Close Menu
FintechFetch
    FintechFetch
    • Home
    • Fintech
    • Financial Technology
    • Credit Cards
    • Finance
    • Stock Market
    • More
      • Business Startups
      • Blockchain
      • Bitcoin News
      • Cryptocurrency
    FintechFetch
    Home»Stock Market»Building a steady passive income: the power of growth and dividends on the FTSE 100
    Stock Market

    Building a steady passive income: the power of growth and dividends on the FTSE 100

    FintechFetchBy FintechFetchOctober 18, 2025No Comments4 Mins Read
    Share Facebook Twitter Pinterest LinkedIn Tumblr Reddit Telegram Email
    Share
    Facebook Twitter LinkedIn Pinterest Email


    Image source: Getty Images

    Earning a passive income is one of the most satisfying financial goals an investor can set. The idea of money quietly building in the background without effort has long captured the imagination. And one of the simplest ways to make that dream a reality is through long-term investing in the stock market.

    A Stocks and Shares ISA is one of the most efficient ways for UK residents to do just that. It allows investments to grow tax-free, meaning any dividends or capital gains stay entirely in the investor’s pocket. Over time, this can make a huge difference.

    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.

    A study by Barclays found that UK stocks generated average annual returns of almost 5% above inflation over a 119-year period. That’s a powerful figure — although, of course, returns are never guaranteed and in weak years, even the best portfolios can lose money.

    Still, for long-term investors with discipline and patience, the rewards can be substantial. The key is knowing how to reduce risk and structure a portfolio to balance both growth and income.

    Stock-picking for passive income

    When aiming to build a reliable passive income, dividend stocks are often the first stop. They provide regular cash payouts that can either be reinvested or withdrawn as income. But focusing solely on dividends can be limiting. 

    Growth stocks — companies that reinvest their profits to expand their business — play a crucial role in building the initial pot of capital. Once that pot grows large enough, an investor can shift gradually into dividend-paying shares to generate consistent income.

    Another important point is diversification. From consumer goods and healthcare to utilities and industrials, holding shares from different sectors spreads risk and protects against market shocks.

    A FTSE 100 success story

    The FTSE 100 is full of both dividend and growth opportunities. Rolls-Royce is one name that’s made a strong recovery since the pandemic, proving that patience often pays off. But for investors seeking a longer history of consistent expansion, Diploma (LSE: DPLM) is a stock worth considering.

    Over the past 20 years, Diploma’s share price has climbed from 115p to 5,280p (as of 16 October) — an astonishing 4,491% increase. That works out to an annualised return of roughly 21% a year.

    In simple terms, a £1,000 investment two decades ago would now be worth around £45,910. Few companies can boast such performance.

    The passive income potential of Diploma
    Created on TradingView.com

    Of course, past performance is no guarantee of future results. Diploma’s success stems from its disciplined strategy of acquiring and growing niche industrial businesses across engineering, life sciences and controls.

    Revenue has grown at a compound annual rate of 20% since the pandemic, and earnings are up 44% year on year. It’s a well-managed, profitable company with a strong balance sheet.

    That said, no business is without risks. Diploma’s reliance on acquisitions exposes it to integration challenges and potential overpayment for assets. A slowdown in global manufacturing or supply chain disruption could also weigh on margins.

    Final thoughts

    Building a strong passive income takes patience, diversification and consistency. Growth stocks like Diploma can help build wealth over time, while dividend stocks add stability and cash flow.

    The FTSE 100 offers plenty such opportunities for investors. With thoughtful planning — and ideally the tax relief of a Stocks and Shares ISA — an investor can aim to create lasting passive income.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleA New XRP Era? Crypto Educator Sees Path To $1,000
    Next Article Reopens PEPE Long, Faces Another Brutal Liquidation
    FintechFetch
    • Website

    Related Posts

    Stock Market

    Missed out on Nvidia stock? 3 lessons to learn when hunting for future tech stars!

    October 18, 2025
    Stock Market

    Could the Rolls-Royce share price still offer long-term value?

    October 18, 2025
    Stock Market

    Up 1,396%! Could the FTSE 100 be harbouring another share like Rolls-Royce?

    October 18, 2025
    Add A Comment
    Leave A Reply Cancel Reply

    Top Posts

    Why DOGE Is On The Verge Of 333% Rally Toward $0.7

    April 23, 2025

    Experts reckon generative AI could add billions to the value of these 5 FTSE 100 stocks

    October 13, 2025

    The importance of contingency planning as you age

    February 10, 2025

    How much should investors put in an ISA to achieve the average UK wage in passive income?

    March 18, 2025

    Time to buy Nvidia shares before fresh all-time highs?

    February 7, 2025
    Categories
    • Bitcoin News
    • Blockchain
    • Business Startups
    • Credit Cards
    • Cryptocurrency
    • Finance
    • Financial Technology
    • Fintech
    • Stock Market
    Most Popular

    Here’s why the Tesco share price has dropped 18% in a month!

    March 18, 2025

    What is ‘rust out’ and are you experiencing it?

    October 8, 2025

    This 9.5% yielding FTSE 100 dividend stock is at a 52-week low! Time to consider buying?

    August 21, 2025
    Our Picks

    eToro's Stock Lending Partner Moves Operations to Blockchain

    October 18, 2025

    Gold prices soared above $4,300 this week. What’s driving the surge?

    October 18, 2025

    Weekly Roundup: Bitcoin ETF Outflows Signal Risk Reset as SEC Chair Pledges to Revive U.S. Crypto Innovation

    October 18, 2025
    Categories
    • Bitcoin News
    • Blockchain
    • Business Startups
    • Credit Cards
    • Cryptocurrency
    • Finance
    • Financial Technology
    • Fintech
    • Stock Market
    • Privacy Policy
    • Disclaimer
    • Terms and Conditions
    • About us
    • Contact us
    Copyright © 2024 Fintechfetch.comAll Rights Reserved.

    Type above and press Enter to search. Press Esc to cancel.