Ever wondered what you might be able to earn in future by squirreling money away in a Stocks and Shares ISA now and accumulating blue-chip dividend shares?

The answer can be quite substantial…

From zero to £20,294 a year

For example, imagine somebody has an empty ISA now. Or perhaps they do not even have an ISA, so decide to set one up this July.

If they put in £500 a month and compound the value of the ISA at 6% annually for 25 years, it ought to be worth around £338,240. At a 6% dividend yield, that could generate some £20,294 a year in passive income.

The same approach could work with less (or more) money and a different timeline – but the size of the second income would be correspondingly different.

Is 25 years a long time to wait? Maybe, depending on what your objectives are. As I see it though, this is the sort of approach that someone still working could take as a way of building towards a second income later in life.

Something I see as good about this approach is that once the period of contributing ends (I use 25 years as an example, but in reality the investor can decide that for themselves), the income could hopefully flow for the rest of their life without them needing to put in another penny.

Earning high-quality dividends while you sleep

In fact, they could earn more than that, or less, as dividends are never guaranteed to stay the same. That is why it makes sense to diversify the ISA across a range of carefully chosen blue-chip shares.

Instead of going for the highest yield, or the fastest-growing dividend, I try to look at the underlying business and also its current valuation.

Do I think the business has long-term potential to generate sizeable free cash flows that could be used to fund dividends?

Do I think the share price offers good value? This matters even when income not capital gain is the objective, as if the price is too high then I may end up losing money when selling the share down the road, despite having had lots of dividends while owning it.

This blue-chip, high-yield share’s caught my eye

One FTSE 100 income share I think merits consideration right now is financial services group Standard Life (LSE: SDLF).

Is this a thrillingly exciting growth stock? No – and that is part of its appeal, in my view.

It has long-established, proven businesses that benefit from enduring demand for pensions and retirement savings products.

With one in five British adults a customer, the company benefits from economies of scale, deep financial markets expertise and the likelihood of ongoing strong client demand.

That translates into solid cash flows that support its juicy dividend. Standard Life has grown its dividend per share annually for years already — and aims to keep doing so.

One risk I see I see is financial markets turbulence. This could hurt the valuation of some of the firm’s assets, such as its property portfolio. That may eat into earnings.

Taking a long-term approach to investing though, I see a lot to like about Standard Life.

What income stock do we like better than Standard Life right now?

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