Some passive income plans seem complicated to me. They are not really passive and offer, in my opinion, a fairly low probability of generating significant income.

Compare this to a very ancient passive income plan that people have been using for centuries and that is still widespread: investing money in proven companies that are likely to pay dividends in the future.

It takes some effort to decide what stocks to own and then buy them. But in the long run it seems passive to me.

When it comes to the likelihood of generating significant income, success depends largely on the amount invested, as well as the dividend yield obtained.

Get started now and watch your income flow

Some stocks never pay dividends, while others pay dividends irregularly (and there is no guarantee that the dividend will be sustainable). Some pay quarterly, others even monthly.

So if someone were to start now, it’s likely they could start earning passive income by the end of this summer.

A useful first step would be to set up a shares trading account, Stocks and Shares ISA or trading app.

Then someone can deposit money and decide which shares to buy. Regardless of the size of your portfolio, diversification across stocks is an vital risk management strategy.

The income depends on the size of the investment and profitability

As I said above, dividends can fluctuate. They can be canceled or cut, but also increased. Nvidia it has increased its dividend phenomenally this year 2400%. This is special though.

Performance matters when calculating likely income.

The passive income you receive each year is basically the amount invested multiplied by the profit. For example 10 thousand pounds at a 3% rate of return (current FTSE100 on average) you should earn around £300 in passive income per year.

Here’s an income share that I think is worth considering

Although this is the average for the FTSE 100, I believe it is possible to achieve higher returns by sticking to proven blue chip companies.

For example, British-American tobacco (LSE: BATS) is a FTSE 100 company that has increased its dividend per share every year for decades. Currently, the yield is 5.3% and it pays a dividend quarterly. The next portion is due next month, and investors who hold shares until the dividend is paid next Friday (July 10) should be in line to receive that amount.

Can the dividend continue to grow?

Declining demand for cigarettes poses a risk to the company’s revenues and profits Rothmans producer. Some investors may also be discouraged by ethical considerations related to investing in a tobacco company.

However, Britons have been struggling for decades with the decline in popularity of cigarettes. Yet it still generates huge cash revenues.

It intends to enhance its payout per share annually. The company recently announced cost-cutting plans that could facilitate enhance profitability.

With a powerful portfolio of premium brands, extensive global reach and proven cash generating capabilities, British American Tobacco has a lot to offer from a passive income perspective.

Which profitable companies do we like better right now than British American Tobacco Plc?

One of our Share Advisor analysts has just published a recent stock report that we believe is a must-read for any investor looking to generate potential income.

And the best thing is that you can check it yourself right now completely free of charge!

No jargon. There is no demanding sell. Just take a close look at the revenue share we think is worth your time.

Christopher Ruane does not hold any position in the companies mentioned.