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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 manufactured from the proper FTSE 100 shares.
However what are the ‘proper’ shares?
Nicely, in all honesty, there’s no definitive checklist of appropriate shares for such an endeavour. And the truth that the objective posts are continually altering doesn’t assist. Fluctuating rates of interest, political instability and overseas tariffs all play an element in the place share costs go each day.
That’s why the best shares are those who preserve a gentle head even when occasions get robust. 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 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 standard for passive earnings due to its distinctive dividend monitor file. Spanning almost a century, it’s paid dividends constantly since 1929, with nearly 20 years of uninterrupted progress 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 Conflict II, the 2008 Monetary Disaster, and Covid), Unilever maintained its dividend funds.
The rationale 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 experiences in each sterling and euros. Moreover, its world diversification means returns are in danger from political instability, foreign money crises and financial volatility.
Nonetheless, historical past has proven it’s one of the crucial steady of FTSE 100 dividend shares.
Severn Trent
When considering of utility inventory for earnings, many individuals flip to Nationwide Grid. However whereas the nation’s core power grid operator is a good choice, Severn Trent (LSE: SVT) truly has a greater dividend monitor file.
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 file, in its 20-year-long historical past, it’s finished surprisingly nicely. Regardless of two minor dividend reductions previously 20 years, general, dividends have grown at a mean fee of three.53% per yr. For instance, the corporate elevated dividends from 81p in 2016 to £1.19 in 2024 — roughly 47% progress 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 steady no matter financial circumstances.
However there may be one elephant within the room that may’t be ignored: £8.65bn in debt. At that stage, even a regulated enterprise is susceptible to defaulting — or not less than reducing dividends.
Nonetheless, with a long-term view, I anticipate debt will come underneath management and the corporate will proceed delivering steady earnings to shareholders.
