£50k in savings? Here’s how to unlock up to £4.5k in passive income overnight
Investing is a fantastic way to build passive income, especially for those who already have a chunky lump sum sitting aimlessly in a savings account. In fact, for those lucky enough to have a spare £50,000 in the bank, it’s possible to unlock a £4,550 secondary income stream instantly. Here’s how.
Investing excess savings
One of the easiest ways to put capital to work in the pursuit of income is through dividend stocks. Luckily for British investors, the London Stock Exchange is home to some of the most impressive yields worldwide.
With established customer bases driving recurring sales and consistent cash flows, it’s possible to find reliable dividends in plenty of places. For income investors, that can translate into predictable income combined with low market volatility.
Right now, the FTSE 100 offers a 3.3% yield. So, throwing £50,000 into a FTSE 100 index fund would net a passive income of £1,650. But there are other indexes to consider. Take, for example, the MSCI United Kingdom High Dividend Yield Index.
This small basket exclusively focuses on the companies with the most generous dividend policies. As such, investors can currently lock in a 5.9% yield, pushing the annual passive income to £2,950.
Digging deeper
Obviously, having more money flowing into an investor’s pocket is more exciting. But there are some caveats to consider. Unlike the FTSE 100, the MSCI index is far more concentrated. In fact, it consists of just seven stocks.
| Company | Industry | Dividend Yield |
| British American Tobacco | Tobacco | 6.1% |
| Imperial Brands | Tobacco | 6.5% |
| Mondi | General Industrials | 5.0% |
| Barratt Redrow | Homebuilding | 4.6% |
| Kingfisher | Consumer Discretionary | 4.5% |
| WPP (LSE:WPP) | Media | 9.1% |
| Schroders | Investment Banking | 5.3% |
This portfolio concentration is how the index is able to offer a far more impressive payout. But it also comes at the cost of increased volatility. That’s because not all high-yield mature dividend stocks are safe bets forever.
Let’s take a closer look at WPP. The media advertising titan has had a pretty rough 2025, with almost half of its market cap wiped out since the start of the year.
This downward trajectory comes as a result of several profit warnings. This has been partially driven by customers cutting down on discretionary marketing spend as US tariff uncertainty has steadily crept in. Don’t forget, most of the firm’s profits come from American businesses.
However, there are also concerns that the rise of generative AI is disrupting demand. AI technology allows companies to automate creative content production and campaign planning, eliminating the middleman and thus compromising WPP’s traditional billable-hour model.
The bottom line
WPP’s management isn’t blind to the threat of artificial intelligence. In fact, the company is actively investing in it to try and tap into new growth opportunities. For example, the firm’s new subscription-based WPP Open platform. Here, clients pay for access to this proprietary AI model that’s designed to almost instantly generate data-driven marketing campaigns at scale.
If the business can sucessfully evolve, then today’s 9.1% yield could present an exciting opportunity for income investors. After all, a £50,000 investment at this rate generates a passive income of £4,550.
But that’s a big ‘if’. And right now, I think it’s too soon to tell. That’s why investors may want to consider exploring other high-yield opportunities instead.
The post £50k in savings? Here’s how to unlock up to £4.5k in passive income overnight 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 no position in any of the shares mentioned. 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.
