The modern 2026/27 Stocks and Shares ISA season is upon us and investors have a narrow window to start building £10,000 a year of passive income.

This urgency is not about closing doors, but about time: the sooner money is put into circulation in a Stocks and Shares ISA, the longer it has to accumulate and grow towards achieving its goal.

What does it really take to earn £10,000 a year?

An annual income of £10,000 would typically require you to have a stocks and shares ISA worth between £150,000 and £200,000, depending on the dividend rate achieved.

For example, a yield of 5% would require a portfolio of £200,000, while a more ambitious yield of 7% would reduce this to around £143,000. However, higher returns often come with greater risk, so finding the right balance is key.

Using a more sustainable 6% annual rate of return as a planning assumption, the next question is how long it might take to build an ISA of this size.

The chart below illustrates how consistent monthly investments can compound over time at this rate.

What he emphasizes is plain. Even with a relatively good rate of return, a lower level of investment may still not be enough for the portfolio needed to generate £10,000 a year. This means contribution, time, AND investment choices matter.

Chart generated by the author

Energy game

One stock I think investors should consider is BP (LSE: BP.). The oil major currently offers a dividend yield of 4.1%, and recent forceful share price performance reflects the scale of cash generated by the overall business.

While earnings may be cyclical, BP has consistently generated forceful free cash flow in recent years. This supported a growing dividend as well as additional returns to shareholders through buybacks.

This combination of income and cash generation is exactly what I’m looking for in today’s volatile markets.

The main risk, however, is that returns will remain tied to energy prices and capital allocation decisions. If conditions deteriorate or capital spending increases too quickly, shareholder returns could come under pressure.

Portfolio stabilization

To balance this, I suggest considering a completely different type of energy exposure National Network (LSE: NG.). The company currently offers a dividend yield of around 4%, helped by the recent share price decline that has boosted income for modern investors.

Unlike BP, the company is not driven by commodity prices. Instead, it operates regulated electricity and gas transmission networks, which means returns are largely set based on frameworks agreed with regulators. This gives the company much better insight into future cash flows.

The main attraction here isn’t today’s high yields, but more the steady, inflation-linked growth of dividends over time. This makes it a useful stabilizer within an income-oriented ISA, particularly when combined with more cyclical holdings such as BP.

Risks remain – including regulatory changes, higher interest rates and capital requirements associated with maintaining and modernizing network infrastructure. However, the underlying income stream is usually much more predictable than most capital investments.

Conclusion

For me, building an income of £10,000 a year in a Stocks and Shares ISA is about combining different types of dividend payers and keeping your investment through market cycles. BP and National Grid are just two examples of how I approach this balance. But these aren’t the only possibilities I’m currently looking at.