Dividends are a tried and trusted technique to earn passive revenue however it’s greatest follow to not put all eggs in a single basket. If an organization stumbles, each the share price and dividend funds might take a nosedive.

Nonetheless, whereas diversification’s key, specializing in particular shares generally is a enjoyable thought experiment. Which corporations provide probably the most reliability and peace of thoughts?

If I might solely select two shares to go all in on, it could be these.

The perfect of each worlds?

Healthcare’s typically thought-about a low-risk, non-cyclical market that is still in excessive demand from a rising and ageing inhabitants. Housing’s a barely riskier market however with extra progress potential. 

The 2 make a formidable crew within the type of Main Well being Properties (LSE: PHP).

The actual property funding belief (REIT) has a portfolio of healthcare amenities that serve 6m sufferers. That’s virtually 9% of the UK inhabitants. And it’s a stable dividend payer in addition, with a 6.7% yield and 27 consecutive years of progress.

In change for tax advantages, REITs are required to return 90% of income to shareholders. For my part, that makes them a dependable possibility for long-term passive revenue. Furthermore, 89% of its rental properties are roll-funded by authorities our bodies.

Please observe that tax remedy relies on the person circumstances of every shopper and could also be topic to alter in future. The content material on this article is offered for data functions solely. It’s not supposed to be, neither does it represent, any type of tax recommendation.

Whereas healthcare’s a defensive {industry}, housing’s at extra danger. If the housing market takes a dive, Main Well being’s share price might fall too. There’s proof of this occurring in 2007 in the course of the housing market crash. Extra just lately, the price suffered when rates of interest soared in 2022. If comparable occasions happen once more, the falling share price might threaten dividend funds. 

However earlier recoveries have been swift so I really feel the belief is dependable. Over the previous 20 years, it has delivered annualised returns of two.91%. Mixed with a median 5% yield, whole shareholder returns have been virtually 8% a yr on common.

Many years of dividend progress

Metropolis of London Funding Belief (LSE: CTY) holds the report for the longest uninterrupted interval of dividend progress. For 58 years, the belief’s been growing its annual dividend funds. At 4.72%, it doesn’t have the very best yield on the FTSE however its dividend monitor report is unmatched.

The belief invests primarily in main UK corporations. Amongst its high 10 holdings are well-known British manufacturers resembling Tesco, HSBC, and Shell. Nonetheless, it isn’t fully reliant on the native economic system. As a result of worldwide attain of enormous UK companies, 60% of the income from its holdings comes from abroad. This makes it defensive in opposition to each industry-specific and regional danger.

Nevertheless, it’s not with out danger. Financial downturns have damage the shares prior to now and can probably accomplish that once more. If the fund’s managers make dangerous funding selections, it might endure losses. There’s additionally the danger of losses from change charge fluctuations on income that’s derived from overseas.

Previously 30 years, the price has elevated at a median of three.88% a yr. Mixed with a median 4% yield, long-term returns have been round 7.8% a yr because the early 90s.