This FTSE 100 stock has increased its dividend each year for over 40 years!

Jabran Khan details a FTSE 100 growth stock that has managed to increase its dividend year-on-year for over 40 years. Should he buy shares?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

There aren’t many FTSE 100 stocks that can profess to have increased a dividend every year for more than 40 years. One stock that can is Halma (LSE:HLMA). Should I buy shares for my portfolio?

FTSE 100 champion

Halma is a group of companies with the primary aim of saving lives and increasing safety through technology. It operates in three broad market areas.

Halma’s safety companies protect life as populations grow and specifically look at worker safety. Environmental firms look at improving the quality of food and water as well as monitoring air pollution. Health focuses on the rising healthcare demand and lifestyle shifts over time.

As I write, Halma shares trade for 2,868p per share on the FTSE 100 index. This time last year, shares were trading for 2,200p which means its share price has increased 30% in the past 12 months. Year-to-date, its share price is up approximately 17%. This upward trajectory in recent times can be attributed to recently reported positive results and robust performance. 

Performance and dividend increase

In its full-year report, released last month, Halma confirmed two key things that stood out for me. Firstly, as mentioned, it increased its dividend for yet another year making it 42 in total. In addition, and more importantly to me personally, it announced record profit for the 18th consecutive year. This is another feat not many other FTSE 100 firms can claim either.

Halma reported revenues during the 12 months to March 2021 actually dropped 1.5% to £1.32bn. Furthermore, sales dropped over 5% during the first half as the pandemic affected operations but this was to be expected in my opinion. Sales did pick up in the second half. Despite the overall sales drop, it did report profits rose by over 4% to £278.3m.

Due to this, Halma raised its annual dividends yet again. For 2021, it plans to pay a total dividend of 17.65p per share which is a 7% increase. Halma also confirmed it had made a good start to the current fiscal year which is a pleasing sign that its trend of increasing dividends may well continue.

Risk and reward

I have identified three primary risks that could hurt Halma and its dividend. Firstly, if the pandemic worsens and new variants arise, performance and potentially profit could be affected, like they were at the start of the pandemic last year.

Next, Halma is priced a bit high which means it is susceptible to a share price fall if any bad news were to occur. This could be pandemic related or perhaps political and humanitarian, which could have a negative knock on effect.

Finally, Halma’s core companies operate in a highly regulated space. If regulation were to tighten or change, this could affect performance and profit too.

Although the Halma share price trades at a high price-to-earnings ratio of close to 50, I still think it is an enticing prospect for my portfolio and a great FTSE 100 pick.

As well as its robust performance and yearly dividend increases that would help me make a passive income, it has a unique position to benefit in the current world we live in. Due to the pandemic, healthy and safety equipment and technology have become defensive sectors and this is Halma’s lifeblood.

Overall, I am considering adding some shares to my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

More on Investing Articles

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

2 ‘irresistible’ FTSE stocks to buy before the market recovers!

For me, the FTSE is the most attractive index to invest in. Valuations are low and yields are high. So…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Is NIO stock a buy at $20?

NIO stock has been pretty volatile over the past few months. Here, Dylan Hood takes a look to see if…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

I’m buying more Lloyds shares at 45p! Here’s why

Lloyds shares look cheap to our writer at present. Charlie Carman outlines the factors behind his decision to invest more…

Read more »

Jumbo jet preparing to take off on a runway at sunset
Investing Articles

When will the Rolls-Royce share price recover?

The Rolls-Royce share price may be down, but cash flows are surging! Zaven Boyrazian explores how long it could be…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

1 dirt-cheap FTSE 100 stock I think could TRIPLE my money!

Demand for lithium is forecast to surge by 42 times, enabling this FTSE 100 stock to potentially supercharge its profits…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I invest in the FTSE 100 – or try to beat it?

Our writer has the option of investing in a FTSE 100 tracker fund. So why does he choose to buy…

Read more »

Young black woman walking in Central London for shopping
Investing Articles

£1,500 to invest in a Stocks and Shares ISA? Here’s how I’d do it

Our writer has been investing in his Stocks and Shares ISA. Here he details how he could put £1,500 in…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

2 top FTSE 100 shares I’d buy before the market rebounds!

Christopher Ruane identifies a pair of FTSE 100 shares that have both tumbled in the past year and that he…

Read more »