In the second phase, the FTSE 100 currently has an average dividend yield of 3.3%. But in this case, I think you can realistically aim higher.<\/p>\n
In my view, a 7% yield might be sensible. And that\u2019s enough to earn \u00a39,287 a year in dividend income from a \u00a3132,676 portfolio.<\/p>\n
With an idea of what you\u2019re aiming for in hand, it\u2019s time to start thinking about how to get there. Specifically, what shares to consider buying.<\/p>\n
Step 2: grow the initial capital <\/p>\n
The first phase involves turning that \u00a310,000 into as much as possible. And that means looking for companies that can grow.<\/p>\n
I think Halma<\/strong> (LSE:HLMA) is one of the FTSE 100\u2019s finest in this regard. The firm retains the vast majority of its cash and reinvests it for growth.<\/p>\n Acquisitions are a big part of the company\u2019s growth strategy. And this inevitably brings a risk of paying too much in a deal.<\/p>\n Halma\u2019s returns on equity are above 15%, which is strong. Most importantly, though, they\u2019ve consistently been above this level.<\/p>\n Source: Fiscal.ai<\/p>\n That shows the company isn\u2019t just growing revenues at any cost. It\u2019s doing so with smart investments that generate good returns.<\/p>\n It doesn\u2019t jump out as a cheap stock. But it\u2019s certainly the kind of firm investors trying to build wealth should be looking at.<\/p>\n Step 3: income investing <\/p>\n The second phase involves converting the accumulated capital into passive income. And there are a few ways of doing this.<\/p>\n High yields can be risky. But I think there are stocks with dividend yields above 7% that are likely to be worth considering 30 years from now.<\/p>\n In general, the real estate investment trust (REIT) sector is one that I think is interesting. Especially from a passive income perspective. These are companies that own and lease various different properties. And they distribute 90% of their rental income as dividends to shareholders.<\/p>\n In other words, they\u2019re the opposite of companies like Halma. They don\u2019t retain their cash and this limits growth opportunities.<\/p>\n As a result, however, they often have much higher dividend yields. And this is where I think investors targeting a 7% yield should look.<\/p>\n 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.<\/p>\n Three steps <\/p>\n Turning excess cash into a second income involves two phases. The first is trying to grow the initial capital as much as possible.<\/p>\n The second involves looking for dividend opportunities. But before either of these, the first step is to figure out what might be achievable.<\/p>\n This will vary as different investors have different timeframes. But with 30 years, I think turning \u00a310,000 into a \u00a39,287 second income is a realistic possibility.<\/p>\n The post \u00a310,000 in savings? Here\u2019s a 3-step plan to target a \u00a39,287 second income<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/strong><\/p>\n Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma 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.<\/a><\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"How can you turn your excess savings into a second income? Investing in the stock market is a…\n","protected":false},"author":2,"featured_media":928205,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3093],"tags":[51,69904,474,1880,259894,259893,19536,2499,16,15],"class_list":["post-928204","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-dividend-yields","tag-finance","tag-ftse-100","tag-initial-capital","tag-investing-in-the-stock-market","tag-passive-income","tag-personal-finance","tag-uk","tag-united-kingdom"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116492831873648818","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/928204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=928204"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/928204\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/928205"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=928204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=928204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=928204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/04\/d1a02f13c3a2b254aa9396346269f712.jpeg\")
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