Dividend investing is something of a lost art in today's growth-driven stock markets, where share price appreciation has been the main vehicle for investors over the last 10 years or more. That’s been driven by the surge in US technology stocks and, in particular, the Magnificent 7, many of which have achieved valuations that are larger than those of national stock exchanges outside of the US.

However, the fact that something has fallen out of favour or fashion doesn't mean it's no longer valuable. 

As the proverb goes, “many a good tune has been played on an old fiddle” (apologies to Stradivarius).

We had a reminder of this earlier this year when, between June 10th and July 31st 2026, the FTSE 100 dramatically outperformed the S&P 500 by as much as +9.00%. 

Much of that outperformance was attributed to the FTSE's lack of technology exposure and to its high concentration of dividend-paying stocks, many of which are also multinational blue chips. 

A report from Schroders in June 2020 highlighted the fact that the FTSE 100 barely moved between New Year's Eve 1999's record close at 6930 and the end of 2019. The total return on the index over those 20 years was +122.0%. 

How could that happen? The answer is dividends 

Of course, since then the FTSE has added almost 4000 points, but dividends remain as important today as they did 26 years ago.

To that end, I want to talk about a dividend ETF, namely the iShares UK Dividend UCITS ETF ticker IUKD LN. 

If we do see markets seriously question the data centre boom, its sustainability, financing, and nested nature, then IUKD could be an uncorrelated hedge or safe haven.

The ETF, which is managed by BlackRock, provides income and capital growth to investors by tracking the performance of UK companies with relatively high and stable dividends. Its benchmark is the FTSE UK Dividend+ Index, and its annual charges are 0.40%. 

The fund has 50 holdings, many of which would qualify as household names to equity investors and consumers alike. IUKD was launched in 2005 and has assets under management of some £1.35 billion. 

There is a weighting bias in the portfolio towards financials, which make up almost 44.0% of the fund; consumer staples, real estate and energy account for another 32.0%. Legal and General is the fund's largest holding; the ETF makes quarterly distributions and is rebalanced on a semi-annual basis.

Performance 

As of September 3rd, the fund has produced a return of +211.0% since inception.

Over 10 years, it's up by 93.96%; in 5 years, it's grown by +82.29%. Year to date, the ETF has seen its price rally by +14.26%. 

In the first 8 months of 2026, the ETF has outperformed the FTSE 100 index by almost +1.60%. And over 3 years, IKUD has outperformed the UK blue-chip index by +12.50%, though the FTSE fares better over longer timeframes. 

Overall Rating 4.0/5.0

Pros: Captures the performance and dividend payments of 50 UK equities, many of which are blue chips; recent and medium-term outperformance of the FTSE 100 index. IKUD can be held within an ISA or a SIPP, making the dividends and price appreciation tax-free; it has an attractive trailing dividend yield and average volumes of almost half a million shares are traded daily. Has been and could continue to be an attractive hedge against the data centre-led US indices.

Cons: Has a relatively narrow list of holdings with a significant bias towards UK financials; Annual charges are high when compared to the cheapest US ETFs. Has been outperformed by the FTSE 100 in the medium to longer term. Dividends are a bonus, not a guarantee; they can vary greatly or even be withdrawn. 

Technical Outlook 

Technically, IUKD looks solid; in fact, the ETF has spent no real time below its 50-day moving average since the spring of 2024. The 200-day line is found down at 981.50p, and RSI 14 for the ETF is at 53.23. I note that the RSI 14 has crossed above its own 5-day MA line, suggesting that we could see an uptick and associated price rise. 

Rating 4.0/5.0

Fundamental Outlook 

From a fundamental standpoint, the fund looks good too; it does what it says on the tin, though there has been some tracking error/deviation from the fund's benchmark index over time; the gap appears to be narrowing in recent periods. The trailing 12-month dividend yield of +4.60% looks good for a fund with diversified holdings, and a P/E of 15.72 times is at the top end but not appreciably outside of the recent range of the PE for the FTSE 100 itself. 

Rating 4.0/5.0