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For traders who love shopping for revenue shares, 2025’s been a reasonably good yr. Throughout the primary 9 months, a complete of £73.6bn of dividends have been paid out. And in keeping with the newest forecasts, that is anticipated to achieve £87.2bn for the complete yr.
But, this might pale compared to what’s coming in 2026.
Continued income from the banking sector, a rebound in mining payouts, and ongoing resilience in defensive sectors like meals and tobacco all level in the direction of larger shareholder rewards subsequent yr. And that is additional supported by more and more beneficial foreign money change charges for large-cap multinationals inside the FTSE 100.
In different phrases, 2026 may very well be a implausible yr for traders looking for passive revenue. That’s why I’ve already been busy snapping up grime low cost dividend shares.
Right here’s what I’m shopping for
Proper now, my focus is on the industrial actual property sector. Larger rates of interest have made this section of the inventory market comparatively unpopular. Consequently, there’s a variety of revenue shares providing 6%+ yields backed by dependable and recurring money flows buying and selling at a reduction to their web asset worth.
What’s extra, since many tenancy agreements include annual uplifts, that doesn’t seem like it’s about to alter in 2026, particularly since rates of interest are additionally anticipated to fall, decreasing the strain of excellent money owed.
That’s why I’ve been topping up my place in actual property funding rust (REIT) LondonMetric Property (LSE:LMP).
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Investing in Tesco’s landlord
For firms like Tesco, operating a web based and brick & mortar retail empire requires a community of well-positioned warehouses and shops. And that’s one thing LondonMetric is an knowledgeable in offering.
Greater than half of its actual property portfolio is concentrated on prime-positioned logistics centres, with the remaining diversified throughout healthcare services, comfort shops, in addition to leisure parks.
The typical size of its lease agreements spans simply over 16 years, with a formidable occupancy stage of 98% that has remained steady even through the disruptive pandemic and subsequent cost-of-living disaster.
This stability, paired with regular money circulate growth, is how the corporate has delivered virtually 11 years of uninterrupted dividend hikes, rising the yield to six.8%. And even with this outstanding observe report, the revenue inventory continues to commerce at a roughly 8.5% low cost to its web asset worth.
The place’s the danger?
From a fundamentals perspective, LondonMetric appears to be like rock stable. But when that’s the case, why aren’t extra traders taking benefit?
The most important wrongdoer seems to be the deteriorating macroeconomic backdrop. The most recent RICS UK Industrial Property Monitor report revealed occupier demand has dropped by a steep 21% inside retail within the third quarter. And demand for the broader industrial sector, it’s dipped into the purple for the primary time since 2012.
With demand shifting within the flawed path, LondonMetric may face a big problem in renewing a few of its soon-to-expire leases. It may need to entice tenants with reductions that would adversely influence dividend affordability.
This concern is why the yield stays excessive. Nevertheless, solely round 8% of its revenue stream is prone to expiration over the subsequent three years, creating an excellent chunk of wiggle room for financial circumstances to enhance and demand to get better. That’s why I feel it’s a threat value me taking, particularly with a near-7% dividend yield on provide.
