Have £4k to invest in your ISA? 2 dividend growth stocks I’d buy and hold ‘til 2030

Are you seeking to generate chunky income flows from your Stocks & Shares ISA? Of course you are. And these dividend stars could be just what you’re looking for, says Royston Wild.

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Alliance Pharma (LSE: APH) might not be a name that immediately comes to mind when you think of dividend-paying pharma stocks. But for all serious income investors, it’s a share that’s worth buying because of its exceptional profits outlook for the next decade.

What makes the AIM-quoted company such a great dividend share is the rate at which it’s consistently raises annual dividends. Last year, it hiked the total payout 10% to 1.46p per share and City analysts expect Alliance to increase them by the same percentage in both 2019 and 2020, resulting in projections of 1.6p and 1.76p for these respective years.

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A medical miracle

Sure, there’s bigger yields out there than the 2% and 2.5% for this year and next, though I’d argue that Alliance’s bright profits outlook — and thus the prospect for more strong and sustained dividend growth thereafter — still makes it worth a serious look.

Latest financials showed revenues boomed 28% (at constant exchange rates) between January and June owing to soaring demand for its ‘International Star’ labels such as Kelo-cote and Nizoral. Sales of these products rocketed 79% in the first half, or 21% on a like-for-like basis.

What’s more, the huge steps Alliance has made in developing its business in the growth markets of Asia Pacific gives investors a lot to get excited about too. Sales here of the flagship Kelo-cote scar treatment for instance soared by 20% in the six months to June.

Short-term pain, long-term gain

I’d argue that Britvic (LSE: BVIC) is another solid dividend growth pick to hold through to 2030, and possibly beyond. It’s certainly true the soft drinks manufacturer — owner of beloved labels including Robinsons, R Whites and Lipton — hasn’t had things all its own way recently, due to difficult trading conditions in Ireland and France. These woes caused group revenues to fall 1.5% at constant currencies in the three months to July 7.

Largely speaking though, the immense brand power of Britvic’s products remains undimmed and, even though it’s not immune to sales lumpiness now and again, the enduring appeal of its drinks provides the sort of long-term earnings visibility that enables the company to raise dividends year after year.

Brand brilliance

Besides, Britvic’s dedication to innovation can be relied upon to keep its brands fresh and flying off the shelves, allowing it to also ride the rising popularity of low calorie drinks. Some of its more successful rollouts in recent times include Pepsi Max Cherry, 7UP Free and a range of its Robinsons juices. I’d argue the FTSE 250 firm has taken on the challenge of the UK sugar tax and used it to create an advantage over its rivals.

One final thing. Amid City expectations of further profits growth in the year to September 2020, an upgraded 31.5p per share dividend is expected, one that yields an inflation-beating 2.9%. I’d happily add Britvic and Alliance Pharma to my income-generating ISA today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. The Motley Fool UK has recommended Alliance Pharma. 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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