In my opinion, investing little and often via a Stocks and Shares ISA is one of the best ways of trying to generate a healthy second income. By creating a portfolio of dividend shares it’s possible to earn money from doing, literally, nothing.

But is it really feasible to build an ISA that could pay the same as the UK’s average disposable income? I think so. Let’s take a look.

From Brighton to Belfast…

Research by MoneySuperMarket reveals that the typical household has £802 a month to spend after paying all essential bills. However, with housing costs varying significantly across the country, it isn’t surprising that there are huge regional disparities. In fact, the lowest disposable income can be found among residents of Brighton (£517) and the highest in Belfast (£955).

To help with household finances, the price comparison website suggests adopting the 50-30-20 framework: 50% take-home pay used for essential costs; 30% reserved for things “you want but don’t need”; and 20% saved.

Today, people who hold cash equivalents feel comfortable. But they shouldn’t. They’ve opted for a long-term asset, one that pays virtually nothing and is certain to depreciate in value.

Warren Buffett

How do the numbers stack up?

Putting 20% of £802 (£160) into a Stocks and Shares ISA — at an annual growth rate of 8% — would see it grow to £146,374 after 25 years.

At this point, a portfolio of dividend shares paying 6.6% would produce an income of £9,661, equivalent to £805 a month. This is £3 more than the UK’s average disposable income (ie after essentials have been paid for).

However, this analysis prompts two questions. Firstly, is an 8% growth rate realistic? Secondly, are there many stocks paying 6.6% in dividends? Let’s see.

Recent history

The performance of the FTSE 100 over the past 10 years suggests an 8% return is achievable. The 2016-2025 average annual growth rate (with dividends reinvested) of the UK’s leading index of shares was 9.5%.

Of course, there are no guarantees history will be repeated. But the past does suggest a return of 8% is possible if a successful stock-picking strategy’s adopted.

Lots to consider

As for whether a 6.6% yield from income shares is realistic, it’s worth noting that there are 40 stocks on the FTSE 350 currently paying more than this.

By coincidence, with a yield of 7.3%, one of these is MONY Group (LSE:MONY), owner of the MoneySuperMarket website.

Of course, there are no guarantees this high yield will continue. Indeed, fears have been expressed that many of the group’s services could be disrupted by artificial intelligence (AI0. This probably explains its disappointing share price performance over the past 12 months. Also, a cyber security attack remains a constant threat.

However, since the pandemic, the stock’s always offered an above-average yield. And it views AI as an opportunity. It recently launched a ChatGPT-compatible app. Attractively, the FTSE 250 stock also trades on 9.6 times historic earnings.

The group is an appealing business model – it claims to have saved households £12bn over the past five years – and has built a valuable cache of data. Its technology platform’s also easily scalable.

Overall, I think it’s a stock to consider by those looking for dividends and long-term capital growth.

Should you invest £5,000 in Mony Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Mony Group Plc made the list?

James Beard does not hold any positions in the companies mentioned.