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The Best 10 Dividend Growth UK Stocks (and ETFs) to Hold Forever
In an era of market volatility, geopolitical uncertainty, and persistently high inflation, dividend growth investing remains one of the most reliable paths to long-term wealth creation. For UK-focused investors, the combination of world-class companies, tax-efficient ISA wrappers, and a long tradition of shareholder-friendly corporate governance makes British equities particularly attractive for those seeking income that grows faster than inflation — year after year, decade after decade.
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This article presents our carefully curated list of the 10 best UK-listed dividend growth stocks and ETFs that we believe can realistically be held “forever” (or at least for multi-decade horizons) by patient, long-term investors. These are not speculative high-yield plays or turnaround stories. They are financially fortress-like businesses with durable competitive advantages, prudent management teams, and proven track records of increasing dividends through recessions, wars, pandemics, and financial crises.
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Selection criteria were rigorous:
Minimum 15 consecutive years of dividend increases (or equivalent for ETFs)
Strong balance sheet (net debt/EBITDA < 3.0× where applicable)
Return on invested capital consistently above 10%
Economic moat (brand, network effects, regulation, cost advantage, or switching costs)
Realistic prospect of mid-single-digit (or higher) annual dividend growth over the next 10–20 years
Reasonable valuation or at least not egregious overvaluation at the time of writing (November 2025)
All yield figures and growth rates are as of 30 November 2025 unless stated otherwise.
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1. Diageo PLC (DGE.L) – The Global Spirits Aristocrat
Dividend growth streak: 35+ years
Current yield: 3.1%
10-year dividend CAGR: 7.2%
Diageo is the closest thing the FTSE 100 has to a true “Dividend King.” Owner of Johnnie Walker, Guinness, Smirnoff, Baileys, Don Julio, and dozens of other premium brands, Diageo benefits from powerful pricing power, an unmatched route-to-market in emerging markets, and a shift toward premiumisation that has persisted for decades.
Even during the 2020 pandemic, when on-trade (bars & restaurants) collapsed, Diageo increased its dividend. The company has transformed from a conglomerate into a pure-play premium spirits powerhouse and still trades at a reasonable ~18× forward earnings despite a difficult 2023–2025 period in Latin America. Long-term demographic trends (rising middle class in Africa and Asia) remain firmly intact.
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2. Unilever PLC (ULVR.L) – Everyday Essentials Giant
Dividend growth streak: 25+ years (never cut, even in local currencies)
Current yield: 3.3%
10-year dividend CAGR: 7.8%
Unilever manufactures products that billions of people buy every single day — Dove, Hellmann’s, Knorr, Ben & Jerry’s, Domestos, and Lipton. Approximately 60% of sales come from emerging markets, yet the balance sheet remains investment-grade and conservative.
After several years of underperformance and activist pressure, new CEO Hein Schumacher has initiated a major restructuring: separation of the ice-cream business, sharper focus on 30 “power brands,” and a commitment to restore mid-single-digit sales growth. The current 3.3% yield combined with likely 6–8% annual dividend growth makes this an almost ideal compounder at today’s levels (~20× forward P/E).
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3. Reckitt Benckiser Group PLC (RKT.L) – Health & Hygiene Leader
Dividend growth streak: 24 years
Current yield: 3.9%
10-year dividend CAGR: 6.9%
Reckitt owns a portfolio of category-leading over-the-counter health and hygiene brands: Durex, Dettol, Nurofen, Gaviscon, Strepsils, Mead Johnson (Enfa), and Lysol. The pandemic dramatically illustrated the defensive nature of these products.
New CEO Kris Licht (appointed 2024) has simplified the portfolio, reduced debt from the Mead Johnson acquisition, and refocused on innovation. Trading at only 14.5× forward earnings with a near-4% yield, Reckitt offers one of the most attractive risk/reward profiles in UK consumer staples.
4. British American Tobacco PLC (BATS.L) – Controversial but Cash-Generative
Dividend growth streak: 25 years
Current yield: 8.3%
10-year dividend CAGR: 7.5%
We include BAT with full transparency that it is a tobacco stock and therefore carries ESG and regulatory risk. However, for investors who are comfortable with the sector, few companies match BAT’s cash-generation ability and shareholder discipline.
BAT has proactively invested billions into next-generation products (vapour, heated tobacco, modern oral) and now generates >15% of revenue from these categories — with far higher growth rates than combustibles. Management’s medium-term guidance remains 3–5% revenue growth and mid-single-digit EPS growth, which at current valuation (~8× forward earnings) supports continued generous dividends and buybacks.
5. National Grid PLC (NG.L) – Regulated Utility Monopoly
Dividend growth streak: 27 years
Current yield: 5.3%
10-year dividend CAGR: 5.1%
National Grid owns the high-voltage electricity transmission network in England & Wales and operates major electricity and gas assets in the northeastern United States. The coming decade will see unprecedented capital investment into grid modernisation and renewable integration in both jurisdictions.
Ofgem and U.S. state regulators allow a predictable return on equity, making earnings and dividends highly visible. The company recently rights-sized the dividend in 2024 after the sale of UK gas transmission, but the new ~5.3% yield is backed by a regulated asset base growing >7% annually through 2029. Few investments offer this combination of inflation linkage and defensive growth.
6. Sage Group PLC (SGE.L) – Small-Cap Software Compounders
Dividend growth streak: 20 years
Current yield: 1.7%
10-year dividend CAGR: 9.8%
Sage is the UK’s leading provider of accounting, payroll, and ERP software to small and medium-sized enterprises. The ongoing shift from on-premise licences to cloud subscriptions has produced accelerating revenue growth (12%+ in FY2025) and expanding operating margins.
Despite the low headline yield, Sage’s dividend has compounded at nearly 10% annually for a decade — one of the highest growth rates on the entire London market. Trading at ~28× forward earnings, it is not cheap, but recurring revenue >85% and net revenue retention >100% justify a permanent place in long-term portfolios.
7. Croda International PLC (CRDA.L) – Specialty Chemicals Moat
Dividend growth streak: 33 years
Current yield: 2.4%
10-year dividend CAGR: 8.9%
Croda manufactures high-value specialty ingredients used in cosmetics, pharmaceuticals, crop protection, and advanced materials. Over 70% of sales are from patent-protected or sole-supplier positions, giving Croda exceptional pricing power.
After a post-pandemic destocking cycle, Croda is returning to mid-single-digit volume growth supplemented by regular price increases. The balance sheet remains net cash, and management has guided to progressive dividends “in all normal circumstances” — a policy honoured for over three decades.
8. Spirax-Sarco Engineering PLC (SPX.L) – Niche Industrial Champion
Dividend growth streak: 56 years (true UK Dividend Aristocrat)
Current yield: 1.9%
10-year dividend CAGR: 10.4%
Spirax manufactures steam traps, peristaltic pumps, and thermal energy solutions for industrial clients. These are small-ticket but mission-critical components: a failed Ł500 steam trap can shut down a Ł10 million production line.
The company operates in a classic “razor-and-blade” model with high switching costs and has expanded through disciplined bolt-on acquisitions. Despite a premium valuation (~30× forward earnings), Spirax has delivered total returns exceeding 15% annualised over the past 20 years — one of the best records on the London market.
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9. Halma PLC (HLMA.L) – Safety Technology Growth Star
Dividend growth streak: 45 years
Current yield: 0.9%
10-year dividend CAGR: 10.1%
Halma is a conglomerate of over 50 niche safety, health, and environmental technology businesses (fire detectors, gas sensors, water analysis, eye-care equipment, etc.). Organic growth consistently runs at 5–7%, supplemented by acquisitions at reasonable multiples.
The ultra-low yield is more than compensated by double-digit dividend growth sustained for over four decades. Halma’s decentralised model and focus on structural growth markets (regulation-driven demand) make it a near-perfect “forever” growth-at-a-reasonable-price stock.
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10. Vanguard FTSE All-Share Tracker ETF (VUKE.L) & iShares Core FTSE 100 ETF (CUKX.L) – The Set-and-Forget Diversifiers
Effective dividend growth: Tracks UK market aggregate (historically ~4–6% pa long-term)
VUKE current yield: 3.7%
Expense ratio: 0.07–0.09%
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We include two broad-market ETFs because no investor should concentrate entirely in 8–10 individual stocks. These ultra-low-cost vehicles provide instant diversification across hundreds of UK companies while still delivering respectable and growing income.
The FTSE All-Share has increased its aggregate dividend every year since 2009 (including reinstatements post-COVID), and long-term dividend growth has averaged ~5% annually over the past 40 years — more than enough to protect purchasing power when combined with 3–4% average yield.
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Bonus Eternal Hold: HSBC FTSE All-World High Dividend Yield UCITS ETF (VHYL.L)
Yield: ~4.5% (global, but UK-listed and ISA-eligible)
Expense ratio: 0.29%
For investors wanting global diversification yet still an elevated yield,
VHYL provides exposure to ~1,800 high-dividend companies worldwide (significant UK weighting) and has grown its dividend payout in 9 of the last 10 years.
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Portfolio Construction Thoughts – Building Your Forever Income Stream
A balanced “forever” dividend growth portfolio using the names above might look like:
30% Consumer Staples (Diageo, Unilever, Reckitt)
20% Healthcare/Consumer Health (Reckitt overlap, Croda)
15% Utilities/Infrastructure (National Grid)
15% Industrials/Technology (Sage, Spirax, Halma)
10% Tobacco (BAT – optional, size to tolerance)
10% Broad UK ETFs
Reinvest dividends during accumulation years and switch to partial spending in retirement. The weighted average portfolio yield today would be ~3.8% with expected dividend growth of 6–8% annually — producing a rapidly rising income stream that should handsomely outpace UK inflation for decades.
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Risks to the “Forever” Thesis
No investment is without risk. Key threats include:
Prolonged regulatory attack on tobacco and alcohol
Major emerging-market slowdown affecting Diageo/Unilever
Adverse UK government policy toward utilities or pharmaceuticals pricing
Persistent sterling weakness inflating import costs
Black-swan de-equitisation of the London market
Yet history shows that high-quality companies with pricing power and strong balance sheets navigate even severe crises while continuing to reward shareholders.
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Final Thoughts
The companies and ETFs listed above have collectively survived the 1970s inflation crisis, Black Monday, the dot-com bust, the global financial crisis, Brexit, COVID-19, and the 2022 energy shock — in almost every case increasing dividends throughout.
For patient investors willing to ignore short-term noise and focus on the underlying business fundamentals, these 10 holdings represent the closest thing UK markets offer to permanent, compounding income machines.
Invest regularly, reinvest dividends, review annually but trade rarely, and let the most powerful force in finance — time — do the heavy lifting.
Disclosure: The author and affiliated entities may hold positions in some or all securities mentioned. This article is for educational purposes only and does not constitute personal investment advice. Past performance is not a guarantee of future results. Always conduct your own due diligence or consult a qualified financial adviser.
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