Is now a smart time to build wealth by buying UK passive income shares? Judging by recent data, it seems targeting high-yield dividend shares from the London stock market can be a great way to boost one’s portfolio.
The FTSE UK Dividend+ index tracks the performance of higher-yielding FTSE 350 dividend stocks, excluding investment trusts. And in 2025 it provided a 33% total return, outpacing the broader FTSE 350’s 24.2%.
Yet now isn’t a ‘once-in-a-decade’ chance to capitalise on unusual market conditions. The truth is, UK dividend shares have been outperforming the wider market for years.
Over five years, the FTSE UK Dividend+ has delivered a 96.3% total return, meaning someone who invested at the start of 2021 would have almost doubled their money. By comparison, the broader FTSE 350’s provided a 74.8% total return.
The question is: can investors continue to beat the market by targeting dividend stocks?
Sunny outlook
I think they could. The London stock market is packed with financially robust, market-leading companies with diverse revenue streams. So investors can realistically expect strong and sustained dividends in most economic scenarios.
What’s more, a significant number of these operate in mature industries with limited growth prospects. As a consequence, they often prioritise dividends for their surplus cash over investing in their operations.
Having said that, individuals may need to get a bit more selective if they’re looking to maximise their dividend opportunities. Surging share prices in 2025 have pulled the average yield on UK shares down to a forward-looking 3.3%. So how can investors best tackle this challenge?
Next steps
The first step is to find a good stock screener to find higher-yield shares. They’re out there — it just takes a little bit of research to find them. My own analysis shows there are still around 100 passive income stocks today with yields of 6% and above.
The next step is to find those magical companies that could deliver a mix of healthy capital gains and dividends now and later. Not all those 6%-plus yielders will fall into that category. High yields can be signs of a troubled company and a harsh share price drop.
The good news is modern investors have more tools at their disposal to find these dividend gems than ever before. They can use company reports, analyst notes, financial websites, and investing experts like the Fool to sort the wheat from the chaff. I myself have added more Aviva (LSE:AV.) shares to my portfolio after doing some careful research.
A FTSE 100 income share
For 2026, Aviva’s dividend yield is an enormous 6.1%. And for next year it rises to 6.5%. Dividends have risen consistently since 2020, and analysts expect the company’s strong balance sheet to underpin further growth. As of November, its Solvency II capital ratio was 177%, even after the purchase of rival Direct Line.
Can the FTSE 100 firm keep delivering, though? I think it can, though profits could come under pressure if core regions like the UK continue to struggle. I expect Aviva’s share price and dividends to rise strongly over time as the broader financial services sector rapidly expands.
