My Self-Invested Personal Pension (SIPP) generated a chunky 25.9% total return last year, outpacing even the tech-laden S&P 500‘s 16.4% gain. And that’s without having a single tech stock in my retirement portfolio.
Instead, my focus has been on finding unloved and boring businesses that can be depended on to do one thing: generate cash. Let me break it down.
My dividend growth strategy
The strategy’s straightforward. I’m looking for businesses that produce an exorbitant amount of excess cash flow, even in the toughest economic conditions. Why? Because businesses that continuously generate cash can simultaneously reinvest in themselves and fund an ever-rising dividend even when times are tough.
This proved to be particularly powerful in 2025. With persistent inflation and elevated interest rates ravaging most UK businesses, the cash generators in my SIPP didn’t break a sweat. In fact, several started using their financial strength to buy up smaller struggling competitors, boosting their market share in the process.
So far in 2026, those same market conditions persist. As such, my strategy remains unchanged. And one business I’m eager to buy more of today is Safestore Holdings (LSE:SAFE).
Why Safestore?
Owning a self-storage rental enterprise may not sound exhilarating. But it’s hard to argue with the financials. Steadily rising demand across the UK has paved the way to 16 consecutive years of revenue, earnings, cash flow, and dividend growth. Yet looking ahead, that could be just the tip of the iceberg.
Safestore’s the dominant player in the UK. But jump across the English Channel, and the story’s very different. The European self-storage market is still in its infancy and highly fragmented – the exact same market conditions as the UK almost two decades ago.
Management’s now seeking to replicate its winning UK strategy abroad. And progress so far has been pretty encouraging.
In its latest half-year results, Safestore’s Expansion Markets division delivered a 25.7% boost to revenue. Spain alone achieved a 21.2% growth rate on a like-for-like basis. And with an expansive pipeline of new storage facilities planned for construction or targeted for acquisition, there could be even more double-digit growth on the horizon.
Having said that, there are some crucial risks to consider.
What could go wrong?
Higher interest rates haven’t compromised Safestore’s cash-generating capabilities. But it has nonetheless had an impact on occupancy and margins.
With smaller businesses feeling the economic pinch, demand for larger stores has suffered. Management’s responded by prudently reformatting these stores into multiple, smaller, consumer-focused ones, which has helped occupancy levels recover.
But nevertheless, occupancy remains weaker compared to five years ago. And if interest rates start to spike back up, both business and consumer customers could once again start cancelling their leases, putting pressure on profit margins.
But is that a risk worth taking?
The bottom line
For my SIPP, I’m only interested in owning businesses capable of steady value compounding over the next 30 years. And in my opinion, Safestore fits that bill nicely.
It’s not a stock that will deliver ‘get rich quick’ returns. But for patient investors seeking an ever-expanding dividend income stream for retirement, I think Safestore could be worth mulling. And it’s not the only dividend growth stock I’ve got my eye on right now…
What income stock do we like better than Safestore Plc right now?
One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.
And the best bit is that you can see if for yourself, right now, absolutely free of charge!
No jargon. No hard sell. Just a clear look at an income share we think is worth your time.
Zaven Boyrazian owns shares in Safestore Holdings.
