£9,000 of savings? Here’s how it could be used to target a £3,419 second income

At this time of year, the idea of having a second income to fall back on can certainly seem attractive!

A second income does not necessarily mean that someone is juggling multiple jobs. There are different ways a person can aim to earn an additional income. One is buying up a bunch of shares in companies that will hopefully pump out dividends in future.

A long-term approach can help earn money

I understand that when someone decides a second income could come in handy, they may be thinking of how handy it would come in right now.

But taking a long-term approach can mean setting up a second income in future – and letting time work to your advantage between now and then.

As an example, say someone has a spare £9k and invests it in a diversified portfolio of shares that earn an average dividend yield of 7%.

After 25 years, that portfolio ought to have grown to a size where a 7% dividend yield would produce around £3,419 of passive income each year.

Preparing to unlock the income taps

As a starting point, someone needs a practical way to invest. So one step they could take this week – indeed, right now before the year gets any older – would be choose a share dealing account, Stocks and Shares ISA or trading app.

It also helps for someone to set an investing strategy that plays to their strengths , reflects their investing objectives and aims to strike a suitable balance between potential risk and reward.

For example, a 7% yield is well above the current FTSE 100 yield of 3.1%. But I do not think it necessarily requires investing in little-known, risky companies (which is certainly not my cup of tea).

I reckon an investor can build a high-yield portfolio from quality blue-chip dividend shares in proven companies.

One share to consider for 2026

As an example, one share I think investors should consider is FTSE 100 financial services firm Legal & General (LSE: LGEN).

Despite yielding 8.3%, I already know that the company aims to grow its dividend per share in 2026. That is part of a longer-term strategy of annual dividend growth.

Can it deliver? After all, no dividend is ever guaranteed. Longstanding Legal & General shareholders discovered that during the 2008 financial crisis, when the company cut its payout.

Any big enough future financial crisis that leads to policyholders pulling out funds brings a similar risk. I also think this year’s expected sale of a large US protection business will leave a hole in the company’s revenue streams, although it will also bring in a large chunk of cash.

But I like Legal & General because it has shown it prioritises shareholder returns, has a strong brand, and uses a proven business model. The retirement market on which it is focused is large and resilient.

The post £9,000 of savings? Here’s how it could be used to target a £3,419 second income appeared first on The Motley Fool UK.

More reading

• How long would it take for an ISA to pay you £1,000 a month in passive income for life?
• An 8.2% yield and 57% undervalued — time for me to buy more of this British passive income star?
• Demand for these high-yielding FTSE 100 dividend shares could soar in 2026
• How much do you need in an ISA to target £1,800 a month of passive income?
• Why it doesn’t pay to be passive when it comes to income shares

C Ruane 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.

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