The London stock market has long been a popular hunting ground for investors seeking a large and reliable passive income. FTSE 100 shares in particular have proven reliable dividend plays with the UK’s premier index packed with cash-generating companies in mature industries and strong payout cultures.
That said, UK stocks have lost some of their lustre from a dividend perspective more recently. Underlying dividends (which also exclude special dividends) dropped 0.6% in 2024, representing the second successive year of declines.
On a global basis, shareholder payouts rose 6.6%, according to Janus Henderson. In the US, underlying dividends were up 8.7% year on year.
Taking a global view
That isn’t to say London’s now a bad choice to shop for a second income. Spire Healthcare — a share I hold in my Stocks and Shares ISA — hiked the ordinary dividend 320% in 2024, for instance. Dozens of other UK shares raised theirs by triple- and double-digit percentages too.
But last year’s performance shows the wisdom of searching the world for dividend stocks and not just sticking to the UK. Ageas is one such dividend share I’m considering for my own portfolio. The Belgian insurance giant has raised dividends during 11 of the last 12 years. The only exception came during 2020 — then the business froze cash rewards at the height of the pandemic.
Ageas is highly cash generative, and is tipped to keep raising dividends despite macroeconomic risks. Its forward dividend yield is an enormous 6.6%.
I’m also taking a close look at Enel. The Italian energy producer has raised dividends every year since 2015. This stability reflects the inelastic nature of power demand and the reliable cash flows it provides. A focus on renewable energy can create some turbulence during periods of unfavourable weather. However, the firm’s portfolio of gas-fired plants helps limit any damage.
The dividend yield here is 5.7%.
A top US dividend share
Looking further afield, Realty Income (NYSE:O) is a US share I’ve long admired for its dividend growth record. Investor payouts have risen for 112 consecutive quarters. This means annual dividend growth since the 1994-listed real estate investment trust (REIT) stands at a healthy 4.2%.
I also like Realty Income because of the frequency of its dividends. The self-styled ‘Monthly Dividend Company’ has paid cash rewards roughly every four weeks for 56 years. This gives investors quicker access to dividends for potential reinvestment.
Reflecting its REIT status, Realty Income is obligated to pay at least 90% of annual earnings from its rental operations out in dividends. This is in exchange for juicy tax perks. But this doesn’t guarantee a large and growing dividend on its own. Profits can fall during economic downturns when rent collection and occupancy issues may spring up.
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However, this rule can still make it a more dependable dividend payer than most other stocks when earnings sink. What’s more, the company has roughly 15,600 commercial properties locked down on long-term contracts, a powerful cushion from possible downturns.
Realty Income’s forward yield’s a chunky 5.4%.
