The UK stock market’s home to loads of excellent dividend shares. And amazingly, there are some that have increased their payouts for nearly 60 consecutive years. Moreover, look closely and it’s possible to find 132 of them on the FTSE All-Share index that are currently (11 June) paying 5% or more.

But what does this mean in practice? Let’s see.

How do the numbers stack up?

In the absence of a lump sum, many people prefer to invest little and often. And by doing this, it’s possible to build a large portfolio over a lifetime of investing.

Of course, the outcome depends on the level of return achieved, the sum invested, and for how long. The table below summarises how a portfolio might grow over a period of 25 years, depending on the assumptions made.

For example, an individual investing £300 a month at 5% a year could build a nest egg of £176,436 after a quarter of a century.

Is this realistic?

When presented with impressive figures like these, it’s easy to be sceptical. Is this really achievable? Well, we’ve already seen that there are over 100 stocks with a dividend yield of 5% or more. So yes, I think it is.

But it must be pointed out that shareholder returns are never guaranteed. After all, dividends can fluctuate in line with earnings. Also, my example assumes that share prices don’t change, which is unrealistic.

Despite these words of caution, there are many examples of companies that have excellent track records in steadily increasing their dividends over time, including during periods when the global economy has been struggling.

Personally, I believe the numbers in the table above clearly illustrate the potential long-term gains on offer from buying dividend shares. And I think it’s the principal reason why so many people see investing in UK shares as a great way to save for their old age.

An example

One company that has a vested interest in helping individuals with their retirement planning is Standard Life (LSE:SDLF). And coincidentally, it happens to be the second highest-yielding share on the FTSE 100, with a trailing 12-month return of 7.2%.

Impressively, investing £300 a month at 7.2% would grow to £234,341 after 25 years.

The pensions and insurance group’s capacity to pay such a generous dividend is entirely due to its impressive cash generation. Indeed, this is the primary measure on which it judges its own performance.

And despite paying such large sums to shareholders, it’s been able to maintain a strong balance sheet. At 31 December 2025, the group had a level of reserves that was 1.76 times higher than the regulatory minimum.

In 2025, after paying its dividend and covering its “recurring cash uses” it had £423m of “excess cash” left over. As part of its strategy of reducing its gearing, it used this to repay some debt.

However, its payout could come under threat if its huge portfolio of investments failed to deliver the returns (or income) anticipated. And it operates in an increasingly competitive industry.

But for the past 10 years, the group’s consistently delivered an above-average yield. And it’s produced some modest share price growth.

That’s why I have Standard Life in my own portfolio and why, I think, others could consider adding it to theirs.

Should you invest £5,000 in Standard Life right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Standard Life made the list?

James Beard owns shares in Standard Life plc.