The FTSE100 it finally broke 8,000 points in 2024. But it still seems like a good value to me.

The index includes some stocks with very low projected price-to-earnings (P/E) ratios, e.g International consolidated airlinesby less than five.

There are also some great dividend yields, such as: Phoenix Group Holdings at 10% i M&G at the level of 9.5%.

To get the highest passive income, you need to find the stocks that will give you the best returns in the coming years, right? Well, no, not necessarily.

Buy them all

What if we just buy them all? What I mean is that we will put our money into the so-called FTSE100 index tracker. This is a fund that simply follows the index, either through clever computer work or by purchasing shares of each index.

Over the long term, the FTSE 100 Index generates an average annual total return of nearly 7% per year.

So, by investing regularly in my ISA to buy shares in tracker funds, how quickly can I build up to £1,000 a month?

16 years

To get the most, I would have to reinvest my dividends (or buy a tracker that does it automatically for me).

And if I can invest £500 a month, I will achieve my goal within 16 years. At least I could reach a pot of over £173,000, which would be enough for a 7% return to pay the money.

Now complete returns can be arduous. Many FTSE 100 stocks pay little or no dividends. So this would mean selling some shares every year to actually get 7%.

But what could I do with just the dividends?

Only dividends

I will choose an insurer Aviva (LSE: AV.) as my single share pick. I wouldn’t invest all my money in one stock. No, diversification is necessary to reduce risk.

But the current forecast dividend is almost 7%, so it seems like a good choice. Oh, and this is the one I’ve already chosen to provide myself with passive income.

So, with Aviva’s dividend reinvestment, I could reach my target of £1,000 a month within 16 years. This is with a monthly investment of £500.

Less money?

If I could only invest £250 a month, it would take me twice as long, wouldn’t it? Actually no, I could get there in 24 years.

This is how folding works. Cash invested in the early years and left to accumulate over the long term can be worth much more than cash in later years.

In both cases it assumes that Aviva will continue to pay the same dividend. And the share price doesn’t change, so I always get the same number of recent shares from each dividend payment.

Dividend target

In fact, this is not likely. However, looking at the dividends on offer today, I am convinced of one thing.

If I set myself a target of earning an average yield of 7% per annum from the highest dividend FTSE 100 stocks, I think I have a good chance of achieving it.