There is one way British American Tobacco (LSE: Bats) looks perfect for developing how much we can earn on investments on the stock exchange in the second income. Currently offers a forecast by 6.9% dividend. And this is on average largely FTSE 100 Annual return from the last 20 years.

So we can exploit it as a potential representative of average phrases. At the same time, we can see how we can assess individual income reserves.

Let’s take care of it. A single ISA benefit worth 20,000 GBP invested in shares returning 6.9% per year, with reinvested dividends, can enhance to 76,000 GBP in 20 years. And the same profitability can then generate an annual second income of $ 5,200.

So he answered the question, just put money in tobacco in British weight gain and wait. Task … Oh, wait a minute, we really have to look a bit deeper.

More to consider

Dividends are never guaranteed. There is no single answer to the entire response to long -term investments. Not everyone has the same amount. In fact, most of us will invest less than 20,000 pounds a year. But we can be able to invest regularly than one lump sum.

Not everyone will want to buy the same shares. I think that it is worth considering tobacco from British American tobacco for those who want to build a passive pot, mind.

Has achievements of dividend growth, and the forecasts show that he continues. Earnings did not enhance so smoothly, but the trend is nicely launched. And they should cover the dividend between 1.3 and 1.4 times in the next three years, if the forecasts turn out well.

Tobacco threat

A threatened end of a tobacco request is a clear danger. But I’m not sure if this will happen in the near future. We had an update from the company on June 3 before the first half of July 31.

The company expects “Acceleration H2 new category revenues“These are up-to-date generation products that do not require burning and smoking. The more this segment grows, the more I see that it softens the risk. But the risk will not disappear.

Oh, I’m probably overlooking the worst risk of all. Do we really want to put all our eggs in one basket? This may be a request for trouble. And that’s why I say that we should always direct diversification in our ISA investments.

The same, but different

We can achieve the same overall annual return from a varied portfolio, although there will be ups and downs along the way. And we can say, be able to invest 10,000 pounds each year. We could then talk about really grave money, with the possibility of building 420,000 pounds in 20 years. For this reason 6.9%? Cool 29,000 pounds a year.

Here’s the last thought. Do this for 30 years with the same overall return and we can achieve 960,000 pounds. An additional 10 years can be worth more than the first 20. We can end with 66,000 pounds a year income.