One reason many people do not put their dream into action is a perception that it can take a lot of money to invest in the stock market.

In reality, though, as summer approaches and many people are eyeing the idea of weekend getaways that could cost a couple of hundred pounds or more, that same amount could be put to use as a way for someone to start buying shares.

Here’s what it takes

The money needs to be put somewhere where it can be practically put to that use. A share-dealing account or Stocks and Shares ISA should work for that.

A few hundred pounds is enough to diversify across multiple shares, a simple but important risk management strategy.

Before venturing into the stock market, someone should understand at least some key elements of how it works. A good business is not necessarily the same as a good investment, so learning how to think and act like a good investor is important

A small start, but a start

It is also important to be realistic about expectations.

When many people decide to start investing, they understandably focus on the excitement of what could happen.

In practice, though, what could happen and what actually ends up happening are not necessarily the same thing. It is important to avoid being unrealistic partly because that can lead people to take poorly considered risks.

If someone starts buying shares, learns along the way, and gains confidence to invest more over time, I think they could do better than if they get into something they do not properly understand and act rashly.

Here’s a share to think about

As an example of a share I think someone who wants to start investing should consider, I can point to ITV (LSE: ITV).

Now, I said above that investors always need to be mindful of risks and that is true here.

ITV’s operating landscape has changed dramatically from the days when families all gathered around the goggle box in their living room. A far broader spectrum of entertainment options is now available, fragmenting the audience.

That poses a risk to ITV’s revenues and profits. But it also gives the FTSE 250 company some opportunities

The company has expanded its own digital offering substantially in recent years. It also has a studio rental and production business that means it can actually benefit from other content producers making shows.

The ITV share price is in pennies, 35% below where it stood five years ago.

But I think that undervalues the long-term prospects for the company. In addition to that, ITV offers a dividend yield of 6.1%. That could potentially mean ongoing passive income stream for shareholders, if the dividend is maintained.

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To achieve this, I’m trying to build a stock portfolio that contains high-quality dividend stocks.

According to the ONS, the current median salary in the UK for full-time employees is £39,039. Therefore, it makes sense to create a strategy that targets earning this income annually.

Let’s see how it’s possible for an investor to replace their job with a passive income machine.  

The passive income target

Now, let’s assume an investor was targeting a dividend yield of 5% in a diversified portfolio. If aiming to replace the median UK salary, that portfolio would need to be valued at £780,780.

However, I’m not sure many of you reading this have that much spare change to hand.

But I’m here to tell you some good news… you don’t need that much to start. An investor could instead aim to achieve this over time.

With a much more modest amount of £20,000 to start with (which is still a large sum of spare cash) and a small contribution of £125 a month, an investor could make £780,780 within 32 years.

This is assuming that both dividends and shares in the portfolio rise by 5% a year, and that the dividends are reinvested.

I appreciate that some of the additional income generated from the portfolio will be eroded away by inflation over that time. Investors should also note that dividends aren’t guaranteed.

But by investing in a stocks and shares ISA, the dividends earned in the portfolio would be tax-free income. Whereas, of course, you have to pay tax on your employment income.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Let’s now look at a UK share that could help an investor target this.

A juicy dividend yield!

ITV (LSE:ITV) shares currently sport a lovely dividend yield of 6.2%. This would be ideal for investors to consider buying for their portfolio, as it’s above the 5% target used in my example above.

The broadcaster faces some serious issues. Most notable is the competition it faces from streaming platforms. The way people are consuming TV is changing. More and more are watching platforms such as Netflix, instead of traditional broadcasters.

Because of this pessimism, the firm’s shares have struggled, pushing their valuation into bargain territory. Right now, it sports a forward price-to-earnings (P/E) ratio of 9.

However, while I acknowledge this risk, I think it’s a bit overblown. The company remains a staple in many households.

Furthermore, its own streaming platform, ITVX, has been quietly impressing in the streaming world. In 2025, total streaming hours increased 16% to 2.3bn. Monthly active users also increased 12% to 16.5m.

While ITV does face serious issues, this provides reasons to be optimistic for the company’s future.

Combined with a high dividend yield and cheap valuation, I think investors should consider buying ITV shares today.

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Looking around, I can see a few of potential opportunities to consider in the UK market.

Turnaround candidate?

Broadcaster ITV (LSE: ITV) is arguably one example. Based on analyst projections, its shares currently change hands at a price-to-earnings (P/E) ratio of just under 10.

The trouble is that the performance of the share price over the long term leaves a lot to be desired. Anyone picking up the stock five years ago will have endured a 33% fall. Sure, dividends received over this period would have soothed the paper loss to some extent. But this is akin to treading water. It’s not a recipe for getting rich.

Can long-standing CEO Carolyn Mccall and her team turn things around? The sheer amount of competition ITV faces along with the structural decline in TV advertising suggests it will be tough. But more growth in its Studios division would certainly do no harm. I also wouldn’t rule out a takeover bid or two.

In the meantime, the stock offers a forecast yield of 6.3%.

Huge dividend yield

Price comparison websites provider MONY Group (LSE: MONY) is a second mid-cap value stock that catches the eye and may be worth further research. Like the broadcaster, its share price has been going down for some time now. We’re talking about a 14% fall in the last 12 months.

A lot of this seems to be fuelled by concerns over the £900m cap’s ability to grow. Yes, revenue is ticking up but this is not the sort of momentum that’s going to get investors busting a gut to buy. The large number of share sales by directors in March doesn’t bode well either.

All that said, MONY trades on a P/E of nine. That looks remarkably cheap considering the above-average margins it consistently posts. The launch of a new MoneySuperMarket Chat GPT app also shows how it’s leveraging artificial intelligence (AI) to enhance services for customers.

The passive income is worth mentioning too. At a chunky 7.6%, the forecast yield is over double that of the FTSE 250.

How cheap?

By contrast to the previous two stocks, JD Sports Fashion (LSE: JD) pays relatively little in dividends. So there won’t be much in the way of compensation for buyers if the shares keep falling in value. They’re already down nearly 20% in 2026 alone!

The outlook isn’t great either. With inflation on the rise due to the conflict between Iran and the US, it’s likely that shoppers will be looking to cut back (again) on discretionary purchases.

But I still think there’s a lot to like. JD’s ongoing growth strategy in the US is progressing well and now accounts for a significant amount of total revenue. The forthcoming footfball World Cup could also provide a boost to earnings (even during tough times) thanks to long-standing partnerships with key brands such as Nike and Adidas.

To cap things off, it’s also the cheapest of the three. The P/E here’s a little less than six! If/when sentiment improves, those brave enough to think about investing now could be rewarded.

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Several things, in my view. As I explain below, with the right approach, an ISA can end up providing some powerful passive income streams.

Why bother with an ISA?

Some passive income ideas are pretty whacky. Some are not passive at all, but involve a fair bit of work.

By contrast, investing in the shares of proven blue-chip companies that pay dividends from spare cash they generate can potentially provide income that is genuinely passive. I say “potentially” because dividends are never guaranteed. But by spreading the ISA across a range of different, carefully-chosen shares, I think that risk can be managed.

Still, that approach does not require an ISA. A simple share-dealing account or trading app would suffice. However, an advantage of a Stocks and Shares ISA is that dividends can pile up in it free of tax.

By taking a long-term approach, those can be reinvested (compounded) so that dividends can end up generating more dividends over time.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Five-figure passive income potential

As an example of how lucrative this could be, say that someone compounds their Stocks and Shares ISA at 7% annually. After 35 years, it ought to be big enough that a 7% dividend yield would equate to £14,947 a year of passive income.

That raises two questions though: why wait so long and is a 7% target realistic?

A long-term approach can pay rewards

Waiting 35 years gives compounding enough time to make a real financial impact. That is why the passive income is so impressive.

But it is not necessary to wait 35 years. The same approach could work on a much shorter (or longer) timeframe. However, the income earned would be correspondingly different, based on the timeframe.

Hunting for high-quality shares to buy

What about a 7% target compound annual growth rate and, later, dividend yield? (By the way, the difference is that the compound annual growth rate includes not only dividends but also any capital gain, less any capital losses). I see 7% as realistic.

One share I think investors should consider is ITV (LSE: ITV). It aims to pay out at least 5p per share in dividends annually. At the moment, the share sells for pennies, so its dividend yield is 6.1%. That means for every £100 invested, an investor will hopefully earn £6.10 annually in dividends.

On top of the income opportunity, I also see some potential for the ITV share price to grow over time. That would be a change from what we have seen in recent years. Over the past five years, the share has lost 31% of its value.

Such a fall reflects a risk that remains of concern: the impact of growing digital rivals and changing media consumption trends on a legacy broadcaster.

I recognise that as a risk. But ITV’s legacy business remains a strong foundation for its business, even if it is set to decline over time.

The company has been developing its digital business too. It also has a sizeable production business providing studio space and expertise. To me, the current share price undervalues the long-term value of that combination.

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The best way I have found of making money while I sleep is through dividends paid by shares. The only real effort on my part is to choose good stocks initially and then to monitor their progress periodically.

One share that caught my eye recently is terrestrial and digital media giant ITV (LSE: ITV).

Why this one?

For a start, the firm delivers a current dividend yield of 6.5% — way higher than the FTSE 100’s 3.1% or the FTSE 250’s 3.4%.

Better still is that analysts forecast this will rise to 7% by 2028.

So, investors considering a £20,000 holding would make £20,193 in dividends after 10 years and £142,330 after 30 years. This period is commonly seen as a standard investment cycle for long-term investors.

The numbers assume the same 7% forecast yield as an average, although this can go up and down. It also factors in the dividends being reinvested back into the stock to capture the turbocharging effect of ‘dividend compounding’. It is like allowing interest to grow in a savings account.

At the end of 30 years, the holding would be worth £162,330 (including the original £20,000 investment). And this would pay £11,363 every year in income from dividends.

A share price bonus too?

On top of that potential income stream, I think there could be share price profits too. This is because the current price of ITV is far below the ‘fair value’ of the stock. And over time, asset prices (including shares) tend to converge to this true value.

Discounted cash flow (DCF) analysis enables investors to pinpoint the price at which any stock should trade. It does this by projecting future cash flows for the underlying business and ‘discounting’ them back to today.

Some analysts’ DCF modelling is more bearish than mine, depending on the data used. However, based on my DCF assumptions — including an 8.2% discount rate — Vodafone shares are 27% undervalued at their current 77p price.

This implies a ‘fair value’ of around £1.05.

Given the gap here to its current price, this suggests a potentially terrific buying opportunity to consider today if those DCF assumptions hold.

My investment view

A risk here, in my view, is the sub-£1 share price, which adds price volatility to the value proposition. Aged over 50, I am in the latter part of my 30-year investment cycle and am looking to minimise risk. Another risk is the intense competition in its sector that may squeeze its margins.

However, for those younger than I or with less risk aversion, I think ITV looks a strong passive income play. It is starting from a high dividend yield base, and this is projected to rise to the key 7% level.

Why is this key for me? Because it effectively offers compensation for taking the additional risk in share investment over no risk at all. And the ‘risk-free rate’ (the 10-year UK gilt yield) is currently 4.8%.

Meanwhile, other high-yielding, deeply discounted shares have caught my eye in the last few days.

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Let’s have a look at what that could mean for someone who is currently 35, has an empty ISA (or no ISA at all) and can spare £15 a day to put into one.

Keeping things simple

In this illustration, I will presume a 5% ‘dividend yield‘. Yield is what you earn from the shares in your ISA annually, expressed as a percentage of what they cost.

There can be a temptation – an understandable one, I feel – to plump for high-yielding shares. But as dividends are never guaranteed, and an unusually high yield can be a red flag that investors fear a cut.

That can happen even with low-yielding shares though, so in every case it is always important to look at the quality of a business. How sustainable does its dividend look, based on its likely future free cash flows?

Five percent is well above the FTSE 100 yield (currently 3.1%), but I do see it as realistic while sticking to proven blue-chip firms.

In my example I am presuming a 5% yield. Bear in mind that, in reality, dealing fees, commissions and other charges can eat into an ISA. So it makes good sense to compare some of the many available options when choosing one.

Income streams can grow over time

Putting £15 a day (£5,475 a year) into a Stocks and Shares ISA from 35 onwards, here are the likely passive income streams based on that 5% target yield.

At 45 – £2,737 a year, at 55 £5,475. a year and by 65, an annual passive income of £8,212.

Earning more income for the same contribution

It would be possible ultimately to earn bigger passive income streams doing exactly the same thing but with one change – initially reinvesting the dividends instead of taking them as passive income.

That is known as compounding. It can be a powerful force multiplier. If someone did that and started drawing the passive income at 45, it would be £3,443 at that point (and ought to keep growing even as they stop compounding, thanks to ongoing contributions).

Waiting until 55 should mean annual passive income of £9,051. For someone patient enough to wait until 65 to begin drawing the income, it should be a yearly total of £18,187.

Every investor’s different

Compounding might not be for everyone. Some investors are keen to start earning passive income immediately!

Either way, one share I think is worth considering for its income potential is broadcaster ITV (LSE: ITV). It aims to maintain its annual dividend per share at least as its current level. It currently has a juicy yield of 6.6%.

A key risk here is declining advertising revenue. In weak economic periods, advertisers tend to spend less. Digital proliferation is an ongoing risk to ITV’s ad revenue as well, due to its terrestrial footprint.

But ITV has been growing its digital offer. It has lots of content and advertiser relationships that can help. The company also has a large studios and production business, generating sizeable non-advertising related revenue streams.

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Inside a Stocks and Shares ISA, this income would also be tax-free. So does this make ITV a no-brainer dividend share for my portfolio today? Let’s tune in and find out.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Consistent profits

Looking back, broadcaster and content producer ITV hasn’t been a great investment. It’s down roughly 38% in five years and almost 68% across a decade.

By contrast, Netflix‘s share price has surged around 86% and 853% over the same periods.

However, ITV’s share price has been flat since April 2022. And the dividend’s remained consistent, paying out 5p per share for four consecutive years.

While there’s no guarantee that run will continue, City analysts do expect the 5p dividend to be maintained this year and next. So while the ITV business isn’t growing much (it’s considered an ‘ex-growth stock’), it does consistently produce profits that tend to support regular dividends.

One unit could be sold

ITV said last month that it was still “actively engaged” in talks to sell its Media and Entertainment (M&E) division to Sky. That’s the broadcasting side made up of linear channels (ITV1, ITV2, etc) and streaming platform ITVX.

Reports suggest the unit could be sold for £1.6bn. If so, there could be a chunky special dividend paid to shareholders upon completion.

And if M&E is sold off, it would leave just the ITV Studios. This business creates, produces, and distributes TV shows globally for the likes of Netflix, Disney+, and Amazon, as well as ITV. 

Hit content includes Love Island, I’m a Celebrity…, Rivals, and Line of Duty. The Love Island franchise is now sold in 28 markets, and Love Island USA was the most watched streaming TV original season of 2025 across the pond.

Studios revenue rose 5% last year to £2.13bn, while adjusted EBITDA was £297m, generating a solid 13.9% margin. And the unit acquired the UK’s Moonage Pictures, which produces The Gentlemen for Netflix and Suspicious Minds for Disney+.

Management expects solid Studios revenue growth this year too.

Studios is interesting

However, if the broadcasting unit is sold, will the dividend yield still be high moving forward? I doubt it. After all, Studios is a growth business and these don’t tend to pay out high dividends. It will likely want to keep cash to snap up smaller production labels and retain talent to make scripted new dramas to licence to the big streamers.

Therefore, I might not be able to rely on the stock’s 6.5% yield.

On the flip side, the market might favourably re-value the remaining pure-play content business. It has diversified revenue streams, with 350 customers worldwide, and a low-risk production model where it only makes programmes once they’ve been commissioned.

By contrast, broadcasting can suffer from very lumpy ad revenue. This is the risk with ITV.

On reflection, I find the Studios business interesting, but not for income. It could be cheap from a sum-of-the-parts valuation perspective. Yet there’s ongoing uncertainty regarding M&E and the price it could be sold for. So ITV isn’t a stock I’m interested in buying right now.

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But in reality, there are plenty of such ideas that are firmly grounded in reality. One is investing into companies that will hopefully pay their shareholders dividends.

Here I explain how, by doing that today with £20k, someone could target hundreds of pounds in passive income each month in the future.

Why time can be an investor’s friend

When I say future, in this example I am presuming a 25-year timeframe before the income starts flowing. It would be possible to get it sooner – indeed, as soon as this year – but at a lower level.

Why wait? The shares will hopefully pay dividends but rather than take them as passive income straight away, they can be reinvested. This is known as compounding and can be a powerful force multiplier when it comes to investing. Basically, dividends in turn start to earn dividends. That is because they can fund the purchase of more shares.

Over the course of time that can all add up substantially. Compounding £20k for the 25 years I mentioned at 7% annually, it would grow by over five times, to a size big enough that a 7% dividend would equal £633 of monthly dividends.

Focusing on quality, with an eye on costs

Is a 7% yield realistic? After all, that is over twice the current yield of the FTSE 100 index of blue-chip shares. I do think it is realistic, even while sticking to high-quality shares.

Of course, some shares can disappoint and no dividend is ever guaranteed to last, so it makes sense to spread the £20k over a diversified range of shares.

That could be in a Stocks and Shares ISA or other share-dealing account, but whatever investing platform is used, it is useful to keep an eye on costs as they can eat into the returns.

Well-known broadcaster with a 6.7% yield

One share I think investors should consider at the moment for its long-term passive income potential is FTSE 250 broadcaster ITV (LSE: ITV). It yields a juicy 6.7%. It also aims to maintain its annual payout per share at least at the current level.

Still, with its well-known brand, strong broadcasting footprint and extensive production business, why does the share have such a high yield? Why does it sell for pennies, after falling 38% in price over five years?

It is always worth asking such questions, not only because they could be a risk to the dividend, but also because even for an income-focused investor, capital loss can be painful.

ITV’s revenue last year fell slightly, while its pre-tax profit was down by over a third. Digital competition keeps growing and, while ITV is investing lots in digital provision itself, that is a costly process.

But it continues to generate sizeable advertising revenue – something this summer’s football World Cup could boost handily. The production and studios business provides some insulation against the ups and downs of advertising demand.

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Here are two I think could be considered for a Stocks and Shares ISA.

Holding the cards

Card Factory‘s (LSE:CARD) the first of these dividend shares I think investors should consider. Like any retail share, it’s exposed to a rapid downturn in consumer spending. With the Middle East crisis escalating, this is a serious risk right now.

But then again, a focus on the value end of the market could stand Card Factory in good stead. After all, people don’t stop sending birthday cards and celebrating major occasions even when times get tough. The company’s revenues could remain largely stable if shoppers switch down from more expensive card sellers.

What’s more, it could be argued that Card Factory’s shares are already at bargain-basement levels. Its forward price-to-earnings (P/E) ratio sits at 4.8 times, which some say fully reflects the challenges the retailer faces and may limit price downside.

Today, Card Factory shares carry an enormous 8.4% dividend yield for this financial year (to January 2027). The good news too is that the predicted 5.2p per share annual dividend is covered 2.4 times by anticipated earnings. So even if earnings get blown wildly off course, that expected shareholder payout still looks in good shape.

Besides, management’s drive to slash costs should help protect profits and dividends if sales drop. Over the long term, I think returns here could fly as it expands into higher-margin gifts and celebration accessories, expands into more international markets, and invests in the high-growth online channel.

Another top income stock

In an age of streaming, it’s easy to see why ITV (LSE:ITV) shares might not be everyone’s cup of tea. Changing viewer habits could see traditional broadcasters like this eventually mowed down by Netflix and its peers.

Could these fears be exaggerated? In the case of ITV I think so. This is for two reasons. First of all, the company’s making its own impressive inroads into the streaming market and even outperforming the US giants. The number of active users on the ITVX platform surged 12% year on year in 2025, reflecting the depth of its popular programming.

The second reason is that, through its ITV Studios arm, the business has excellent sales opportunities as media companies battle it out for content. Last year, external revenues at the production unit rose 10% which it said “reflected strong demand from global streaming platforms“.

I’m a big fan of ITV. And especially when adding the company’s exceptional value for money into the bargain. Its price-to-earnings growth (PEG) ratio of 0.5 for 2026 sits well inside value territory of 1 or below. The dividend yield’s a gigantic 6.7% as well, based on an expected 5p payout.

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But that is only half the story — and increasingly the wrong half, as recent results highlight, in my view.

So, what sort of returns could investors be looking at here?

Growth momentum?

A risk to ITV’s earnings — the key driver for share prices and dividends — is intense competition from terrestrial and digital media firms. However, analysts forecast its earnings will grow by 4% a year to end-2028.

ITV’s 2025 numbers showed Studios revenue rose 5% year on year to £2.13bn, while digital revenue climbed 10% to £614m.

Tight cost control kept adjusted earnings before interest, taxes, and amortisation broadly steady at £534m. And the group generated a hefty £187m of free cash flow.

Overall, it underlines a business shifting towards higher‑quality, more durable revenue streams, I believe.

How much income can be made?

ITV paid a dividend in 2025 of 5p — the same as in each of the previous three years. This gives a yield on the present 83p share price of 6% — well ahead of the 3.4% FTSE 250 average.

That said, analysts forecast the payout will rise to 5.1p next year, and 5.4p in 2028, generating respective 6.1%, and 6.5% yields.

So, investors considering a £20,000 stake in the firm could make £18,244 in dividends after 10 years. This could rise to £119,836 after 30 years, although yields can change according to annual payouts and share prices.

The numbers reflect the forecast 6.5% as an average, and the dividends being reinvested into the stock. This allows for the supercharging effect of ‘dividend compounding’ to work its magic.

At the end of 30 years, the holding would be worth £139,836, including the initial £20,000. And this would pay an annual income through dividends of £9,089!

Share price gains too?

Share prices tend to trade to their ‘fair value’ over time, with this representing the true worth of the underlying business. Discounted cash flow (DCF) analysis projects a company’s future cash flows and then discounts them back to today to ascertain this fair value.

The inputs used in other DCF modelling may produce more bearish results than mine. However, my modelling for ITV — using a discount rate of 7.5%, among other inputs — suggests the stock is 28% undervalued at its current 83p price.

That implies a fair value of £1.15. And this suggests a potentially strong buying opportunity to consider today if those DCF assumptions hold good.

My investment view

Aged over 50, I am in the later part of my 30-year investment cycle. This commonly starts with first investments around the age of 20 and ends in early retirement options around my age.

Because of that, I have lowered my risk tolerance, which now precludes buying stocks under £1. The lower a share’s price, the higher the price volatility.

Consequently, ITV is not for me, although I have my eye on other deeply-discounted high-yield stocks.

However, I think it merits the attention of investors at an earlier stage of their investment cycles and those who are broadly less risk-averse.

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