When it comes to earning passive income in the stock market, I think there’s one thing that gives some investors a big advantage over others. It’s having time on their side.

Being able to be patient can increase returns dramatically. And shares in FTSE 250 bakery and food retailer Greggs (LSE:GRG) are a good illustration of this.

Dividend growth

Over the last 12 months, Greggs has distributed 59p in dividends per share. So to earn £12,000 a year – or £1,000 a month – before dividend taxes, an investor would need 20,339 shares.

At today’s prices, that costs £424,271 (leaving aside stamp duty). That’s a lot – and I suspect few of us have that amount knocking around right now.

Greggs however, has grown its (regular) dividend by 161% over the last decade. And if it does this again, 7,643 shares will be enough to generate £1,000 a month by 2035.

The current share price means that costs £159,127. That’s still a lot, but much less than the £424,271 it costs to start earning that amount of passive income straight away. 

Outlook

The big question is whether Greggs will keep growing its distributions at the same rate over the next 10 years. Dividends are never guaranteed, but I think this one’s especially uncertain.

Over the last 10 years, the company’s increased its store count by just over 54%. If it does that again, it’ll be operating around 4,031 outlets. 

The trouble is, even Greggs isn’t anticipating that level of expansion. Its manufacturing base is currently set up for around 3,500 stores, which is quite a bit lower.

If the business stops expanding, it might find itself with more free cash. But while this might boost the dividend in the short-term I don’t see it as conducive to long-term growth.

Other opportunities

I think UK investors looking for passive income should consider opportunities beyond Greggs. Croda International‘s (LSE:CRDA) one that looks attractive to me.

The company makes chemicals that help pesticides stick to plants, make moisturisers smooth, and help drugs get to where they’re needed. And its products are very well-protected.

The risk is that sales volumes can be highly volatile. With agriculture, for example, the price of wheat can have a big influence on demand and Croda has no control over this.

Despite this, the company has a very strong track record of increasing its dividend consistently. And I think it has a competitive position that will allow it to keep doing this over the long term.

Long-term investing

Not all investors are able to take a long-term approach to passive income. But I think those who are have a big advantage. 

With the right businesses, all shareholders have to do is wait as the returns grow. And that can mean they eventually get a lot more in dividends with less invested at the start.