Making four figures in passive income each month might sound unrealistic. To be clear, it isn’t something that’s achievable for everyone. It’s certainly not something that happens overnight.
But smart investors can stand a better chance of reaching this goal if they’re patient, shrewd and pick the right dividend shares. Here’s how the strategy could work.
The building blocks
To begin with, let’s talk about numbers. If someone invests £100 a month, it simply isn’t going to grow into a four-figure monthly income, even with several decades of work.
But what size does it need to be to make things realistic?
To answer that question, we need to assess the portfolio’s average yield. Given there are 25 stocks in the FTSE 250 with a yield above 7%, I think it’s feasible to have a diversified portfolio with a dividend yield of 7%.
Therefore, to make £1.2k a month from income with a yield of 7%, the portfolio needs to be worth £205,714. In theory, if someone had this as a lump sum, they could get going straight away. For many of us, we’d need to build up to that by investing regularly over many months.
If someone parked £500 a month in the stock market with this target yield, it could take just over 17 years to reach the desired target amount. Of course, this isn’t set in stone. Companies could cut dividends, stocks can appreciate in value, and a variety of other factors could shorten or quicken this timescale.
Picking the right shares
The other key factor is the portfolio’s stocks. Ideally, they should be from a mix of different sectors, in order to help provide a diversified balance. This helps so that if one part of the market has trouble, the whole portfolio isn’t overly impacted.
The diversification also helps in the long term. After all, some sectors could shine over the next decade, while artificial intelligence (AI) could disrupt others. Spreading risk should help to make the dividends more sustainable.
In terms of a stock to consider, I like Primary Health Properties (LSE:PHP). Down 5% in the past year, it has a dividend yield of 7.62%.
The real-estate investment trust (REIT) owns GP surgeries, medical centres and healthcare facilities across the UK and Ireland. It then rents them out on long-term leases, which is mainly to NHS-backed tenants. In other words, it’s a landlord for essential healthcare infrastructure.
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That creates a pretty reliable business model. The firm makes money through rental income, with many leases linked to inflation and stretching well over a decade. The 2025 full-year results showed occupancy sitting at 99%, which is exceptionally high for the sector.
This helps to support the dividend, which I believe looks resilient. The REIT has increased its payout for almost 30 consecutive years, with management saying that dividends should remain covered by adjusted earnings. The latest annual dividend rose again to 7.1p per share.
There are risks though. There’s concern about higher interest rates, which could lead to higher financing costs for new projects. This could squeeze profits further down the line. Yet even with this, I still think it’s a stock worth considering for investors.
