2 dividend growth stocks from the FTSE 100 and FTSE 250 I’d buy today!

These dividend stocks have been growing shareholder payouts by double-digit percentages. I think they’re too good to ignore.

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I think these FTSE 100 and FTSE 250 stocks could be among the best dividend stocks to buy right now. Here’s why I’ll look to buy them when I have extra cash to invest.

Chemring

The world is embarking on a new arms race. And defence businesses like Chemring Group (LSE:CHG) are playing a vital role in helping Western nations carry out their programmes.

This particular UK share manufactures countermeasures that protect planes and boats from attack. It also makes sensors, explosive materials and other devices for use over land, air and sea.

The FTSE 250 firm racked up orders of £338.2m during the six months to April. This was up 81% year on year and represented a record first-half result. Tellingly the company’s order book stands at its highest for more than a decade, above £750m. 

Chemring has predicted “strong growth” in the defence market over the next decade. I think it’s difficult to argue against this.

Mounting concern over Chinese and Russian foreign policy helped propel global arms spending to a new peak of $2.2trn last year (according to the Stockholm International Peace Research Institute). Unfortunately it appears as if geopolitical tensions will worsen before they get better too.

This explains why City analysts expect dividends to keep rising. The defence firm raised annual payouts by 19% in the last financial year to October 2022, to 5.7p per share. Rewards of 6.8p and 7.8p are forecast for fiscal 2023 and 2024, respectively, too.

This means a dividend yield of 2.3% for this year marches to 2.7% for the following 12-month period.

System failures can have disastrous consequences and are a constant threat to repeat business. But Chemring’s robust track record means it’s winning considerable amounts of business in today’s climate.

Coca-Cola HBC

FTSE 100-quoted Coca-Cola HBC (LSE:CCH) is a dividend growth share I already own. And following recent share price weakness I’m tempted to increase my holdings.

The bottling company has a long track record of lifting dividends by high single-digit percentages. This culminated in a 2022 reward of 78 euro cents per share, up almost 10% year on year.

And despite the tough economic climate forecasters expect dividends to keep rising strongly. Rewards are tipped to rise to 82 cents and 91 cents per share in 2023 and 2024, respectively. Thus yields for the period range between 3% and 3.3%.

It’s true that Coca-Cola HBC must paddle hard to succeed in an ultra-competitive marketplace. Yet the colossal brand power of drinks like Coke and Sprite still allow it to grow earnings almost every year, thus allowing it to consistently raise dividends.

The company’s formidable cash generation also gives it the financial firepower to pursue an ultra-progressive dividend policy. Free cash flow has averaged €511m a year since 2018. And last year it hit record levels of €645m.

A star-studded portfolio of brands, allied with a high exposure to fast-growing emerging markets, makes Coca-Cola HBC a firm winner in my book. I expect dividends here to keep soaring over the long term.

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 assessed. Consider taking independent financial advice.

Royston Wild has positions in Coca-Cola Hbc Ag. The Motley Fool UK has no position in any of the shares mentioned. 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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