For those who’re on the lookout for a sweat-free passive earnings, a Shares and Shares ISA is a terrific technique to do it. You received’t pay a penny in tax in your dividends or capital positive aspects, for all times.
At The Twelfth Magpie, we imagine within the energy of investing in FTSE 100 and FTSE 250 dividend shares. Dividends are the common funds corporations make to reward shareholders, and lots of intention to extend them yr after yr. They aren’t assured, however can present a beneficiant and rising earnings over time. All tax-free inside an ISA.
By no means underestimate the dividend
Please be aware that tax remedy depends upon the person circumstances of every shopper and could also be topic to vary in future. The content material on this article is supplied for data functions solely. It isn’t supposed to be, neither does it represent, any type of tax recommendation. Readers are accountable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding choices.
Let’s say an investor had £20,000 to speculate at this time, which simply occurs to match the annual ISA allowance. Let’s additionally say they unfold it throughout a number of dividend shares and obtain a mean annual return of 8%, with dividends reinvested.
After 30 years, their unique £20k can be price a shocking £201,253. And that’s with out making any additional contributions. Taking 4% of that yearly would generate £8,050 a yr, or £671 a month, tax-free. That’s a helpful second earnings, though neither the returns nor the withdrawal charge are assured.
Some FTSE 100 corporations can yield 7% or extra. One which catches my eye is Aberdeen Group (LSE: ABDN), which has a tempting trailing dividend yield of round 6.7%.
Aberdeen’s lengthy highway again
Aberdeen has had a torrid time since merging with Commonplace Life in 2017. The mixture created a sprawling asset supervisor simply as energetic fund administration was hit by the shift to cheaper passive index-tracking. Underperformance, misplaced mandates and buyer withdrawals hammered the inventory.
In 2021, administration ditched the normal title for abrdn, a vowel-free rebrand that attracted widespread ridicule. The corporate lastly restored Aberdeen to its title in March 2025.
The inventory dropped into the FTSE 250 in March 2025, however its fortunes have began to enhance. Aberdeen regained its blue-chip standing in June 2026.
Is its restoration sustainable?
The shares have rallied sharply in current months, helped by improved profitability, cost-cutting and the rising success of its Interactive Investor platform. Newest full-year outcomes confirmed adjusted working revenue up 4% to £264m in 2025, whereas property beneath administration and administration climbed 9% to £556bn.
The momentum continued within the first half of 2026, when adjusted working revenue jumped 21% to £151m.
Aberdeen continues to lose cash by means of internet outflows in elements of its funding enterprise, whereas a inventory market stoop might hit property, charges and income. Competitors from low-cost platforms stays fierce.
But Interactive Investor is rising strongly, prices are being squeezed and administration expects adjusted working revenue of at the least £300m this yr.
I believe Aberdeen is price contemplating for long-term income-focused buyers. I might purchase it myself however already personal M&G and Authorized & Normal Group, two high-yielding FTSE 100 shares from the financials sector. There are different FTSE 100 dividend shares we like at The Twelfth Magpie, together with this one yielding a shocking 7%…
What earnings inventory can we like higher than aberdeen group proper now?
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Harvey Jones owns shares in Authorized & Normal and M&G.
