In my opinion, investing in dividend stocks can be a path to unlocking a passive income stream.

Here’s how I would do it if I was starting from scratch today.

Step by step

Firstly, I would open a Stocks and Shares ISA as my preferred investment vehicle. This is a no-brainer for me as I have to pay less tax on dividends and also around £20k per year.

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The next step is to choose the best dividend stocks. The aspects I look for include industry position, earnings and payment history, and balance sheet, which can tell me about the financial health of the company as well as its future prospects. I would also diversify my stock portfolio to support mitigate risk.

Risks I’m afraid of

Dividends are never guaranteed, which is concerning. Plus, any stock I would buy comes with its own risks that could hurt results and payouts.

Ultimately, I’m looking for a certain level of return to choose a specific pool to draw from. If I make less, I’ll be left with less money to draw from and enjoy.

Counting numbers

Let’s say I have £11k to start my journey. I would also exploit £200 a month from my salary to top it up.

My plan is to invest for 25 years and aim for an 8% return. Ultimately, I would be left with £270,947. If I took 6% per year and split that into weekly payments, I would be left with £312 per week.

One stock I would buy in this process

I would catch myself TP ICAP (LSE:TCAP) is cheerful to share its shares to support me achieve my goals.

The brokerage, data and analytics business has a broad global reach and serves some of the world’s largest sectors, including energy, financial services and commodities.

From a fundamental perspective, there is much to be pleased about. The dividend yield of over 6% is extremely attractive. Furthermore, the stock seems to me to be good value for money with a price-to-earnings ratio close to six.

Moving on, recent results have been positive, with the half-year report published last month. The update showed an augment in group revenue and EBITDA compared to the same period last year. Furthermore, forecasts indicate that this could augment significantly in the coming years. However, I understand that forecasts do not always come true.

With one eye on the future, TP ICAP’s data analytics division could be the key to explosive growth in the future, as well as sustainable returns. With its current market presence and the potential implications of artificial intelligence (AI) to augment its products, I will be watching this space closely.

However, from a bearish perspective, the company’s brokerage business could become obsolete quite quickly. This is due to the natural change in technology and work practices. Executing trades over the phone is becoming a thing of the past. Profits and returns could be affected here.

Overall, TP ICAP can offer me good prospects for regular payments, which will support me create additional income.