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Constructing a passive revenue portfolio within the UK doesn’t simply require a bucketload of endurance and dedication (though they assist). Equally as vital is a portfolio product of the best FTSE 100 shares.
However what are the ‘proper’ shares?
Properly, in all honesty, there’s no definitive checklist of right shares for such an endeavour. And the truth that the aim posts are continually altering doesn’t assist. Fluctuating rates of interest, political instability and international tariffs all play a component in the place share costs go every day.
That’s why the best shares are people who hold a gradual head even when occasions get powerful. In case your funding outlook is 10 to twenty years (and it ought to be), then you definitely want shares that may survive the journey.
With that in thoughts, I’ve recognized two dividend shares on the FTSE 100 which have a super-reliable historical past. Whether or not making ready for retirement or saving up for a home, I feel each are properly price contemplating.
Unilever
Regardless of a usually average yield, Unilever (LSE: ULVR) is fashionable for passive revenue due to its distinctive dividend observe file. Spanning practically a century, it’s paid dividends persistently since 1929, with virtually 20 years of uninterrupted progress earlier than Covid.
That alone is spectacular — however the true attraction is its resilience to market downturns. Even throughout essentially the most extreme financial downturns (the Nice Despair, World Warfare II, the 2008 Monetary Disaster, and Covid), Unilever maintained its dividend funds.
The explanation for that is the corporate’s recession-resistant enterprise mannequin. Promoting important items like meals, private care, and family merchandise means its revenues stream no matter financial circumstances.
It’s price noting, there’s a danger of sudden foreign money fluctuations affecting dividend funds, as Unilever stories in each sterling and euros. Moreover, its international diversification means returns are in danger from political instability, foreign money crises and financial volatility.
Nonetheless, historical past has proven it’s some of the steady of FTSE 100 dividend shares.
Severn Trent
When considering of a superb utility inventory for revenue, many individuals flip to Nationwide Grid. However whereas the nation’s core power grid operator is a good possibility, Severn Trent (LSE: SVT) truly has a greater dividend observe file.
What’s extra, it’s additionally carried out barely higher over the previous 20 years.
Much like Nationwide Grid, Severn Trent is a regulated utility firm serving roughly 4.7m households and companies throughout the Midlands and Wales. As a regulated monopoly, the corporate advantages from predictable, inflation-linked income streams with minimal competitors.
Whereas nowhere close to Unilever’s file, in its 20-year-long historical past, it’s accomplished surprisingly properly. Regardless of two minor dividend reductions previously 20 years, total, dividends have grown at a mean price of three.53% per yr. For instance, the corporate elevated dividends from 81p in 2016 to £1.19 in 2024 — roughly 47% progress over eight years.
One other bonus of regulation provides provisions for inflation indexation, guaranteeing dividend funds hold tempo with rising prices. And the important want for water means income stays steady no matter financial circumstances.
However there may be one elephant within the room that may’t be ignored: £8.65bn in debt. At that degree, even a regulated enterprise is liable to defaulting — or at the least reducing dividends.
Nonetheless, with a long-term view, I count on debt will come underneath management and the corporate will proceed delivering steady revenue to shareholders.
