Have £10,000 to buy dividend stocks with a Stocks and Shares ISA? Investors today have a great chance to turn a sum like this into a large and sustainable passive income. There are 17 stocks on the FTSE 100 alone with dividend yields of 5% or more.
With a £10k lump sum, I think investing in three different shares is a strategy to consider. This could deliver a healthy second income even if one of these companies fails to pay the dividends analysts are forecasting.
Which shares to consider? Well, Aviva (LSE:AV.) is one I hold in my portfolio, and whose forward yield is an enormous 6.5%. Alongside this FTSE 100 dividend hero, I think student accommodation provider Unite Group and iShares US Equity High Income Active ETF are worth considering. Their dividend yields are 7.4% and 8.7% respectively.
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How much passive income?
With a £10,000 lump sum invested equally across them, an investor could buy 522 Aviva shares, 643 Unite shares, and 766 shares of iShares US Equity High Income Active ETF. With an average annual dividend yield of 7.5%, these three would throw off a £752 passive income in 2026 alone, assuming broker forecasts are accurate.
Diversification is important to reduce the chances of dividend volatility, as I say. And exchange-traded funds (ETFs) like our iShares US-focused fund help investors achieve this simply and cheaply.
Any fund that’s focused on one region carries more geographic risk than ones with a global approach. However, this product’s well diversified in other ways, which helps offset its regional limitations. It holds positions in 355 companies in industries as varied as IT, financial services, healthcare, and consumer goods. This ETF holds cash and US government bonds, too.
Two top dividend stocks
Unite’s status as a real estate investment trust (REIT) also gives it brilliant dividend credentials. At least 90% of annual rental earnings must be paid to shareholders in exchange for tax breaks. This limits the influence management can have on the dividends it pays.
So what’s the downside? Well profits and dividends can still underwhelm if its tenants fail to pay the rent. However, with rents usually paid upfront or paid by parents or student loans, such risks are limited, with the steady income Unite receives used to pay reliable dividends.
As I say, Aviva’s a dividend share I already hold in my portfolio. Dividends have risen during 11 of the past 12 years. And over the past decade, yields have averaged 8.3%, which trounces the FTSE long-term average of 3% to 4%.
A 7.4% income opportunity?
There are a number of factors that make Aviva a reliable dividend share. Huge restructuring since the mid-2010s has made it more capital efficient and rebuilt the balance sheet. Today its Solvency II capital ratio is a huge 180%, and it’s targeting more than £7bn of cash remittances in 2026-2018.
This supports the company’s 6.5% dividend yield for 2026, and the 6.9% and 7.4% it carries for 2027 and 2028 respectively. Could rising competition impact dividend growth further out? It’s possible. Even so, I think Aviva’s proven business model and growing markets should help it remain one of the UK’s best dividend shares.
Should you invest £5,000 in Aviva Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva Plc made the list?
Royston Wild owns shares in Aviva.
