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2025 was a robust 12 months for UK dividend shares, with a complete of £84.7bn paid out to shareholders. But waiting for the remainder of 2026, the passive earnings earned by savvy traders may very well be much more spectacular.
In line with the newest analysts by Computershare, a complete of £85.9bn in dividends is predicted. And this quantity will increase to £88.8bn when factoring in potential particular dividends alongside the best way.
A £1.2bn payout hike is sort of an thrilling prospect for index traders. However for prudent inventory pickers, much more dividend progress may very well be unlocked this 12 months. Right here’s one dividend progress share that I’ve already added to my passive earnings portfolio.
A profitable earnings alternative?
Whereas not essentially the most thrilling enterprise on the planet, Safestore Holdings (LSE:SAFE) has nonetheless confirmed to be a free money circulate printing machine.
Even over the past three years, when the self-storage trade suffered by way of a cyclical downturn, the enterprise continued to supply sufficient extra money to maintain reinvesting, execute a wider worldwide enlargement technique, and generate a dependable passive earnings stream from shareholders.
There’s no denying that progress was fairly elusive. In any case, a key driver of self-storage demand is exercise in the true property market since individuals want momentary storage when transferring or renovating their houses. And with rates of interest going by way of the roof, Safestore noticed its occupancy take successful.
Nonetheless, skip forward to 2026, and that might all be about to vary. Occupancy is now again on the rise. The agency’s new storage services, which opened again in 2023 and 2024, have began to interrupt even and contribute in the direction of earnings. And recovering demand can also be granting Safestore some refreshed pricing energy with each new and current clients.
What may go unsuitable?
Whereas the working surroundings for Safestore appears to be enhancing, it’s vital to recognise that the timeline for restoration stays unsure.
Self-storage progress in Europe is proving to be fairly sturdy, supported by notably decrease rates of interest versus the UK. Nonetheless, the UK stays Safestore’s core market. And a slower-than-expected rebound within the property market resulting from financial weak point may go away traders ready some time longer for a return to fast dividend progress.
This macroeconomic threat additionally comes paired with Safestore’s personal monetary obligations. Funding the buildout of latest shops required taking over a little bit of debt. And the group’s complete borrowings & equivalents as of October 2025 now stand at simply shy of £1.1bn.
Given the agency’s spectacular money circulate era, this leverage is seemingly greater than manageable. Nonetheless, it nonetheless reduces the quantity of extra money out there to fund payout hikes.
What’s the decision?
Seeing Safestore’s dividend return to double-digit progress in 2026 could be a bit formidable. However when zooming out to the subsequent few years, analyst forecasts have gotten more and more bullish. That’s why, regardless of the dangers, I’m severely contemplating topping up my current place. And it’s not the one dividend share I’ve received my eye on proper now.
