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.

| 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.

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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%.

Should you invest £1,000 in Hsbc Etfs Public Limited Company - Hsbc S&p 500 Ucits Etf right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Hsbc Etfs Public Limited Company - Hsbc S&p 500 Ucits Etf made the list?

See the 6 stocks

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.

Created with Highcharts 11.4.3Spirax Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

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.

Created with Highcharts 11.4.3Dcc Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

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.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »