How I generated a 25.9% return in my SIPP in 2025 (and my strategy for 2026!)

2025 has been a terrific year for my Self-Invested Personal Pension (SIPP) portfolio. While there are still a few weeks to go before the year comes to a close, my UK-exclusive SIPP is up 25.9%.

By comparison, the FTSE 100 has generated a total return of 21.8% over the same period. Clearly, it’s been a great year for UK shares in general. But thanks to some intelligent decision-making, my portfolio continues to enjoy the upper edge.

Here’s how I did it, and what my investment strategy will be in 2026.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The power of dividends

My SIPP exclusively contains dividend-paying stocks. It has a simple long-term goal: to generate a chunky and lovely passive income stream during my retirement.

However, unlike most income investors, I’m not hunting for the largest yields. Instead, I’m interested in lower-yielding stocks that generate an exorbitant amount of free cash flow. These are the businesses that have the most potential to grow dividends in the future. And given enough time, an initially modest yield can transform into something far more substantial.

It can take several years for this snowball effect to make a meaningful difference. But thanks to the investments made back in 2022 and 2023, my SIPP started outperforming in 2024. And in 2025, that margin has expanded even further.

My biggest winner so far

Games Workshop (LSE:GAW) is currently the top performer in my SIPP today. Right now, if an investor were to buy shares, the yield would be a measly 1.7%. But thanks to dividend growth, my yield’s already closer to 6%. And with the company continuing to post impressive results, that payout’s on track to expand even further.

[fool_stock _chart ticker=LSE:GAW]

The highly-anticipated 2026 launch of the new edition of its flagship Warhammer 40,000 is already building hype. That’s because each edition comes with a brand-new line-up of new miniatures for collectors, painters, and players alike.

Meanwhile, with the company also developing new licensing projects like the upcoming Amazon TV series starring Henry Cavill, the company might soon be able to reach a much wider audience for its various Warhammer franchises.

Of course, like every other business in my SIPP, there are always risks to consider carefully. In this case, the company’s exposed to US import tariffs that will undoubtedly eat into its US profit margins.

What’s more, continued economic weakness could dampen global discretionary spending, which could have a knock-on effect. After all, Warhammer miniatures are priced at a significant premium.

So far, demand has proved to be resilient even during the 2022 cost-of-living crisis. But whether that will continue into 2026 remains uncertain. Nevertheless, I remain cautiously optimistic for what lies in store next year for Games Workshop and my other dividend growth positions.

My strategy for 2026

As we approach the new year, my strategy remains unchanged. I continue drip feeding money into my SIPP to buy shares with substantial dividend growth potential.

Like before, I don’t expect these investments to pay off immediately. In fact, they might actually underperform in the short term. But by remaining focused on the long run and diversifying across multiple industries, I expect my portfolio yield to continue climbing and generate sustainable and (hopefully) predictable market-beating returns.

The post How I generated a 25.9% return in my SIPP in 2025 (and my strategy for 2026!) appeared first on The Motley Fool UK.

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Zaven Boyrazian has positions in Games Workshop Group Plc. The Motley Fool UK has recommended Games Workshop Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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