When investors hunt for passive income stocks to buy, they often reach for insurers, utilities or real estate investment trusts.

But one FTSE 100 stock — not usually discussed as an income play — is quietly offering a forecast yield of 7.8%.

So, how much dividend income could it generate?

Overlooked dividend giant

The stock in question is NatWest (LSE: NWG). It is a name many investors still associate with the long legacy of the financial crisis rather than dependable income.

Yet the modern iteration of the bank is a very different beast. It is a streamlined, retail‑focused operation with strong capital buffers, disciplined cost control, and the capacity to return hefty sums to shareholders through dividends.

One risk to the bank is interest rates falling faster or further than expected, so pressuring its net interest margin. The margin is the difference between the interest rate received on loans and paid out on deposits. Another risk is the high competition in mortgages and deposits that could squeeze pricing.

Earnings‑growth drivers

NatWest’s latest (annual 2025) results point to several drivers that could support strong earnings growth in the years ahead. And it is ultimately this that drives any firm’s dividends higher over time.

Operating profit before tax soared 24.2% year on year to £7.7bn, while income jumped 12.3% to £16.4bn. These rises were powered by customer growth, recent portfolio acquisitions and a stronger wealth‑management arm.

Meanwhile, costs remain tightly controlled. The bank aims for a sub‑45% cost‑to‑income ratio by 2028 (from 48.6% in 2025 and 53.4% in 2024). And its targeted CET1 ratio of around 13% by then gives it the flexibility to keep returning capital to shareholders.

These trends suggest NatWest has the operational muscle to keep growing profits — and, in turn, to keep lifting its dividends.

How much dividend income can be made?

NatWest hiked its dividend by 51% in 2025, to 32.5p, giving a current dividend yield of 6.2%. It sits well above the present FTSE 100 average of 3.1%, but the bank’s payout is forecast to go even higher.

Consensus analysts’ projections are for dividends of 35.5p this year, 39.9p next year, and 43.2p in 2028. These would generate respective dividend yields of 6.7%, 7.6%, and 8.2%.

So, my £20,000 holding could make me £25,284 in dividends after 10 years and £212,146after 30 years. This covers the standard long-term investment cycle, starting with first investments around 20 and ending in early retirement options about 50. It also assumes the 8.2% yield as an average, although this could go down or up over time.

‘Dividend compounding’ is also factored into the numbers, as this has a turbocharging effect on dividends over the long run.

By the end of 30 years, my holding could be worth £232,146, including the initial £20,000 investment. And this could pay me a yearly income from dividends of £19,036!

My investment view

NatWest’s combination of steady earnings, strong capital position and a generous yield makes it far more attractive than many investors assume.

The bank today is leaner, more focused and far better run than its crisis‑era reputation suggests. I will be buying more of the shares for long‑term income and think other investors with the same aim might want to take a serious look at it.