4 stocks Fools love with a long history of increasing dividends

Familiar with REITs? You may want to be after reading this, with two of the four dividend stocks falling under this category!

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Some dividend stocks are made differently to others… or is it simply a case of having shareholder-focused management? Find out the reasons that four of our free-site writers are keen on the following income shares:

British American Tobacco

What it does: BAT is one of the world’s largest tobacco companies. In recent times, it has diversified into non-combustible products such as vapes.

By Charlie Keough. It goes without saying that dividends are never, ever guaranteed. So, when I see a company like British American Tobacco (LSE: BATS) that’s raised its dividend every year since 2000, I pounce at the chance to add it to my portfolio.

That’s even more true when I consider I can snag its shares trading on just 6.3 times earnings. That’s nearly half the FTSE 100 average.

With its impressive track record, the Dividend Aristocrat boasts a whopping 10% yield. That’s the third highest on the Footsie. Last year, the business paid shareholders 232.52p per share, a 2% increase from 2022.

Looking ahead, British American Tobacco is expecting to generate around £40bn of free cash flow. It has also been trimming its debt. When it comes to paying dividends, these are good signs.

That said, the company is set to face further pressures in the months and years to come as governments across the world continue to clamp down on the tobacco industry.

Nevertheless, it has been making good progress with its alternative New Categories division. Management has also reiterated it remains committed to its progressive dividend policy.

Charlie Keough owns shares in British American Tobacco.

What it does: Legal & General offers retirement, wealth, insurance, investment management and capital investment solutions.

By Andrew Mackie. I have owned shares in Legal & General (LSE: LGEN) since I started investing five years ago. The reason is simple: it offers market-beating dividends that have been growing for well over a decade.

Since 2019, dividends per share has increased 16%. The company’s intention is to grow the dividend at 5% in FY24. That puts it on a forward yield of a whopping 9.1%. This makes it one of the highest yielding stocks in the FTSE 100.

Of course, I don’t invest in companies solely on the basis of healthy payouts. Dividend sustainability is far more important. Since 2020, capital generation has significantly outpaced shareholder returns. Over the next 5 years, it’s aim is to continue to grow capital faster than its dividend commitment.

However, the UK and global economy continues to struggle. Continued inflationary pressures are forcing markets to reappraise the likelihood of significant interest rate cuts in 2024. This matters hugely to L&G because of the extensive bond and property portfolio on its balance sheet.

But with long-term structural growth drivers, notably around ageing demographics, I remain confident that the business will continue to deliver exceptional returns for shareholders well into the future.

Andrew Mackie owns shares in Legal & General.


What it does: The company owns over 3,500 properties in 49 US states, generating stable and diversified rental income.

By Oliver Rodzianko. From my research, NNN REIT (NYSE:NNN) stood out to me as it has had no dividend reductions since 1988.

It’s a leading US real estate investment trust (REIT). It looks like one of the best places for me to invest for passive income.

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.

Well-performing REITs have a reputation for providing excellent dividends. NNN has a yield of 5.3%.

However, one of the elements of moderate risk here is that the company derives all of its rental income from the US. A housing market crash or a wider economic recession in the country could negatively affect NNN much more so than if the firm was diversified overseas.

But NNN’s top tenants include 7-Eleven, LA Fitness, and Taco Bell. Since its initial public offering in 1984, the shares have also gained 338% in price.

If I want to build out my dividend income, this is one of the first places I’ll look.

Oliver Rodzianko does not own shares in NNN REIT.

Tritax Big Box REIT

What it does: Tritax Big Box REIT owns and operates around 80 warehouses and logistics facilities across the UK.

By Royston Wild. Since it listed in London more than a decade ago, property stock Tritax Big Box REIT (LSE:BBOX) has lifted annual dividends every year bar one. The exception was during the Covid-19 crisis when it reduced shareholder payouts.

With the pandemic now in the rear view mirror, City analysts expect shareholder rewards to continue rising for at least the next few years. So a healthy 5% dividend yield for this year eventually moves as high as 5.5% for 2026.

Real estate investment trusts (REITs) like this can be excellent ways to make a large and reliable passive income. This is thanks to the long contracts these businesses typically lock their tenants into.

The weighted average unexpired lease term (or WAULT) for this stock currently stands at 11.4 years, giving it brilliant visibility when it comes to rental income.

On top of this, REITs such as this are required to pay at least 90% of annual rental earnings out in the form of dividends.

Tritax’s share price could stay under pressure if interest rates remain at elevated levels. But I think the potential long-term rewards of owning the FTSE 250 firm are compelling.

Royston Wild owns shares in Tritax Big Box REIT.

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.

The Motley Fool UK has recommended British American Tobacco P.l.c. and Tritax Big Box REIT 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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