By placing some spare financial savings into dividend shares, it’s doable to set up passive earnings streams that assist put some income of blue-chip corporations into our personal pockets.

If I had spare cash in the present day – say, £9,000 – listed below are three steps I’d take to set the ball rolling on a long-term goal of £1,794 passive earnings every year due to that strategy.

Step 1: turning financial savings into funding capital

My first transfer can be to set up a share-dealing account or Shares and Shares ISA, then park the £9K in it.

That manner, as quickly as I discovered shares to purchase I’d be able to act.

I say ‘shares’ as a result of regardless of how a lot I appreciated one funding alternative, I’d unfold the £9K over a spread of shares to scale back my danger if one did badly. It occurs.

Step 2: selecting shares to purchase

Subsequent, I’d begin the method of discovering shares to place in my portfolio.

With 1000’s of firms listed within the UK and US markets alone, it might sound daunting deciding the place to begin.

My strategy can be to stay to enterprise areas I perceive and that I really feel have the potential for long-term income. I’d then zoom in on firms with a confirmed enterprise mannequin and aggressive benefit that I feel may assist them hold producing extra money to fund dividends for years and even a long time to come back.

An earnings share to contemplate

For example, one share I feel passive earnings traders ought to think about shopping for is ITV (LSE: ITV).

The FTSE 250 broadcaster has a legacy enterprise that continues to pump out income due to promoting. Over time which will decline and the price of ramping up digital operations may eat into income.

However, for now, the enterprise continues to generate vital extra money – and the corporate has additionally been constructing its digital providing.

On prime of that a part of the enterprise, the opposite half of ITV is a studios and manufacturing enterprise. That helps defend it from the ups and downs of promoting demand, as it might make cash by renting out its amenities and providers to a variety of programme makers.

Presently, with the ITV share price in pennies, the dividend yield is 6.8%.

Step 3: rising passive earnings streams

Think about I invested the £9K at a median yield near that, of seven%. Though round double the FTSE 100 common, within the present market I feel that’s achievable.

So, 7% of £9,000 is £630 per yr. As a passive earnings begin I feel that’s fairly cheap.

However I may attempt to do higher – a lot higher — by taking a long-term strategy. That is because of one easy transfer, referred to as compounding. That merely means utilizing the dividends I earn to purchase extra shares.

Think about I compounded my dividends for 15 years at a median annual price of seven%. After 15 years, I must be incomes round £1,794 in passive earnings every year.