Buying shares to earn passive income is hardly a new idea. Nor is it a secret: millions of people already do it. And it can be very lucrative. Last year, FTSE 100 shares alone paid out over £80bn in dividends to shareholders.

There are a few things I like about buying shares from the blue-chip index as I try to set up passive income streams. I can fit the plan to my own financial circumstances. Buying into FTSE 100 firms also lets me benefit from the proven commercial acumen of highly profitable and well-established businesses.

That description does not necessarily apply to all FTSE 100 shares. So I need to choose carefully when buying, especially as I aim to buy shares that I can hold for years or even longer.

I keep my portfolio diversified. In this article, I want to zoom in on one particular FTSE 100 share I already own and would happily buy more of if I wanted to target £1,000 in passive income thanks to dividends.

Long-established blue-chip firm

The share in question is M&G (LSE: MNG).

Heard of it? That would be no surprise. In fact, many readers may even be customers, alongside millions of other individuals in the UK and a couple of dozen markets globally. The financial services powerhouse also has an institutional business, managing assets on a large scale.

Some attractions of the share may be easy to spot. It has a large, high-value target market that I expect to be resilient over the long term. Thanks to its strong brand, reputation established over the course of a long time and existing customer base, it is able to generate sizeable cash flows.

That allows the firm to pay dividends, something it has been very good at doing since demerging from Prudential in 2019.

Doing the dividend arithmetic

In fact, the company aims to maintain or grow its payout per share each year. As with any share, that is never guaranteed – dividends can fall as well as increase. So far though, M&G has managed to deliver on its policy. I am optimistic that its solid business can help it keep doing so.

The yield is a juicy 9.8%, among the most lucrative of any FTSE 100 share.

So, how much would I need to spend on M&G shares to try and earn £1,000 in passive income each year?

The current annual dividend per share is 19.8p. So £1,000 would require me to own 5,051 shares if the dividend is held at its current rate. If it keeps going up, as it has in recent years, the prospective passive income from that holding could be higher than £1,000. At the current share price, that would cost me around £10,218.

I’m happy to hold this share

Why might the dividend not be maintained?

One risk I see is that a financial crisis could hurt investor appetite money into the sort of assets M&G manages on their behalf. If that hurts free cash flow, it could negatively impact the dividend.

Still, I am happy to keep owning the share and hopefully go on earning big passive income streams from it.