When it comes to building a second income, investing in Space Exploration Technologies (NASDAQ: SPCX) might not be the obvious place to start. After all, the company is burning through cash at a rate of knots, is unprofitable and has never paid a dividend.

However, that does not necessarily mean that that things will stay that way — history has taught us otherwise.

Moving from growth to growth and capital return

Think about what paying a dividend actually involves.

A company needs to generate more spare cash than it needs. It then needs to choose to deploy some (or all) of it on capital returns such as dividends, instead of investing so much in growth.

That is exactly what happened to big tech firms like Alphabet in recent years. After years without ever paying a dividend, it initiated shareholder payouts, while still also spending on growth.

Not all such firms do so, though. Tesla is profitable but has yet to pay dividends. Maybe it will do so in future.

Growth, income or both?

SpaceX, as it’s best known, is in a different position for now. It is not profitable yet, for starters.

Also, as we have seen recently, SpaceX plans to spend huge sums on trying to grow its business aggressively.

That piles more risks on the company’s existing risk profile. Competition is stiff and increasing, while the long-term return on investment for SpaceX is unknown.

But SpaceX is growing revenues impressively fast. Imagine if it can scale up its offering and then focus on profitability not just growth. It may be that years down the line it generates substantial spare cash and chooses to start paying a dividend.

I do not expect that to happen in the foreseeable future, but it may be on the cards years from now, depending on how the business performs.

Building income now

Even if that does happen, tech companies that finally start to pay dividends but still command a high share price can often offer low yields.

Take Alphabet’s 0.3% yield, for example. To target a £10k annual second income at that level, someone would need to invest well over £3m.

A cheaper way to target a £10k+ annual second income would be to invest in a diversified portfolio of shares already offering a higher yield (no dividend is ever guaranteed to last, hence the diversification).

Say someone targets a 6% yield: around double the current FTSE 100 yield but still achievable in today’s market, I believe.

At that level, a £10k+ second income would need a portfolio worth at least around £167k.

One income share to consider

Its business is more mundane than SpaceX’s, but one dividend share I think investors should think about for its income potential is 5.8%-yielding British American Tobacco (LSE: BATS).

The FTSE 100 firm is one of a select group of UK shares that have grown their dividends per share annually for decades. It aims to keep doing so.

Cigarettes are not for everyone.

Some investors shun the share on ethical grounds, while tobacco users are also less attracted by cigarettes than they once were. That is a long-trend trend and risk, as cigarette sales volumes keep falling.

Still, the company’s premium brand portfolio gives it pricing power. It has also invested heavily in expanding its non-cigarette offering.

What income stock do we like better than British American Tobacco P.l.c. right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Christopher Ruane does not hold any positions in the companies mentioned.