Stocks and Shares ISA investors have dozens of these to choose from today. And two I think deserve serious attention from dividend investors are Chelverton UK Dividend Trust (LSE:SDV) and Social Housing REIT (LSE:SOHO). With dividend yields above 8%, they could deliver more income than almost every other UK share for every pound that’s invested.

If broker forecasts are correct, a £20,000 ISA invested equally across them will deliver £1,640 in dividends this year alone. So just what makes them passive income powerhouses?

Best of British

Chelverton UK Dividend Trust, as its name implies, is laser-focused on the London stock market for income. It’s a winning strategy, given Britain’s strong culture when it comes to paying dividends. The facts back this up.

Annual dividends at Chelverton have risen consistently since the early 2010s. What’s more, the dividend yield for 2026 is an enormous 8.3%, more than double the FTSE 100 long-term average of 3%-4%.

There is some risk here, as the trust focuses on non-FTSE 100 companies. The medium-to-small-cap stocks it holds don’t always benefit from cash-rich balance sheets, diverse revenue streams and market-leading positions. So when economic and industry conditions worsen, dividends can, in theory, be more vulnerable to disruption.

Yet as Chelverton’s record shows, it has a great track record of navigating such turbulence. That’s thanks to the quality of its management, not to mention its large and diverse portfolio. The 68 shares it holds span a range of industries including financial services, insurance, consumer goods and healthcare. So even if one or two companies suffer severe difficulties, the investment trust can still deliver substantial returns.

A top REIT

Real estate investment trusts (REITs) are also hugely popular with passive income investors. Under sector rules, at least 90% of their annual rental earnings must be distributed in dividends. That’s in exchange for significant tax breaks.

But that’s only one reason why they’re in high demand. After all, this rule won’t guarantee a healthy income if profits sink. The other reason is that these property stocks often have tenants tied into long contracts. This helps deliver stable cash flows even during economic or industry-specific downturns.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Social Housing REIT offers another layer of protection for investors. As the name suggests, it focuses on the ultra-defensive residential property market. Everyone needs a roof over their heads, so tenant demand and rent collection remain stronger than any other property segment.

That’s not to say this investment trust doesn’t carry risk. If interest rates rise, the REIT’s asset values could come under pressure, pushing the share price lower. But I’d expect Social Housing to recover over time and, in the meantime, investors should continue enjoying huge dividends.

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Stock markets have rallied in recent times, pulling down dividend yields. But the FTSE 100 and FTSE 250 indexes remain packed with high-yield heroes that could deliver an enormous passive income in 2026 and beyond.

Have £20,000 sitting in an ISA? Here’s how you could target an income of £1,600 this year alone.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Seven of the best

One of the keys of successful dividend investing is to build a diversified portfolio. The aim is to hold shares spanning different industries, sub-sectors and regions. With this strategy, a portfolio can still deliver robust dividend income, even if one or two companies hit trouble.

With a large number of high-yield stocks to choose from, investors can spread their risk without sacrificing wealth. Here’s an example of a seven-share portfolio that could deliver a large and resilient income stream:

With an average dividend yield of 8%, a £20k ISA investment spread equally across this portfolio would provide an £1,600 second income over 12 months.

You might be thinking that seven stocks isn’t representative of a well-diversified portfolio. This is where the inclusion of the Global X SuperDividend ETF and Chelverton UK Dividend Trust come in.

Combined, they hold shares in 168 different global and UK dividend shares. Pooled investments like this can provide a ‘cheat code’ for investors to build a mixed portfolio with relatively little effort, and much less cost than by purchasing dozens of individual stocks.

A top income trust

The Chelverton UK Dividend Trust is (in my view) one of the best investment trusts to consider for income. And it’s not just because, at 8.3%, its forward dividend yield is almost three times the FTSE 100 average.

Annual dividends here have risen for each of the last 14 years. This is thanks to the trust’s excellent strength in depth — some of the many sectors it invests in include media (ITV), logistics (Smiths News), insurance (Chesnara), retail (Wickes), and real estate investment trusts (Primary Health Properties).

Chelverton’s focus on mid- and small-cap companies comes with higher risk and reward than prioritising FTSE 100 shares. Smaller firms with more limited financial resources can lead to greater dividend volatility, and especially during economic downturns. However, it does provide the trust with that enormous yield.

One final thing: by concentrating on UK shares, the trust plugs investors into one of the most dividend-focused markets on the planet. As part of a diversified ISA, trusts like this can help deliver a large, dependable second income over time.

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In fact, will the State Pension even be around two to three decades from now?

These aren’t worries I’m prepared to sit back and accept while I have time to do something about it. I’m taking steps today to help me become totally financially independent in later life.

Want to see what I’m doing?

Targeting a million

To my mind, saving instead of investing is a major mistake that millions of Britons fall into.

Okay, money put in the bank provides a guaranteed return, and the value of my investment will never fall. The same can’t be said with assets that are traded on the stock market.

Yet cash savings provide the sort of terrible returns that can leave retirees dangerously short of funds. This to my mind is a greater risk, given the strong long-term profits that share investing tends to provide.

Someone who puts £500 a month into a Cash ISA, for instance, would likely have just £216,879 in their nest egg after 30 years. For a Stocks and Shares ISA investor, the amount would be above a million (£1,047,026 to be exact). These numbers are based on Moneyfacts data since 2015.

The Magnificent 7

There are several ways to use retirement savings to make a second income. My plan is to invest in a diversified portfolio of dividend shares providing me with regular cash payouts.

Of course dividends are never guaranteed. But investing in shares spanning different sectors and regions can make one’s income stream more consistent.

I think a strong, seven-stock portfolio could look something like this:

This collection contains both fixed-income assets (bonds) and a large range of equities. In fact, it provides exposure to more than 70 companies thanks to the inclusion of the Chelverton UK Dividend Trust.

What I like about this trust is its high weighing of UK dividend shares (92% today). While this creates more concentrated regional risk, it also means it’s focused on the most dividend-heavy stock market on the planet.

Chelverton’s holdings span industries as varied as mining, financial services, healthcare, telecoms, and consumer goods. This gives it strength to pay a robust, growing dividend over time — annual payout growth has averaged 6.3% over the last five years.

An investors with a million-pound ISA like the one I described earlier, invested equally across this portfolio could generate a huge annual dividend income of £76,433. That would likely more than make up for any State Pension shortfalls.

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Take the following high-yield dividend stocks:

The average dividend yield among these dividend shares is a whopping 8.7% for 2026. It means that a £20,000 investment — say in a Stocks and Shares ISA — invested equally among them would provide a £1,740 passive income next year.

But how realistic are the payout forecasts for these five dividend heroes?

Diversifying for dividends

Dividends are never, ever guaranteed. So it’s important to check items like payout ratios, dividend cover and balance sheet strength when running the rule over broker forecasts.

It’s also important to hold a range of dividend shares spanning different sectors and territories. This can protect a portfolio from weakness in specific regions and sectors, reducing the risk of disappointing dividends.

This is a strategy I’ve used for the portfolio above. It takes in individual shares inside defensive sectors (renewable energy and healthcare) alongside more cyclical industries (financial services and mining). It’s a blend that can combine robust dividend growth with stability over time.

A top trust

The Chelverton UK Dividend Trust takes the diversification theme onto another level. This income-focused investment trust holds shares in 66 dividend-paying shares, ranging from insurance companies (like Chesnara), real estate investment trusts (British Land), medical companies (One Health) and chemicals (Johnson Matthey).

The trust’s mission statement is “to deliver a high and growing income through investments in mid to small-cap companies exclusively outside the largest 100 UK stocks.“

This provides potential for capital growth along with greater annual dividend increases than someone would enjoy by investing in UK blue-chip shares.

It does have one downside, however. Smaller companies with less diverse revenue streams and weaker balance sheets can experience more dividend volatility during downturns.

That said, Chelverton UK Dividend Trust’s has a long record of dividend growth many FTSE 100 shares would kill for. Annual dividends here have risen consistently for the past 14 years, thanks in large part to its diversified approach.

Other top stocks

But what about those other dividend shares in the mini portfolio?

Profits at Legal & General and Rio Tinto could come under pressure if the economic landscape worsens. But both have strong balance sheets I believe will help them to meet dividend forecasts for 2026.

Rio Tinto’s net debt to underlying EBITDA ratio sits at just 1.2 times. Meanwhile, Legal & General’s excellent cash generation gives it a Solvency II capital ratio of 217%.

Elsewhere, Greencoat UK Wind’s reliable cash flows give it the means to pay large dividends despite interest rate risks. And Primary Health Properties’ large client base and defensive operations helps reduce (if no totally eliminate) the threat of rent defaults.

On balance, I think this mini portfolio of stocks is worth serious consideration from income investors for 2026.

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By holding a wide selection of shares, these trusts draw income from a mix of companies, industries and regions, thus reducing the impact of dividend shocks from one or two holdings.

With this in mind, here are three top investment trusts to consider. Today, their forward dividend yields comfortably beat the FTSE 100‘s 3.3% average.

Asia focus

Henderson Far East Income (LSE:HFEL) seeks to capture the enormous investment potential of Asian markets. From a dividend perspective it’s a high performer, having risen annual payouts each year since 2007.

Dividends are also on the large side, and for this year its yield is an enormous 10.2%.

Focusing just on Asia means it carries greater regional risk than global funds. Yet this strategy also leaves it laser-focused on some of the world’s largest and fastest-growing economies like China, India and the Philippines.

In total, this Henderson Fund holds shares in 73 different companies, ranging from cyclical shares such as Taiwan Semiconductor Manufacturing and HSBC to defensive stocks including Power Grid Corporation of India. This balances the portfolio nicely and provides a more stable return across the economic cycle.

Euro star

The European Assets Trust (LSE:EAT) has a more continental flavour than Henderson Far East Income. Some 70% of its funds are wrapped up in eurozone nations, with non-euro-trading European nations accounting for almost all the rest.

Again, this narrow regional strategy carries higher risk. But that’s not all — as with those other trusts we’ve discussed, more than 90% is allocated to shares in cyclical and sensitive industries. This can leave it vulnerable during economic downturns, as illustrated by recent dividend cuts.

The good news though, is that this allocation means each of the trusts can outperform when conditions improve. In this case, major holdings include building materials supplier Heidelberg Materials and Bank of Ireland.

European Assets Trust carries a robust 5.9% dividend yield for 2025. Despite its recent problems, I think it’s worth serious consideration.

Closer to home

The Chelverton UK Dividend Trust (LSE:SDV) has raised yearly dividends reliably since the early 2010s. For 2025, it carries a Footsie-busting 8.4%.

You’ll see this is another investment trust focused on a specific region. In this case, its success is highly geared to Britain’s economy which — if many forecasters are correct — could experience prolonged growth issues. Some 92% of it is tied up in UK-listed shares, which may be a problem.

Yet Chelverton’s ability to overcome similar issues over the last decade and deliver healthy regular growth is a good omen. Since 2020, annual payouts have grown at a decent yearly rate of 6.3%.

The trust holds shares in 66 companies in total spanning multiple sectors. These are as diverse as financial services, consumer goods, energy and telecoms, providing excellent balance.

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Given the spike in interest rates after 2021, it’s not a shock to see cash accounts have gained popularity. But with the Bank of England slashing their lending rates, continuing to prioritise savings over investing in the stock market could be an expensive mistake.

Better returns

Investors have to balance risk and reward when deciding where to put their cash. And there’s no right or wrong answer, as it depends on each individual’s investment goals and risk tolerance.

But I prefer to put the lion’s share of my capital in dividend-paying stocks. By investing in a wide range of companies, too, I can mitigate the riskier nature of share investing versus saving, and chase a strong return without putting my money in too much danger.

Even if rates remain unchanged at 4%, the superior passive income that’s on offer from UK shares make stock market investing a ‘no brainer’ for me.

Seven dividend stars

Here’s a mini-portfolio of seven UK stocks investors could consider putting their spare cash in:

The average dividend yield across these shares is 7.1%, which is triple the average interest rate of 2.3% that savers currently enjoy. Dividends aren’t guaranteed, but assuming these companies meet brokers’ forecasts — and can print a 3% average share price rise, too — I could enjoy a total annual shareholder return north of 10%.

Spread across 73 different companies, this mini portfolio could help protect investors against regional-, industry-, or company-specific shocks. The Chelverton UK Dividend Trust is especially effective in delivering this diversification.

The trust’s objective is “to deliver a high and growing income through investments in mid to small-cap companies exclusively outside the largest 100 UK stocks“. Concentrating on non-FTSE 100 stocks comes with greater risk, but it also provides the potential for superior rewards.

Besides, with investment in 66 different businesses across 20 different sectors, risk is still pretty well spread, in my opinion. Chelverton’s record of 14 straight years of dividend increases illustrates this robustness.

My plan

I’m not saying that investors should consider avoiding cash accounts altogether. I myself hold money in savings to diversify my broader portfolio and provide access to emergency cash.

But, for me, the best way to target a life-changing passive income is by putting most of my spare capital in dividend shares.

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Here are three I think investors should consider as part of a high-performing Stocks and Shares ISA.

Tech star

The first thing to think about is harnessing the huge growth potential of the information technology sector. The digital economy continues to expand rapidly, and phenomena like artificial intelligence (AI), quantum computing, self-driving vehicles and automation are all tipped for incredible long-term growth.

The Allianz Technology Trust (LSE:ATT) is one investment vehicle that’s well placed to capture these opportunities. It holds a total of 49 tech shares, comprising market leaders and companies with great track records of innovation including Nvidia, Microsoft, Apple, Meta and Alphabet.

It’s important to remember that this sector’s highly cyclical, leaving the trust vulnerable in economic downturns. But I feel Allianz Technology’s long-term record speaks for itself. It’s delivered an average annual return of almost 8% since 2015.

Dividend collector

Holding a collection of dividend shares can provide a smoother ISA return over the economic cycle. Capital gains can be hard to come by during downturns, but this can be offset with shares that deliver a passive income.

The Chelverton UK Dividend Trust (LSE:SDV) can deliver on this strategy. Annual dividends have grown consistently for the last 14 years. And during the past five years, they’ve expanded at a healthy average rate of 6.3%.

City analysts expect this trend to continue. And so the dividend yield here for 2025 is an enormous 9.3%.

In total, the Chelverton trust holds shares in 66 companies, ranging from heavyweights with market caps above £1bn to tiddlers with a value below £100m. Therefore it provides exposure to mature companies with strong balance sheets, to smaller businesses with greater growth potential.

This weighting of small-caps admittedly also creates greater danger for investors. But as part of a diversified portfolio still think the trust’s worth considering.

The globetrotter

The final investment trust worth thinking about to round off our diversified ISA is the Monks Investment Trust (LSE:MNKS).

While the other two trusts provide exposure to just US and UK shares, this one’s net is spread far and wide, covering North America, Europe, Japan and global emerging markets. While the latter group may leave it more vulnerable to political shocks, its wide wingspan importantly also leaves it less dependent on a single region to drive performance.

This is another growth-based trust, but its 100+ holdings are widely spread across different sectors. These include tech stocks like Allianz Technology Trust owns, but also industrials, consumer goods, financial services and healthcare companies, among others.

It’s a strategy that’s paid off handsomely. Over the last decade, Monks has delivered an average annual return of roughly 13%.

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Investors today have hundreds of such financial vehicles to choose from depending on their investment style and objectives. So they don’t need to diversify across a basket of assets without having to sacrifice their broader investing strategy, either.

With this in mind, here are three top trusts and funds to consider.

The property trust

Real estate investment trusts (REITs) like The PRS REIT (LSE:PRSR) are renowned as stable and generous income shares. This company — which specialises in the ultra-stable residential rentals sector — offers even more safety, as accommodation demand remains steady at all points of the economic cycle.

Under REIT rules, it must pay at least 90% of annual earnings from its rental operations out in dividends. For this financial year (to June 2026) its dividend yield is a FTSE 100-beating 4.4%.

PRS REIT’s share price could dip again if interest rates fail to drop as significantly as the market hopes. Higher rates depress property stocks’ net asset values (NAV) among other things, hitting earnings.

But given steadily rising rents, I’m confident it will remain an attractive long-term dividend stock.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

A UK shares trust

Investors looking for larger yields might want to consider Chelverton UK Dividend Trust (LSE:SDV), too. Its forward dividend yield is an impressive 9.4%.

The downside is that this investment trust is focused on small-to-mid-sized British companies. This is a potential issue as — unlike blue chips with stronger balance sheets — their dividends can be more volatile during economic and industry downturns.

That said, Chelverton’s investment in a broad range of businesses helps to spread this risk. Today it has holdings in 66 companies including insurer Chesnara, building materials retailer Wickes, and antenna manufacturer MTI Wireless Edge.

This has enabled the trust to raise annual dividends for 14 years on the bounce.

An alternative ETF

The Invesco US High Yield Fallen Angels ETF (LSE:FAHY) doesn’t invest in the stock market. This means its price performance isn’t subject to the same volatility that often befalls equities.

Instead, this trust holds corporate bonds that have been downgraded to below-investment-grade status. It’s a strategy that leaves it more exposed to default risks. However, this also gives the opportunity to achieve higher returns through better dividend yields.

For 2025, the dividend yield here is a chunky 6.7%.

This Invesco fund also aims to reduce potential default risk on overall returns by holding a wide selection of bonds. Today, this stands at 70. In addition, no single holding constitutes more than 3.76% of the total portfolio.

Some of the bonds it holds are from healthcare provider CVS Health, media company Paramount Global, and aluminium business Alcoa Nederland.

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Purchasing dividend-focused investment trusts can be a great way to reduce (if not completely eliminate) these threats. These financial vehicles often hold stakes in a variety of companies. So problems felt by a handful of companies doesn’t necessarily mean that investors’ dividend income collapses.

With this in mind, here are three top trusts I think could be great sources of long-term passive income. If broker forecasts are correct, a £15,000 lump sum spread equally among them will yield a £1,410 second income this year alone.

Henderson Far East Income (dividend yield: 11.2%)

Economic bumpiness in China has been a problem for Henderson Far East Income (LSE:HFEL) recently. Trouble in its core market (and contagion to nearby economies) has caused its share price to drop. This has, in turn, supercharged its dividend yield.

While risks remain, I think this emerging market trust could deliver great long-term returns. I certainly expect it to continue raising dividends for the foreseeable future (annual rewards have risen every year since 2008).

This Henderson trust holds stakes in around 70 companies. These range across sectors and include Alibaba, Taiwan Semiconductor Manufacturing Co and China CITIC Bank.

I think it’s worth considering as way to capitalise on soaring Asian wealth and population levels.

Chelverton UK Dividend Trust (dividend yield: 9%)

As its name implies, the Chelverton UK Dividend Trust (LSE:SDV) is focused on generating returns from London-listed shares. This leaves it more vulnerable to nation-specific risks than continental or investment trusts.

But with more than 60 holdings, and a focus on mid-to-small-cap companies, it still offers a diversified approach that can provide long-term payout growth. Dividends here have risen consistently for the past 14 years.

Like Henderson Far East Income, Chelverton’s capital is spread across a wide spectrum of sectors. Industrial goods and services, financial services, and construction are especially well represented through shares like Smiths News, Duke Royalty, and Severfield.

Small-cap shares like this can be more volatile than blue-chip stocks, which is a risk to consider. However, they can also have superior growth potential over time.

Social Housing REIT (dividend yield: 7.9%)

As a real estate investment trust (REIT), this particular vehicle’s set up in a way that prioritises dividends income. Sector rules mean that 90% of rental earnings must be paid out each year.

This doesn’t always guarantee a reliable passive income. But Social Housing REIT (LSE:SOHO) focuses on the stable supported housing sector, which provides a cushion of safety.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Unlike those other two trusts, this one doesn’t invest in equities. Instead, it holds a portfolio of almost 500 residential properties comprising around 3,500 homes. This helps protect group earnings from problems (such as rent collection or cost issues) at one or two locations.

Despite interest rate risks, I think this property trust is worth serious consideration for dividends.

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• Operate in defensive industries, and therefore enjoy long-term earnings stability.
• Have strong balance sheets with low debt and/or impressive cash flows.
• Enjoy robust economic moats (like barriers to entry, patented products and brand power).
• Maintain strong diversification, which protects profits from localised issues.

With this in mind, here are three great dividend stocks I think savvy share pickers should look at today.

iShares US Equity High Income ETF

With holdings in 211 companies, the iShares US Equity High Income ETF (LSE:INCU) could be an effective way for investors to reduce risk and source a long-term income.

Its exposure is spread far and wide, from tech businesses like Nvidia and Apple to classic safe-havens like consumer goods giant Pepsico, pharmaceuticals developer Merck and telecoms provider AT&T. This isn’t all, as it also generates earnings from government bonds and cash, providing additional stability.

Right now, iShares US Equity High Income’s forward dividend yield is a mighty 9%. Its ongoing charge meanwhile is 0.35%, which I consider reasonable.

I think it’s a great diversified fund to consider, even though its focus on Stateside stocks could leave it vulnerable if investors continue rotating away from US shares.

Chelverton UK Dividend Trust

Like a shares-based ETF, investment trusts can also provide high returns while helping share pickers to reduce risk. As its name implies, the Chelverton UK Dividend Trust (LSE:SDV) is designed to supply a steady stream of passive income.

More specifically, this pooled investment vehicle “aims to deliver a high and growing income through investments in mid to small-cap companies exclusively outside the largest 100 UK stocks.” Such smaller companies can be more susceptible to weakness during economic downturns. But again, a wide variety of holdings (it owns shares in 62 companies today) helps to reduce (if not completely eliminate) this threat.

Some of Chelverton’s largest holdings are insurer Chesnara, food manufacturer Bakkavor and Arbuthnot Banking. The forward dividend yield here is an impressive 9.1%.

Aviva

In my opinion, Aviva (LSE:AV.) is one of the best FTSE 100 shares to consider for a long-term passive income. And it’s not just because its 6.3% forward yield is one of the largest on the UK blue-chip index.

The company has significant brand power, which helps protect earnings even during downturns. Its status as the largest life insurer in the UK (market share of 24%) and market-leading positions in other diversified product lines underlines this. It also has a significant position in the defensive general insurance markets to protect revenues when consumers feel the pinch.

On top of this, Aviva has a cash-rich balance sheet it can use to pay large dividends while still investing for growth. Its Solvency II capital ratio was 203% as of December.

Intense competition remains an ongoing threat. But Aviva’s long-term resilience helps soothe any fears I have.

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