3 steps to target a £300 monthly passive income by 2030

The idea of ​​earning money without working is appealing to many people, including me. But that passive income may not be as easy to make as it seems.

I don’t bother with time-consuming passive income ideas like dropshipping or creating a digital store. Instead, I invest in blue-chip companies that I hope will pay dividends.

That has some advantages as I see it. I can benefit from the proven success of the existing business model. That approach doesn’t require me to work. I can get started without needing huge savings.

This is how I aim for a monthly dividend income of £300.

1. Start saving regularly

I will put aside money on a regular basis to try and get into the habit of saving discipline. This way, I hope I can continue to build my investment pot even when other spending priorities come up.

To do this I set up a stock trading account or a Stocks and Shares ISA.

How much should I invest? Read on to find out!

2. Find stocks to buy

The next step, when regular savings are increasing, will be deciding what to do.

I will be looking for shares that I think can pay big dividends not only now in the future. So, I don’t just share like that Energy Diversification with 14%+ returns without better understanding of the business and its long-term prospects.

Every time when the evaluation can buy, I will look for the same qualities.

Does the business operate in a business area that I expect will benefit from strong customer demand in the future? Do you have some competitive advantage that can give you pricing power, like the unique brand of Aboveor patented technology from AstraZeneca?

Does having a healthy balance sheet, or debt affect the ability to pay profits as dividends? Is the business already paying dividends, or is it like Google’s parents Alphabet would it rather retain profits to reinvest in growth than reward shareholders with passive income?

If I find the type of company that I think can pay big dividends in the future and whose stock is selling at an attractive price, I will buy it. By building a diverse portfolio of different companies, I reduce the potential risk of passive income if one of my choices turns out to be disappointing.

3. Start earning passive income

How much I can earn will depend on the amount I invest and the average dividend yield I receive.

At an average yield of 5%, for example, to reach my monthly passive income target of £300, I would need to invest £72,000. I can do it from scratch by investing £900 a month. Thus, at the beginning of 2030, I should reach my target dividend income.

I was able to follow the same approach with smaller regular savings, although it took me longer to reach my goal. But I should start earning dividends along the way that, hopefully, will grow as my investment portfolio grows.