Owning dividend stocks can be a great way to earn a second income. AND FTSE100 offers some great options for investors to consider.

Shares in BT Group (LSE:BT.A) rose 25% this week after the company announced significant restructuring plans. However, with a dividend yield of 5.76%, this stock is still worth considering.

Second income of £10,000

BT currently pays a dividend of 8p per share. This means that to get a second income of £10,000 you would need to buy 125,000 shares.

At today’s prices this would require an outlay of around £168,000. That’s a lot, but there are several reasons why investors are bullish about the company’s stock.

Firstly, it can be invested over time – £168,000 is £466 a month for 30 years. Another is that reinvestment of dividends received along the way may contribute to this.

The most essential reason, however, is that BT can grow its dividend over time. And if the up-to-date CEO’s plan works, the raise could be dramatic.

Cost reduction

Allison Kirkby has led BT since February and its shares have risen 30% since then. The up-to-date CEO believes that the prospects for the company are good.

BT operates in a capital-intensive industry. The cost of building the UK’s fiber network through subsidiary Openreach has hit its profits.

However, it seems that the peak of the investment cycle has already passed. The company has now entered a cost-cutting phase, with cuts worth £3 billion announced earlier this week.

This has a positive impact on BT’s profits and, more importantly, its cash flow. Free cash flow is expected to double over the next five years, which could translate into a much higher dividend.

Skepticism

Not everyone buys it, however. The inflationary environment is tough for capital-intensive businesses, and BT’s share price has fallen 34% in the last five years.

However, this is probably not the company’s biggest problem. Despite significant financial needs, BT faces significant competition.

The number of customers using Openreach broadband plans is falling. The company is also losing share in the broadband market.

To offset this, BT will have to escalate prices for customers. However, whether this can be done without increasing the pace of customer migration is another question.

Time to buy?

If BT manages to double its free cash flow over the next five years, the stock would look like a bargain. In any case, the 5.76% dividend yield is attractive even with interest rates at 5.25%.

Of course, the stock was more attractive when it was 20% cheaper a week ago. However, when cost reductions start to appear, it is worth paying attention.