near a historical low of 3.3%. And the FTSE 250‘s only slightly better at 3.4%.
Losing that extra 0.7% increases the required portfolio size to just shy of £910,000. As such, investors relying exclusively on index funds in 2025 will have to wait far longer for the wealth-building compounding process to do its magic.
However, for stock pickers, the story’s quite different. By being able to focus exclusively on the best income shares offering higher yields, unlocking a £30k passive income becomes a potentially much faster process.
Right now, there are over 110 stocks across the two flagship UK indices offering a payout of 4% or more. Of course, not every stock will prove to be a good investment, so it’s up to investors to spot the diamonds in the rough.
Balancing risk with reward
Let’s zoom in on Victrex (LSE:VCT), a speciality materials business that manufactures high-performance polymers for the aerospace, energy, and electronics sectors, among others.
Right now, the dividend-paying FTSE share is offering a mouth-watering 8.2% yield. And if the business can maintain this level of payout moving forward, shareholders would only need around £366,000 of invested capital to unlock a £30k passive income – almost a third of what index investors need.
The business is in the middle of a transformation. Demand for its specialist materials has waned in recent years due in part to the global slump in the industrials and electronics industries. As a result, revenue growth’s flatlined while operating income‘s almost been slashed in half between 2022 and 2024. And with that in mind, it’s not surprising to see the stock tumbling nearly 80% from its late-2021 peak.
Today’s 8%+ yield is a reflection of investor sentiment surrounding this business. With earnings coming under intense pressure, there runs the risk of a potential dividend cut. Yet, there are some early signs of recovery beginning to emerge.
Polymer volumes are rising once again as demand slowly returns, including from the healthcare sector, where margins are higher. The firm’s also recently completed the construction of a new manufacturing facility in China, expanding its production capacity while also enabling future capital expenditures to fall.
In other words, so long as market conditions continue to improve and no new spanners are thrown into the works, Victrex’s dividend could be more sustainable than many investors believe.It’s still a bit too early to invest, in my opinion. But Victrex is definitely one of many FTSE shares investors may want to investigate further when looking for juicy passive income opportunities.
