There are now an impressive 5,000 ISA millionaires and most of them have built their wealth by investing in… yes, that’s right, FTSE 100 dividend shares.

Today’s updated figure comes courtesy of smart money app Plum, following a Freedom of Information request. That’s up from 4,000 at last count, an increase of 25% in a year

The average ISA millionaire now has a tax-free pot of £1.35m and some are doing even better. The top 25 Stocks and Shares ISA investors hold an eye-watering £8,880,000 on average.

Who wants to be a Stocks and Shares ISA millionaire?

Plum’s Rajan Lakhani said ISAs don’t just offer tax advantages but “flexibility and liquidity” too. “You can crystallise your wealth whenever you choose and regardless of age, unlike, for example, pension holdings or buy-to-let properties.”

The new research doesn’t show which stocks these wealthy private individuals hold, but luckily investment platform AJ Bell produced its own research earlier this year.

Its report will come as a shock to anyone (me included) who assumed they’d grown wealthy by investing in US tech giants culled from the S&P500.

While the likes of Nvidia, Microsoft and Apple do feature in their portfolios, AJ Bell said that “far more have large-cap dividend-paying stocks from the UK market than overseas-listed stocks”.

It also made it clear what attracted ISA millionaires to UK blue-chips: while foreign shares “pay little or no income to shareholders”, UK shares do.

FTSE 100 oil giant Shell (LSE: SHEL) is their number one holding. Now there’s a business that has been doing the same thing for decades.

Yet Shell has been through a tough time lately. Like every oil producer, revenues and profits bob up and down in line with commodity prices. With the oil price sliding to $72, the Shell share price is sliding too. It’s down 14.53% over the last three months. Over the year, it’s fallen 4.42%.

Shell quickly resumed its dividend after dropping it in the pandemic and today offers a modest trailing yield of 4.07%. I’d expect that to return to 5% or 6% over time. The board has rewarded investors with plenty of share buybacks too.

Shell is a long-term dividend-growth star

The oil price could fall further as Chinese demand wilts and US President-elect Donald Trump ramps up fossil fuel production. I doubt ISA millionaires are worried though.

Experience will have shown them that investing is cyclical. The last thing they would do is sell Shell at the bottom of that cycle. While Shell still has to navigate the green transition, I would expect it to deliver a steady stream of income and growth over the years.

Lloyds Banking Group is the second most popular stock among ISA millionaires, according to AJ Bell. It’s followed by pharmaceutical group GSK, oil giant BP, insurer Aviva, utility National Grid, consumer healthcare company Haleon, insurer Legal & General, HSBC Holdings and spirits maker Diageo.

AJ Bell said that ISA millionaires show a preference for solid, established businesses that have been doing the same thing for decades: “There are no speculative, blue-sky companies in their portfolios that have a bright idea but do not generate revenue.”

Personally, I hold GSK, BP, L&G and Diageo and while I’m nowhere near ISA millionaire status, it’s nice to know I’m in good company.