Owning dividend-paying companies in a Stocks and Shares ISA can be a low-effort way to enjoy a passive income. Once I’ve decided which dividend stocks to buy and purchased them, I can sit back and (hopefully) watch the cash rewards roll in.
Here are three top FTSE 100, FTSE 250 and small-cap shares I’m currently thinking about adding to my ISA.
A top REIT
I already own several real estate investment trusts (REITs) in my portfolio. These include Primary Health Properties, which owns and lets out GP surgeries, and care home operator Target Healthcare REIT.
Alternative Income REIT (LSE:AIRE) is another such investment trust on my radar.
These property investment trusts must distribute 90% of annual rental earnings to investors. This specific one is in my sights because of its giant forward dividend yield. At 9.2%, it’s the highest-yielding REIT on the London stock market.
This share has exposure to more cyclical sectors like retail, leisure and industrial. As a consequence, it faces the threat potential rent collection and occupancy problems during downturns.
However, it also has its tenants tied down on long contracts to mitigate this risk — the weighted average unexpired lease term was 17.5 years as of March. And it has some exposure to defensive sectors like healthcare and residential to further reduce the possibility of such issues.
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Growing passive income
F&C Investment Trust (LSE:FCIT) doesn’t have the heavyweight dividend yields of that small-cap REIT. For 2025, the yield sits at only 1.4%. But what it does have is one of the strongest records of payout growth on the FTSE 100.
Annual dividends have risen consistently for the last 53 years. With the trust also trading at a 7.6% discount to its net asset value (NAV) per share, you may understand why it’s on my watchlist.
With investment in more than 400 companies, it provides excellent diversification that reduces risk and provides consistent passive income across the economic cycle. To give you a flavour, some of its largest holdings include Nvidia, Microsoft, Mastercard and Walmart.
F&C’s global footprint means performance is vulnerable to adverse currency movements. But I also like the fact this means it isn’t reliant on one region to drive returns.
Double-digit dividend yield
Today NextEnergy Solar Fund (LSE:NESF) offers an attractive blend of dividend growth and market-beating yields.
Annual payouts have risen every year since the fund listed in London in 2014. Its 11.4% forward dividend yield is also the best on the FTSE 250 mid-cap index.
Profits at renewable energy stocks depend heavily on weather conditions. When the sun doesn’t shine, power generation at this particular stock can disappoint. However, NextEnergy’s wide asset base that spans Europe helps reduce (if not totally eliminate) this risk.
Today this dividend stock trades at a 21.8% discount to its NAV per share. I think it could be a great way for me to target a cost-effective passive income.
Now all I have to do is make up my mind!
