How much second income would it take to cover household bills?

Household bills never stop arriving. That’s why many investors dream of building a second income stream that could cover some of life’s unavoidable costs.

But how much passive income would that actually require, and how large would a Stocks and Shares ISA need to be to generate it?

Covering the bills

Household bills can vary enormously depending on where someone lives and the size of their home. However, it’s not unusual for regular outgoings such as council tax, energy, broadband, and insurance to run into hundreds of pounds each month.

The table below shows how large a Stocks and Shares ISA might need to be to generate different levels of second income, assuming yields of 4% and 7%.

Taking the middle figure of £600 a month, an ISA worth just over £100,000 could generate enough second income to cover a substantial chunk of regular household bills. That’s a surprisingly attainable target.

However, achieving a 7% yield makes stock selection crucial. A high yield is only valuable if the underlying dividend can be sustained.

Sustainable dividend

One stock to consider is M&G (LSE: MNG). The savings and investment specialist currently yields around 6.4%, making it one of the highest-yielding shares in the FTSE 100.

Naturally, that raises an important question. Is the dividend sustainable?

For me, the encouraging sign is that the business appears to be gaining momentum rather than simply managing decline. During 2025, the company generated £7bn of net inflows from external clients, helping assets under management rise to £345bn. That’s particularly important because growing assets provide a larger base from which the company can earn management fees.

The group is also becoming increasingly international. Historically, M&G has been viewed largely as a UK savings and investment business. However, management has been expanding its global reach through partnerships and distribution agreements.

One notable example is its strategic relationship with Japanese insurance giant Dai-ichi Life, which provides access to new markets and a broader customer base.

I also like the fact that the savings company isn’t relying on financial engineering to support shareholder returns. The business continues to generate substantial operating capital while gradually shifting towards higher-quality fee-based earnings from asset management and wealth activities. Those areas typically require less capital than traditional insurance operations and can provide more flexibility when it comes to funding dividends.

Of course, there are risks. A prolonged market downturn would reduce assets under management and could weigh on profits. That’s something income investors need to keep in mind.

Bottom line

M&G combines a high starting dividend yield with signs of improving underlying business momentum. The dividend will never be completely risk-free, particularly given its exposure to financial markets and assets under management.

However, the direction of travel is encouraging. Net inflows are strengthening, the business is becoming more international, and a greater share of earnings is now being generated from capital-light asset management activities.

Taken together, that supports the case for a well-covered and potentially growing dividend over time.

For investors targeting a meaningful second income stream, M&G looks like a strong candidate within the FTSE 100 income space.

Should you invest £5,000 in M&g Plc right now?

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Andrew Mackie does not hold any positions in the companies mentioned.

The post How much second income would it take to cover household bills? appeared first on The Twelfth Magpie.

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