Picture supply: Getty Pictures
Most traders purchase dividend shares to generate passive earnings, be it to complement their wage or high up their pension. Nonetheless, the share costs of a number of the UK’s hottest examples have additionally been rocketing for the reason that begin of the yr.
Let’s take a look at three examples which can be outpacing the FTSE 100 and would possibly simply proceed doing so for the rest of 2026.
Turnaround dividend inventory
Regardless of Vodafone‘s (LSE: VOD) chequered historical past in the case of distributing money to its homeowners, traders have lengthy gravitated in the direction of the telecommunications behemoth for his or her dividend repair. However currently, this market juggernaut has been behaving nearly like a progress inventory! A 15% achieve in 2026 compares favourably to the index’s 9% and provides to the tremendous momentum seen in 2025.
In fact, the rise in its share worth has lowered the dividend yield. Proper now, this stands at 3.6% — pretty modest when different shares within the FTSE 100 are yielding as much as 8%. But it surely’s greater than a bathroom commonplace index tracker would presently earn (2.9%).
After a troublesome few years, it seems like traders are warming to this firm’s technique of promoting its non-core companies and focusing extra on progress markets. Certainly, the completion of its merger with Three UK final yr appeared to mark an inflection level in sentiment.
My chief concern stays the large debt load. Sure, it’s decrease than just a few years in the past. However ongoing and fierce competitors may make a considerable discount unlikely for now.
Future proof
Additionally on a cost is mining big Rio Tinto (LSE: RIO). Its shares have carried out even higher — rising over 20% for the reason that begin of January — helped by a surging copper worth.
Regardless of this nice efficiency, there have been just a few unstable days within the combine. A few weeks in the past, Rio’s worth dropped because it posted flat annual earnings and missed analyst expectations as a consequence of weaker iron ore costs. This highlights the bumpy trip that every one traders in commodities can count on.
Nonetheless, the possible big demand for the crimson metallic within the years forward because the world migrates in the direction of to cleaner power sources absolutely bodes effectively for Rio as each a long-term earnings and progress play.
Once more, the dividend yield isn’t fairly what it was. However 4.6% is hardly dangerous. And though these money distributions can by no means be assured, they give the impression of being set to be lined by anticipated revenue.
Dependable earnings
Yielding 3.5%, energy supplier Nationwide Grid (LSE: NG.) completes our trio of earnings shares doing effectively. Up 20% to date, this historically ‘boring enterprise’ has now hit a report excessive.
Now, I’ve all the time regarded this as a possible cornerstone of any dividend-focused portfolio. Along with regular-if-modest hikes to the entire amount of money returned, our fixed want for fuel and electrical energy makes this probably the most defensive companies round.
It’s not a slam-dunk funding, although. Like Vodafone, the Grid has an enormous debt pile, primarily as a consequence of the price of sustaining its infrastructure. A price-to-earnings (P/E) ratio of 18 additionally makes Nationwide Grid shares the most costly of the three.
As extra money appears to be flooding into UK and European shares from throughout the pond, nevertheless, I believe the worth would possibly simply proceed going up.
