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Investing in a Self-Invested Personal Pension (or SIPP) is perfect for an investor with a long-term approach to investing, like me.
Along the way, as dividends pile up they can be kept within the SIPP and used to fund the purchase of more shares without needing to add extra capital. That simple but powerful investing approach is known as compounding.
A SIPP investor could have the best of both worlds, adding in new funds at the same time as compounding dividends from current holdings to buy more shares.
Here are five UK dividend shares for income-focussed SIPP investors to consider. Each yields at least 5.2%.
ITV
Broadcaster ITV (LSE: ITV) has a policy of paying at least 5p per share as a dividend annually. In its results this month, it delivered once more on that and also mentioned that it expects to grow the dividend over the medium term.
Given that the ITV share price is in pennies, that means that the FTSE 250 broadcaster now yields 6.5%.
Still, the share price has disappointed and is now 9% lower than it was five years ago.
I think that reflects ongoing investor concern about the business prospects. Traditional broadcasting remains significant but is in decline. ITV has expanded its digital offering considerably, but that costs money and the market is much more fragmented, making it harder to build economies of scale.
But I think its intellectual property, viewer base, and studio rental business are all competitive advantages.
Aviva
Insurance may be boring but it can be lucrative. Insurer Aviva slashed its dividend per share in 2020 but it has since been raising it handily.
Last year saw a 7% increase in the dividend per share and Aviva now yields 6.6%. Its strong brands combined with a huge customer base (over 17m in the UK alone) are real strengths in my view.
A proposed combination with Direct Line could accelerate growth and add economies of scale. But it also risks distracting management from the core business.
WPP
Another firm that has cut its dividend over the past few years is advertising network WPP. But its yield still stands at a juicy 6.2%.
Can it last?
The City seems nervous about the risks AI poses to lots of the ad creation and ad space buying work WPP currently does. The share has already fallen 24% in 2025.
But I reckon its proven business model, client relationships, and large agency network are strengths. AI could help reduce costs so may be an opportunity, not just a threat.
J Sainsbury
Retailer J Sainsbury needs little introduction. Its 5.2% yield makes it a share I think income investors should consider.
Both in the supermarket business and through its Argos operation, the FTSE 100 company has done a good job of integrating digital and offline shopping.
But a weak economy could put further pressure on profit margins, as rivals cut prices to attract shoppers.
BP
5.8%-yielding BP has been doing what looks like a U-turn, ditching much of its renewable energy focus to put more emphasis on oil and gas.
I see that as good for profitability. But it does increase the risk to both sales and profits if the oil price crashes, as it tends to do from time to time.