The exploit of ISA shares to buy dividend shares is a common way to configure passive income streams.

It can also be very lucrative.

For example, £ 20,000 can generate a four -digit monthly passive income FTSE 100 Actions. Here’s how.

Successful

Let’s start from scratch.

He gets the right ISA. Fees and costs can consume passive streams of income. So it pays for the investor carefully selection when making decisions, what shares and shares of ISA best meet their needs.

Then there is a straightforward arithmetic question, what investments can generate a monthly passive income of 1000 pounds.

It’s 12,000 pounds a year. On an investment worth $ 20,000, which suggests 60% of dividend profitability, which I think is completely unreal.

Reinvesting dividends every year in the long run – something known as elaborate – I think that the goal is possible to achieve. For example, imagine that the investor manages the average capacity of 7%. After 32 years, ISA should generate over 1000 pounds of passive income each month.

Sure, 32 years is some time. However, this is a long -term approach to investing, which in my opinion is understandable, taking into account the ambitious nature of the purpose of passive income.

Finding shares for purchase

Despite this, the theory is good and good-but or 7% of dividends is realistic, and at the same time stick to high-quality companies with blue-chips? After all, it is now about twice as high as the average FTSE 100 performance.

I think it is possible to achieve on today’s market, but as always, it is critical that the investor not only focuses on performance. It does not guarantee any dividend. So I think that it is critical to always look for brilliant companies with attractive campaigns, and only later to enlarge their crops.

An example of one such share, I think, investors should consider M & G (LSE: MNG). The FTSE 100 asset manager has recently increased the annual dividend to the action, in accordance with the policy of striving to maintain or augment the payment each year.

At 9.9% profitability, M&G even more lucrative for shareholders. In my opinion, the asset management market is huge and will probably remain this way.

The robust M&G brand in combination with the customer base in millions turned out to be a valuable formula when it comes to generating significant free cash flows that can support finance dividend.

The potential for generating cash in M&G is proven, but I see one of them that investors will draw more funds than they put on. M&G has been fighting this challenge in the last few years and I consider it a risk of future profits.

But I think there is a lot to like in the company – and certainly the potential of passive income with massive dividend efficiency.