I have a predicament at the moment. My goal is to build a £10,000 annual return for long-term, sustainable passive income but am lacking spare cash to invest.

That got me thinking about setting aside a tenner each day for investing. By investing that money into a portfolio of FTSE 100 dividend shares, just how much could I theoretically generate for my retirement plans in a few decades?

Being patient

Let’s keep my £10 a day plan simple and stick to weekdays. That would give me £50 per week to play with. I will also assume no share price gains (or losses, which of course is somewhat artificial and not guaranteed), plus a 7% annual dividend yield paid out and reinvested four times each year.

Starting with £0 on day one, my portfolio is looking a bit sad. But hey, I’ve got to start somewhere, right?

After one year, my projections give me £2,712 of invested capital and a meagre £112 in annual dividends paid.

After five years of disciplined investing, that portfolio could be worth £15,654 with £980 of annual income. Not a lot to show for my hard work and savvy investing but there’s a nest egg starting to form.

Let’s fast forward a little bit. Let’s say I’ve been at this for 15 years. I wouldn’t be looking to retire just yet, which is lucky, because my hypothetical portfolio is worth £69,138 and paying £4,565 in annual dividends.

So, when can I hit the £10,000 in passive income I’m after? After 25 years that portfolio could be worth £176,189 and paying £11,742 in annual income. That’s enough for me to focus on protecting that and building towards a solid retirement in the future.

Which stocks can help me achieve this?

Clearly, the above is a simplified scenario. However, there are a number of Footsie dividend shares that have yields in the region that I’m talking about.

They include HSBC, Rio Tinto and British Land (LSE: BLND) with dividend yields of 6.6%, 6.5% and 5.9%, respectively. Among those three, I think British Land is an interesting proposition.

The company has a 97% occupancy rate and continues to be proactive in managing its portfolio. Asset disposals and acquisitions are on the agenda. With a pro forma loan-to-value ratio of 34.6% and £1.9bn in undrawn facilities and cash, I think the property company could be one to watch.

With strong outperformance against its MSCI benchmark and a healthy dividend yield, the real estate investment trust (REIT) could be one to watch.

Of course, some of its chosen sectors can be cyclical and impacted quickly, such as retail parks, so it may not be one for me to rely on in my long-term passive income plans.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Wrap up

My simplified example gives me hope for the future. By setting aside just £10 each day, investing it well and enjoying a touch of luck, I think I could generate a £10,000 passive income in the future.