Investing in the stock market is one of the most effective ways to build a passive income in 2026. And by putting that money to work inside a Stocks and Shares ISA, every penny of that income lands tax-free.
But if I invested £20,000 today, how much passive income would I actually be earning by July 2027? Let’s crunch the numbers.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
What a FTSE 100 tracker could deliver
The FTSE 100 currently yields around 3%. With total UK dividends forecast to grow by 5.3% this year, that yield nudges up to roughly 3.16% on a forward basis.
Pair that with the 10% price growth that institutional analysts are projecting, and a £20,000 investment today could grow into roughly £22,000 by next July, generating a £695.20 passive income. Not bad for doing almost nothing.
But stock-pickers could potentially do considerably better… and right now, one opportunity in particular has caught my attention.
Why RELX stands out
RELX (LSE:REL) is a global provider of information-based analytics and decision tools, serving customers across legal, scientific, risk, and exhibitions markets in over 180 countries through brands including LexisNexis, Elsevier, and Reed Exhibitions.
Earlier this year, the stock was brutally sold off. In February, shares plunged 14% in a single session after Anthropic launched a new AI legal tool, sparking fears that LexisNexis could be disrupted overnight. And at its lowest point, RELX had fallen over 45% from its 2025 peak!
But the experts don’t seem convinced by the panic…
With an average 12-month share price target of 3,140p, RELX shares could jump 35% by this time next year. Throw in a forward dividend yield of 3.11%, and a £20,000 initial investment could transform into £27,000, generating around £839.70 in passive income all by July 2027.
A stellar opportunity or a trap?
In its latest trading update, RELX reported a strong start to 2026 across all four divisions. Its legal research platform, Lexis+ with Protégé, is posting double-digit growth driven by AI-powered analytics. Its Financial Crime Compliance and digital Fraud & Identity tools are growing rapidly in Business Services. And Scientific, Technical & Medical is benefiting from record article submission volumes.
In short, the numbers suggest that RELX isn’t being disrupted by AI, but using it to strengthen its competitive moat.
Having said that, it would be naive to dismiss the risk entirely. Only 12% of RELX’s operating profit comes from the legal database business most exposed to AI competition. But that’s still significant. And if AI tools continue to advance rapidly, more of the group’s subscription cash flow and pricing power could be under threat.
After all, for a business that charges premium subscription prices for analytical tools, any sign that free or cheaper AI alternatives can replicate its value would be a serious long-term challenge.
Is it worth considering?
Right now, RELX is a rare combination. It’s a business actively embracing AI, benefiting from it, and yet simultaneously being viewed as a victim of it.
With the market pricing the company as if it’s already been disrupted, and the numbers saying quite the opposite, it’s hard not to be tempted. That’s why I think ISA investors looking to earn chunkier passive income over the next 12 months might want to take a closer look.
Should you invest £5,000 in RELX right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if RELX made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
