If I invest £10,000 in BT shares, how much passive income can I earn?

BT (LSE:BT.A) shares have enjoyed quite the rally in 2025, climbing by almost 25% since the start of the year. However, even with this momentum under its belt, the dividend yield remains quite favourable at 4.5%.

So if an investor were to buy £10,000 worth of stock, they can currently expect to earn a passive income of around £450 over the next 12 months. That’s assuming, of course, that dividends don’t get cut in the meantime.

Is that likely? Looking at the latest forecasts, it doesn’t seem so. In fact, income investors may still want to take a closer look at this steadily rebounding business.

BT dividend forecasts

Long-term forecasts always need to be viewed with a healthy dose of scepticism. Even when looking out to the next 12 months, a lot of unexpected surprises can emerge that can invalidate expectations.

Having said that, these projections can still be a useful tool to get a sense of direction. And right now, the indicated direction for BT shares seems to be… up.

Assuming these projections are correct, a £10,000 investment today could generate closer to £510 by 2030.

In terms of growth, that translates to an average annual dividend hike of 2.5% which is roughly in line with inflation. And while that’s not very attractive for dividend growth investors, it could still be an interesting opportunity for those seeking to defend their existing wealth rather than expand on it.

Risk versus reward

Looking ahead, there are lots of reasons to be optimistic about BT shares. Under the leadership of new management, the company’s undergoing a substantial strategic transformation to eliminate costs, rebuild margins, and accelerate growth. And while it’s still early days, the initial results are encouraging.

Free cash flow generation is on track to reach £3.5bn by the end of 2026. This not only makes dividends more sustainable, but also provides the much-needed financial flexibility to chip away at its long-time problematic pile of debt obligations.

Of course, this turnaround still carries significant execution risk. A total of £15bn is being deployed through fibre optic and 5G infrastructure upgrades. Any miscalculations or delays to expected returns could adversely impact the business.

Even if it’s a short-term speedbump, it could prove quite problematic. Why? Because rival groups like Vodafone are also executing their own turnaround strategies. And if BT makes a mistake, its competitors will no doubt try to exploit it and steal market share.

The bottom line

If management can keep hitting key milestones, BT shares could continue to see strong share price returns as well as a slow and steady boost to its dividend. So in my opinion, there’s an interesting long-term opportunity here that’s worth a deeper dive by defensive investors.

However, I’m more interested in finding more aggressive growth investments for my portfolio. That’s why I’m looking at other promising stocks within this space.

The post If I invest £10,000 in BT shares, how much passive income can I earn? appeared first on The Motley Fool UK.

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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Vodafone Group Public. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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