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Most investors buy dividend stocks to generate passive income, be it to supplement their salary or top up their pension. However, the share prices of some of the UK’s most popular examples have also been rocketing since the start of the year.
Let’s look at three examples that are outpacing the FTSE 100 and might just continue doing so for the remainder of 2026.
Turnaround dividend stock
Despite Vodafone‘s (LSE: VOD) chequered history when it comes to distributing cash to its owners, investors have long gravitated towards the telecommunications behemoth for their dividend fix. But lately, this market juggernaut has been behaving almost like a growth stock! A 15% gain in 2026 compares favourably to the index’s 9% and adds to the super momentum seen in 2025.
Of course, the rise in its share price has reduced the dividend yield. Right now, this stands at 3.6% — fairly modest when other stocks in the FTSE 100 are yielding up to 8%. But it’s more than a bog standard index tracker would currently earn (2.9%).
After a tough few years, it looks like investors are warming to this company’s strategy of selling its non-core businesses and focusing more on growth markets. Indeed, the completion of its merger with Three UK last year seemed to mark an inflection point in sentiment.
My chief concern remains the massive debt load. Yes, it’s lower than a few years ago. But ongoing and fierce competition could make a substantial reduction unlikely for now.
Future proof
Also on a charge is mining giant Rio Tinto (LSE: RIO). Its shares have performed even better — rising over 20% since the start of January — helped by a surging copper price.
Despite this great performance, there have been a few volatile days in the mix. A couple of weeks ago, Rio’s price dropped as it posted flat annual earnings and missed analyst expectations due to weaker iron ore prices. This highlights the bumpy ride that all investors in commodities can expect.
Still, the likely huge demand for the red metal in the years ahead as the world migrates towards to cleaner energy sources surely bodes well for Rio as both a long-term income and growth play.
Again, the dividend yield isn’t quite what it was. But 4.6% is hardly bad. And although those cash distributions can never be guaranteed, they look set to be covered by expected profit.
Reliable income
Yielding 3.5%, power provider National Grid (LSE: NG.) completes our trio of income stocks doing well. Up 20% so far, this traditionally ‘boring business’ has now hit a record high.
Now, I’ve always regarded this as a potential cornerstone of any dividend-focused portfolio. In addition to regular-if-modest hikes to the total amount of cash returned, our constant need for gas and electricity makes this one of the most defensive businesses around.
It’s not a slam-dunk investment, though. Like Vodafone, the Grid has a huge debt pile, primarily due to the cost of maintaining its infrastructure. A price-to-earnings (P/E) ratio of 18 also makes National Grid shares the most expensive of the three.
As more money seems to be flooding into UK and European stocks from across the pond, however, I think the price might just continue going up.
