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Want to maximize your chances of earning a mighty second income? Then consider buying dividend shares in a Stocks and Shares ISA. Thanks to tax protection, every penny he earns in the form of dividends is his property to reinvest, spend, or both.
Stock markets have recently surged, causing dividend rates to decline. But FTSE100 AND FTSE250 the indexes are still filled with high-yield heroes that can provide massive passive income in 2026 and beyond.
Got £20,000 in your ISA? Here’s how you can achieve an income of £1,600 this year alone.
Please note that tax treatment depends on each client’s individual situation and may change in the future. The content of this article is for informational purposes only. It is not intended to be and does not constitute any form of tax advice. Readers are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.
The seven best
One of the keys to successful dividend investing is building a diversified portfolio. The goal is to have shares that cover a variety of industries, subsectors and regions. With this strategy, the portfolio can continue to provide solid dividend income even if one or two companies end up in trouble.
By having a gigantic number of high-yielding stocks to choose from, investors can spread risk without sacrificing wealth. Here’s an example of a seven-stock portfolio that can provide a gigantic and stable income stream:
| Dividend stocks | Industry | Core region | Dividend rate in the future |
|---|---|---|---|
| Legal and general | Financial services | Great Britain | 8.2% |
| Greencoat Renewable Energy | Renewable energy | Ireland | 9.8% |
| Supermarket Income REIT | Real estate investment funds (REITs) | Great Britain | 7.3% |
| Global X SuperDividend UCITS ETF | Exchange-traded fund (ETF) | Global | 10.1% |
| Admiral | Insurance | Great Britain | 6.3% |
| Chelverton UK Dividend Fund (LSE:SDV) | Investment funds | Great Britain | 8.3% |
| Verizon Communications | Telecommunication | US | 6.1% |
With an average dividend yield of 8%, an ISA investment of £20,000 £ spread evenly across the portfolio would provide a second income of £1,600 in 12 months.
You may think that seven companies are not representative of a well-diversified portfolio. This is where the Global X SuperDividend ETF and Chelverton UK Dividend Trust come to the rescue.
In total, they own shares in 168 different dividend stocks around the world and in the UK. Such pooled investments can be a “code” for investors to build a mixed portfolio with relatively little effort and at much lower cost than purchasing dozens of individual stocks.
Highest Yielding Trust Fund
Chelverton UK Dividend Trust is (in my opinion) one of the best mutual funds to consider for income. And that’s not just because the forward dividend yield of 8.3% is almost three times the FTSE 100 average.
Annual dividends here have been increasing for the last 14 years. This is thanks to the trust’s excellent strength – some of the many sectors it invests in include media (ITV), logistics (Smith News), insurance (Chesnar), retail (Wicks) and real estate investment trust funds (Basic health properties).
Chelverton’s focus on mid- and small-cap companies carries greater risk and reward than prioritizing FTSE 100 stocks. Smaller companies with more constrained financial resources can lead to greater dividend volatility, particularly during economic downturns. However, it provides confidence with such enormous efficiency.
One last thing: by focusing on UK shares, the trust exposes investors to one of the most dividend-oriented markets in the world. As part of a diversified ISA, these types of unit trusts can assist provide a gigantic, reliable second income over time.
