Have you ever wondered if stock dividends could be a viable way to build a second income?

This is how some people supplement their earnings. By investing in blue chip dividend stocks, they want to earn extra money without having to work.

Dividends may accumulate

This approach can be profitable.

Currently the flagship FTSE100 the index of leading British shares has a yield of 3.2%. This means that for every £100 invested, the investor will hope to earn £3.20 a year in dividends.

This may not seem like much.

But it depends on how much is invested and at what rate of return. Although the average for the FTSE 100 is 3.2%, I think 6% is a realistic target in today’s market, even when sticking to a carefully selected basket of proven top companies.

Imagine someone invests £1,000 every month and grows that amount by 6%. This compound growth can come from dividends or share price increases, although share price declines can impact the rate achieved.

At a total of 6%, after 20 years the portfolio should be worth slightly more 453 thousand pounds.

At a yield of 6% this is enough to generate a second income of £523 per week on average.

Getting the right approach

Could it actually be as straightforward as it seems?

I think this approach can be quite straightforward. However, this requires discipline, and the investor must also be careful when choosing which stocks to buy.

After all, dividends are never guaranteed. Even the best company can encounter unforeseen difficulties.

It’s also imperative to have a practical way to buy and hold shares, such as a shares trading account, Stocks and Shares ISA or a trading app.

Chasing dividend stocks

I said above. I believe a 6% yield is realistic as an average of the yields of the various stocks within the portfolio. Not all of them would necessarily give 6%.

One stock I think investors should consider is a high-yield financial services company listed on the FTSE 100 Feniks Group (LSE:PHNX).

Phoenix itself may not be widely known outside financial circles, but some of its operating companies, such as Standard Life, certainly are.

In fact, Phoenix has millions of customers. The long-term savings and pensions business is a huge player in this part of the market, which is characterized by high and resilient demand.

I hope it stays that way for many years, even decades.

With its vast customer base, deep operational expertise and powerful brands, I think the company can continue to generate sturdy cash flow.

It already gives 7.9%. It also intends to escalate its dividend per share each year, although, as with any company, there is never a guarantee that the dividend will be sustainable.

What factors could potentially prevent continued dividend growth (or even maintenance)?

One risk I see is a significant market downturn that will hurt the value of some of Phoenix’s assets. This could force the company to write down the value of its mortgage portfolio, which would eat into profits.

As a long-term investor, I continue to like the company’s prospects and consider it a stock that investors should consider.