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Constructing a passive earnings portfolio within the UK doesn’t simply require a bucketload of persistence and dedication (though they assist). Equally as vital is a portfolio manufactured from the proper FTSE 100 shares.
However what are the ‘right’ shares?
Effectively, in all honesty, there’s no definitive checklist of appropriate shares for such an endeavour. And the truth that the purpose posts are continuously altering doesn’t assist. Fluctuating rates of interest, political instability and overseas tariffs all play an element in the place share costs go day by day.
That’s why the best shares are those who preserve a gentle head even when instances 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 believe each are effectively value contemplating.
Unilever
Regardless of a sometimes reasonable yield, Unilever (LSE: ULVR) is common for passive earnings due to its distinctive dividend monitor report. Spanning almost a century, it’s paid dividends constantly since 1929, with nearly 20 years of uninterrupted development earlier than Covid.
That alone is spectacular — however the actual attraction is its resilience to market downturns. Even throughout essentially the most extreme financial downturns (the Nice Despair, World Struggle 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 movement no matter financial circumstances.
It’s value noting, there’s a threat of surprising forex fluctuations affecting dividend funds, as Unilever studies in each sterling and euros. Moreover, its international diversification means returns are in danger from political instability, forex crises and financial volatility.
Nonetheless, historical past has proven it’s probably the most secure of FTSE 100 dividend shares.
Severn Trent
When pondering of a very good utility inventory for earnings, many individuals flip to Nationwide Grid. However whereas the nation’s core vitality grid operator is a good possibility, Severn Trent (LSE: SVT) truly has a greater dividend monitor report.
What’s extra, it’s additionally carried out barely higher over the previous 20 years.
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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 report, in its 20-year-long historical past, it’s executed surprisingly effectively. Regardless of two minor dividend reductions up to now 20 years, general, dividends have grown at a median fee of three.53% per 12 months. For instance, the corporate elevated dividends from 81p in 2016 to £1.19 in 2024 — roughly 47% development over eight years.
One other bonus of regulation provides provisions for inflation indexation, guaranteeing dividend funds preserve tempo with rising prices. And the important want for water means income stays secure no matter financial circumstances.
However there’s one elephant within the room that may’t be ignored: £8.65bn in debt. At that stage, even a regulated enterprise is liable to defaulting — or at the least chopping dividends.
Nonetheless, with a long-term view, I count on debt will come beneath management and the corporate will proceed delivering secure earnings to shareholders.
