One of my goals is to eventually turn ISA investments into a reliable second income. Currently, my portfolio is in a growth phase, so I reinvest dividends and focus on profits and dividend growth. But one day I will change my strategy to maximize dividends and passive income.

An investor with £20,000 doesn’t start with a life-changing sum. However, with the potential for compounding and dividend growth, this single starter ISA could potentially become a portfolio capable of generating a passive income of £12,000 a year. So what’s the catch?

Well, it won’t happen overnight. But for investors who want to think long term, the numbers can be surprisingly compelling.

How to make a five-figure second income

Let’s start with a elementary example. Let’s say an investor puts £20,000 into a quality investing Stocks and Shares ISA FTSE100 and international dividend-paying stocks. If such a portfolio generates an average total return of 9% and all dividends are reinvested, the pot could grow significantly over time.

After 10 years it could be worth around £47,347. And after 25 years, that same investment could be worth around £172,462.

Now let’s assume that the investor moves towards a portfolio focused on earning passive income from dividends. In this example, we can assume that the portfolio has a rate of return of approximately 7%.

At this point, a portfolio worth £172,170 could potentially generate around £12,072 in dividend income per year. This is slightly above our target of 12,000. pounds.

Of course, real-world returns will vary and there are no guarantees. But this example shows the extraordinary impact that time and assembly can have on a relatively modest initial investment.

Here’s how to achieve your goal much faster

Even more surprising is the effect of regularly adding investments over time. Now let’s assume our investor adds £5,000 to his ISA every year. Notice how the magic of compounding can really enhance your profits over time.

As a result, you should be able to achieve a second income of £12,000 much faster than with a one-off investment. In this case, in about 10-15 years.

But what type of company could lend a hand generate these returns?

Can Aviva accelerate this journey?

One company that regularly attracts the attention of income investors is Aviva (LSE:AV.). These activities generate significant cash flows from a wide range of financial products and services.

What I find particularly attractive about Aviva is its combination of defensive features and income potential. Its insurance business helps generate relatively predictable profits over economic cycles. Meanwhile, growing wealth and retirement businesses offer exposure to long-term demographic trends.

Please note that Aviva is not immune to a prolonged economic downturn. An unexpected enhance in insurance claims could also reduce profitability and future dividend growth.

Aviva currently offers a dividend yield of 6.5%. That’s more than double the 3% offered by the FTSE 100. It also has a long history of both paying and increasing shareholder payouts.

And like Aviva, Footsie has many others that offer a powerful combination of capitalization and growing dividend income. And I’ll keep an eye on each of them.

Is it worth investing £5,000 in Aviva Plc now?

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Mark believes there are 6 standout stocks that investors should consider buying right now. Want to see if Aviva Plc is on the list?

Harshil Patel holds no position in any of the companies mentioned.