These 2 FTSE 100 dividend stocks have hiked payouts by 10% a year for a decade. Time to buy?

Harvey Jones is tempted by two FTSE 100 dividend stocks with a strong track record of increasing shareholder payouts every year.

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I’ve bought a heap of FTSE 100 dividend stocks over the last year, mostly concentrating on those offering very high yields of 6%, 7%, 8% or more. There’s a hatful to choose from, but a high yield isn’t everything.

Companies with a lower headline yield can also be dividend heroes, if they hike shareholder payouts year after year after year. Which is exactly what these two have done.

The first is a company I haven’t looked at for yonks, engineer Spirax Group (LSE: SGX). Its trailing dividend yield is just 1.81%, well below today’s FTSE 100 average of 3.7%.

Long-term rising yields

Its share price performance hasn’t been all that either. It’s crashed 18.44% over 12 months. Over five years, it’s up just 6.58%. Despite that poor performance, the Spirax share price is still valued at 28.52 times earnings! No wonder I overlooked it.

Yet AJ Bell recently sent me some a table listing FTSE 100 companies with the best record of hiking dividends and Spirax was right in there, with an average compound growth rate of 10.5% a year. Not many matched that.

Over 10 years, the stock had delivered a total return of 284.7%, with all dividends invested. Not the best on the FTSE 100, but not bad either. And that’s despite the recent bad run. So should I think again?

The Cheltenham-based thermal energy management and pumping specialist suffered a 21% drop in pre-tax profits in 2023 to £244.5m. It hiked its dividend but only 5.26%, modest by its standards.

For 2024 it’s predicting revenue growth of only mid-to-high-single-digits, as it fights market weakness and currency headwinds. Demand is flat, especially for its semiconductor wafer fabrication equipment.

As I said, I like buying shares when the market doesn’t want to know. However, I like them to be cheap and Spirax isn’t. Not for me, not today.

FTSE 100 rising income play

Sales and marketing firm DCC (LSE: DCC) also needs a more buoyant global economy for its shares to kick on. Yet it hasn’t done so badly without one. The DCC share price is up 23.78% over the last 12 months, although it’s down 14.44% over five years.

It’s not all about share price growth. AJ Bell’s figures show DCCt has hiked its dividend by an average of 10.8% every year for the last decade. Its total return over that time is 138.6%, which isn’t so exciting when I think about it, but is still acceptable. The dividend has done most of the heavy lifting here.

DCC operates across the energy, healthcare and technology sectors. 2023 group revenues fell 10.6% to £19.9bn, largely due to falling wholesale energy costs. Adjusted operating profits nonetheless climbed 4.1% to £682.8m.

Today, the trailing yield is 3.44%, higher than Spirax. DCC is a lot cheaper too, trading at 12.61 times trailing earnings.

When companies are struggling, the marketing spend is often the first to be cut. So it’s hardly surprising that DCC’s shares have struggled in our troubled times. When the economy picks up (it has to recover at some point, surely), so should DDC.

The stock has been at the back of my mind for a year now. Given its dividend track record, I’m tempted to buy it when I have the cash. But I’m not so taken with Spirax.

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.

Harvey Jones has no position in any of the shares mentioned. 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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