Generating passive income to cover household energy bills is one of the most practical income targets an investor can set. The average UK energy bill runs to approximately £1,717 a year under the current price cap.
At today’s best yields available from FTSE 100 dividend stocks, covering that requires a substantial investment. So, what does the maths look like?
Crunching the numbers
At a 5.9% yield, generating £1,717 in annual dividend income requires an investment of approximately £29,102. Here’s some basic numbers that illustrate the point:
- Target income: £1,717 per year
- Dividend yield: 5.9%
- Investment required: £29,102
- Monthly income equivalent: £143
That’s a meaningfully lower pot than the same income would need at the Footsie’s average yield of around 3.5%. In that case, the investment to cover the same bill would be £49,057.
The right high-yielding stock can shrink that target by nearly £20,000. But which stock offers that yield, and what’s behind it?
Strong dividend paying insurer
The stock is Aviva (LSE: AV.), one of the UK’s largest insurance and financial services businesses. The company provides life insurance, general insurance, and retirement solutions.
With a market cap of £20bn and a dividend yield of 5.9%, it is one of the more significant income plays in the Footsie. The stock has struggled year to date, falling 2.4% to 666.8p per share as I write on Friday afternoon (3 July).
Management has consistently prioritised returning capital to shareholders, and the dividend track record reflects that.
We have made an excellent start to 2026. Our continued strong trading performance, high quality balance sheet, and diverse set of leading businesses, gives us confidence that we are well placed to meet our group targets, and deliver even more for our customers and shareholders this year.
Amanda Blanc, Group Chief Executive, Aviva — Q1 2026 Trading Update
What are the risks?
The company’s price-to-earnings (P/E) ratio of 25.1 is not cheap, but it’s still cheaper than Legal & General (37.2) as I write.
As an insurer, Aviva is also sensitive to interest rate movements: falling rates reduce the income earned on its bond portfolio, while claims inflation can squeeze underwriting margins in any given year.
Dividends are never guaranteed, and a more difficult operating environment could put the payout under pressure even for a business with as strong a track record as this one.
My verdict
In my view, Aviva’s combination of a near-6% yield and a well-established dividend track record makes it one for passive income investors to consider.
A £29,102 pot covering the average energy bill annually could be an achievable long-term target for a patient, consistent investor. But rather than rely on a single stock to carry the entire weight of an income strategy, it’s a good idea to spread the risk across a number of top income stocks.
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Ken Hall does not hold any positions in the companies mentioned.
