My favourite way to target a passive income is with high-yield dividend shares. The FTSE 100 and FTSE 250 are home to hundreds of top companies with long records of dividend growth, supported by qualities including:
- Strong cash flows and little-to-no debt.
- Sector-leading positions, reflecting competitive advantages and high barriers to entry.
- Diversified revenue streams that protect profits from localised shocks.
- Histories of sensible capital allocation, including prudent payout ratios.
- Capital-light business models that require minimal investment.
I’ve recently bought more Aviva and Primary Health Properties shares for my portfolio to boost my income streams. The forward dividend yields for these shares sit at 6.7% and 7.8% respectively, ahead of the FTSE 100 long-term average of 3%-4%.
And I’m considering opening positions in Henderson Far East Income (LSE:HFEL) and Standard Life (LSE:SDLF) in the coming days. The dividend yields among these top income shares are even higher for 2026, at 9.5% and 8.4%.
Why should investors think about buying these shares? If dividend forecasts are correct, a £20,000 ISA investment spread equally across them will generate £1,680 in dividends this year alone.
Let’s look in more detail why they’re on my shopping list in June.
Look East
Henderson Far East Income, as its name implies, focuses on generating dividends from Asian businesses. The result? This investment trust enjoys exposure to some of the hottest dividend shares on the planet.
According to analysts at Edison:
Asian companies are generating record levels of cash, helped by having low levels of debt, strong free cash flow and low capex… Payout ratios have [also] been rising in Asia and the region is home to some of the highest dividend growth businesses.
As a consequence, Henderson Far East Income’s dividends have risen for 18 years on the spin. But that’s not all. Like all investment trusts, it’s been able to hold back cash during stronger years. This has helped it keep paying large and growing dividends even during leaner times for its holdings. Today, the trust owns shares in 74 different companies.
A FTSE 100 income opportunity?
Standard Life has never cut dividends since it listed on London’s stock market in 2009. It’s also raised dividends every year for the past 10 years. What’s its secret?
The answer’s simple. Standard Life buys mature life insurance and pension portfolios that generate reliable long-term cash flows. This model has another advantage: it doesn’t require huge amounts of capital, allowing the business to distribute more of this cash to shareholders instead of having to reinvest it in the business.
This doesn’t make the FTSE firm risk-free though. One thing I’m mindful of is its large exposure to property markets, leaving Standard Life’s earnings more exposed to interest rates.
Yet I don’t think this will derail Standard Life’s impressive dividend record. Its Solvency II capital ratio of 176% provides a strong buffer against any profits turbulence.
Should you invest £5,000 in Henderson Far East Income right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Henderson Far East Income made the list?
Royston Wild owns shares in Aviva and Primary Health Properties.
