Want to gain an extra £1,000 a month without having to do any work? The appeal of passive income is obvious!

Fortunately, not all passive income ideas are successful. In fact, while the term passive income may be newfangled, people have been earning it for centuries.

One senior approach that can still be very profitable is to invest your money in carefully selected blue chip stocks that pay dividends.

Why I like dividend stocks as a source of income

In my opinion, this approach has a lot to offer.

For starters, he’s really passive.

Instead of hoping that a recent petite business, such as a shipping site, will take off, this approach relies on halves of existing, successful companies. They have proven that they can generate surplus cash and utilize it to finance dividends.

There is also no specific amount of money required, so everyone can adapt the approach to their own financial situation.

How much income can dividend stocks generate?

Oh, did I mention it can be quite lucrative?

For example, imagine that someone today starts from nothing.

First they choose which Stocks and Shares ISA they will utilize (although a stock trading account or trading app could also work). They then deposit £500 each month and invest in dividend stocks.

Combining the value at 7% per year, after 16 years the portfolio should be worth approximately PLN 172,000. pounds.

At a dividend yield of 7% this would generate over £1,000 in passive income per monthon average.

What is a realistic goal?

My 7% compound annual growth rate may come not only from dividends but also from share price appreciation.

Prices can also fall and dividends are never guaranteed. So while this plan is basic, I think someone who takes it seriously will focus on building a diversified collection of high-quality stocks and hopefully not overpay for them.

What about a 7% profit? Nobody knows what will happen in the market in the next 16 years, but right now FTSE100 gives a much lower 2.9%.

Still, even in today’s market, with careful stock selection, I believe a 7% yield may be a realistic target.

Turn paper into money!

As an example, one stock that I think investors should consider for its passive income potential is a FTSE 100-listed paper and packaging company Worlds (LSE: MNDI).

At first glance, the efficiency of 6.9% is certainly striking.

However, there is a reason why profitability is high, even though Mondi has kept its dividend per share unchanged recently. Mondi’s share price has fallen 56% over the past five years, causing its profitability to enhance.

The decline in share prices reflects some of the existing risk. Packaging prices have fallen in recent years, hurting profitability. Mondi faces the risk of further decline in profit margins in its business.

In the long run, I expect the industry to better balance demand and supply, which will impact profit margins. Mondi is an established international operator with extensive capabilities and a immense customer base.

This isn’t some stimulating growth. However, from a passive income perspective, I like the continued potential of Mondi’s long-standing business.