How much do I need in Greggs shares to earn a £1,000 yearly passive income?

It’s that time of year when my thoughts move away from Greggs (LSE: GRG) Festive Bakes and towards the shares as a potential investment for passive income.

Greggs might not offer the biggest dividend yield on the stock market. But at a forecast 4.2% it’s well ahead of where long-term inflation is likely to be. And it’s also better than the FTSE 250 average of around 3.4%. So how much would I need to invest to earn my grand a year?

Show me the money

To pocket Â£1,000 in dividends each year, I’d need to have Â£23,800 invested in Greggs shares. That’s a bit more than a single year’s Stocks and Shares ISA limit. But here’s a thing to bear in mind… even for those who can afford it, plonking down a whole year’s ISA on a single stock would bring too much risk for my liking.

And for those just starting a new ISA in 2026, ignoring the very important need for diversification could turn out to be a costly mistake. My approach is different. I prefer to work out how much I can invest each month, and transfer it to my ISA account. And then, every couple of months or so, invest the cash — in a different stock each time.

I like to choose a different sector each time too. I’d hate to have all my money in Greggs and later have to tell the grandchildren how I lost everything in the great 2026 sausage roll crash.

Good value Greggs?

Talking of crashes, the Greggs share price has slumped 49% since its 3,230p peak in August 2024. So is it a good stock to consider as a passive income investment at all?

I think so, though I didn’t really understand why Greggs shares reached the heights they did. At the peak, they hit a price-to-earnings (P/E) valuation as high as 22. That’s growth stock pricing, not pastry and coffee pricing.

Analysts expect a modest earnings dip this year. But with the share price down, we’re looking at a forward P/E of a more respectable 13.5. And it should drop to around 12.5 by 2027 if forecasts are close. I’m happy with that, and I’d say it carries significantly less long-term risk.

I do still see danger though, as Greggs tends to go into and out of fashion. And a couple of years of lower earnings in the face of rising costs could mean further share price weakness. But I still see it as a long-term ISA stock to consider

Building up

Here’s one example of a way to build up a decent stake (no, I can’t think of a steak pun). If I put Â£165 of my investment money each month into Greggs shares and reinvest all my dividends, I could reach the total I need in about 10 years. That should be enough to get my Â£1,000 annual passive income. And just think of the Festive Bakes and Christmas cake I could buy with that!

The post How much do I need in Greggs shares to earn a Â£1,000 yearly passive income? appeared first on The Motley Fool UK.

Should you invest Â£1,000 in Greggs plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Greggs plc made the list?

See The Six Stocks

More reading

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs Plc. 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.