How does a passive income of £3,000 a month sound? Pretty good, right? Although there are some risks involved, I am convinced that the best way to achieve this income is to buy dividend shares in a Stocks and Shares ISA.

It allows investors to tap into the incredible wealth-creating power of the stock market. With income tax protection, every penny of your income is protected from HMRC scrutiny.

But how large would your ISA have to be to generate a life-changing income of £3,000? pounds? It may not be as large as you think.

Please note that tax treatment depends on each client’s individual situation and may change in the future. The content of this article is for informational purposes only. It is not intended to be and does not constitute any form of tax advice.

Targeting passive income

The answer to this question is straightforward: dividend rate. A higher rate of return means more income for every pound invested.

Long-term average profitability for FTSE100 the index ranges from 3% to 4%. The UK stock market is full of top stocks with yields well above this level. In many of them, the dividend rate is twice as high and amounts to 8% or more.

At this rate of return, someone targeting a passive income of £36,000 a year (or £3,000 a month) would need £450,000 in an ISA.

Dividend yield 11.1%.

However, investing in higher yielding shares with an index ISA involves risk. Providing investors with the highest levels of dividends may be unsustainable. Large cash withdrawals can also be a signal that a company is in difficulty.

Dividend seekers, however, can effectively manage this risk by doing thorough research and building a diversified portfolio. An ISA of 15-20 or more shares can reduce the impact on overall profits of a single company pausing or cutting dividends.

Renewable Infrastructure Group (LSE:TRIG) dividend stocks I really enjoy building passive income. It’s actually the one I keep in my own Stocks and Shares ISA. With a forward dividend yield of 11.1%, it could be one of the best dividend providers in a portfolio generating an average yield of 8%.

TRIG (abbreviated) is one of FTSE250the best dividend stocks to consider in my opinion. Since the company listed on the London Stock Exchange in 2013, dividends have increased almost every year.

Sold Out Revenue Star

But why is the dividend yield so high today? Investor confidence in the company is low, and its share price has plummeted in 2025. Poor wind power generation, rising costs of fresh projects in the industry and higher-than-usual interest rates have caused its share price to fall.

However, I am positive that trust will boost dramatically over time, even if threats persist. The push for green energy is progressing at a breakneck pace, and TRIG – which operates a gigantic portfolio of wind and solar farms across Europe – is well placed to capitalize on it.

In the meantime, the steady flow of cash the company enjoys should facilitate it continue to pay huge dividends while the share price takes time to recover. It’s currently trading at a 37% discount to net asset value, so it’s worth a closer look for bargain-loving dividend investors.

Conclusion

In my opinion, a £450,000 ISA is a realistic target for sensible and patient investors. Assuming an average annual return of 9%, someone could achieve this magic number by investing £402 a month for 25 years.