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Constructing a passive earnings portfolio within the UK doesn’t simply require a bucketload of endurance and dedication (though they assist). Equally as essential is a portfolio fabricated from the appropriate FTSE 100 shares.
However what are the ‘proper’ shares?
Nicely, in all honesty, there’s no definitive listing of appropriate shares for such an endeavour. And the truth that the purpose posts are always altering doesn’t assist. Fluctuating rates of interest, political instability and overseas tariffs all play a component in the place share costs go each day.
That’s why the perfect shares are people who preserve a gentle head even when instances get powerful. In case your funding outlook is 10 to twenty years (and it must be), then you definitely want shares that can 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 getting ready for retirement or saving up for a home, I feel each are nicely value contemplating.
Unilever
Regardless of a usually average yield, Unilever (LSE: ULVR) is in style for passive earnings due to its distinctive dividend observe report. Spanning almost a century, it’s paid dividends persistently 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 probably the most extreme financial downturns (the Nice Despair, World Battle 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 move no matter financial circumstances.
It’s value noting, there’s a danger of sudden foreign money fluctuations affecting dividend funds, as Unilever studies 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 secure of FTSE 100 dividend shares.
Severn Trent
When considering of a superb utility inventory for earnings, many individuals flip to Nationwide Grid. However whereas the nation’s core vitality grid operator is a superb choice, Severn Trent (LSE: SVT) really has a greater dividend observe report.
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 report, in its 20-year-long historical past, it’s finished surprisingly nicely. Regardless of two minor dividend reductions up to now 20 years, general, dividends have grown at a median charge 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 may be one elephant within the room that may’t be ignored: £8.65bn in debt. At that degree, even a regulated enterprise is vulnerable to defaulting — or not less than slicing dividends.
Nonetheless, with a long-term view, I anticipate debt will come underneath management and the corporate will proceed delivering secure earnings to shareholders.
