Getting a tax-free passive income from an ISA is a dream for many. It’s a route to the ultimate investment goal – financial independence. So how much money would you need to generate £767 a month?

That’s currently the national average full-time salary, and adds up to £39,884 a year. That’s a handy sum to have in retirement, on top of the State Pension and any other income sources. How can you generate that?

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A popular choice for long-term Stocks and Shares ISA investors is to build a diversified spread of FTSE 100 shares offering both dividend income and growth. But how much would it actually take to generate that level of income? The answer depends heavily on the portfolio’s yield. 

How much capital do I need?

• 4% – £997,000.
• 5% – £797,680.
• 6% – £664,733.

That’s not the kind of money you can build overnight. It demands investing regularly every month and sticking with it for decades, while re-investing every dividend you receive to let compounding do its work. The next question is this, which shares can help drive that growth and income? 

A stock I think investors might consider is FTSE 100-listed bank NatWest Group (LSE: NWG). The NatWest share price has had a terrific run, shaking off lingering memories of the financial crisis to climb 199% over five years. It’s been caught up in recent volatility though, falling more than 5% in the last month.

On 1 May, NatWest also posted a 12% rise in first-quarter profits and lifted 2026 income guidance. I thought the results were pretty good, but markets had hoped for more. They were also wary of a potential £140m impairment linked to Iran exposure. The shares fell more than 5% on the day. I bought them.

NatWest’s heavily tied to the UK economy, and if economic growth slows, loan impairments could rise while mortgage activity weakens. Like all of the big FTSE 100 banks, it also faces competition from smaller but nimbler ‘challenger’ banks.

NatWest has a really eye-catching dividend

I thought NatWest shares were too cheap to resist. And I still do. Today, the forward price-to-earnings ratio is just 8.2. By comparison, the average FTSE 100 P/E is around 15. But here’s the big attraction.

NatWest’s a top income stock. It currently has a bumper forward yield of around 6.2%, which is forecast to hit nearly 7% in 2027. I think that’s stunning. Investors can underrate the impact of reinvested dividends. Over time, they can make up roughly half of an investor’s total return.

When they’re this big, it could be even more. Dividends are never guaranteed, of course. The board is also running a £750m share buyback, further boosting shareholder returns.

Investors should look to build a balanced portfolio of around 15 stocks. Passive income seekers they might want to focus on more generous yielders like NatWest. I can see plenty more high-yield dividend heroes out there today.