Targeting a million-pound Stocks and Shares ISA shows ambition. Rathbones reckons there are now 17,600 ISA millionaires, which shows it can be done. All have one thing in common. They didn’t build a seven-figure sum by putting their money in a Cash ISA. So what did they do?

A Cash ISA is handy for short-term savings but the stock market is the way to build long-term wealth. Over the last decade, research body Investing Insiders found the average Cash ISA returned 4% a year. By contrast, the average Stocks and Shares ISA delivered 9.5%, with dividends reinvested.

How much do you need to make a million?

The difference magnifies over time, as my table shows. It assumes someone saves or invests £511 a month, which adds up to £6,132 a year.

It’s possible to contribute up to £20,000 to an ISA. Somebody who invested that and got an average return of 9.5% a year would hit millionaire status in less than 19 years. Right now, a popular choice for long-term ISA investors is to build a diversified spread of FTSE 100 shares offering both dividend income and growth. 

Many investors overlook the power of dividends. However, if you reinvest your them straight back into your portfolio, they turbocharge the overall return through the long-term compounding effect. Recent stock market volatility has driven up dividends yields. A notable example is house builder Persimmon (LSE: PSN).

The construction sector has been hit hard by the Iran conflict, as the rising oil price threatens to drive up inflation and interest rates. Lenders have been hiking mortgages, which could hit demand for new builds.

Should I take advantage of current market volatility?

Affordability is already stretched, especially for first-time buyers. Also, builders have also seen their costs rise, due to the cost-of-living crisis and increased employment taxes, further squeezing margins. Now things could get even tighter. The Persimmon share price is down 22% over the last year, and 67% over five years. That level of volatility will deter some investors, but it has two huge advantages for those considering the stock today.

First, the shares now look much better value, with a forward price-to-earnings ratio of just 10.2. That’s below Persimmon’s long-term average of 11.6. Second, the falling share price has driven up the yield. Persimmon is forecast to pay dividend income of 5.95% this year, rising to a stunning 6.46% next year.

Dividends aren’t guaranteed, and can be cut if Persimmon doesn’t generate enough cash to make them. That will get harder if the Middle East conflict intensifies. However, I think Persimmon is well worth considering with a long-term view, as part of a wider portfolio of FTSE 100 dividend and growth stocks. The housebuilder looks like an exciting opportunity, but I’ll be closely watching its dividend and growth prospects in the coming months.