2 super-safe dividend stocks that have been paying passive income for decades

Income from stocks is never nailed on. But there are a handful of UK dividend stocks that have been incredibly consistent in throwing cash back at loyal shareholders.

| 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.

Hand of a mature man opening a safety deposit box.

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.

When looking to buy dividend stocks, I like to see a track record of cash distributions stretching back many years and preferably decades.

This might sound like a big ask — passive income from any company can never be guaranteed. But there are some FTSE shares out there that have proven more reliable than most.

Passive income powerhouse

International sales, marketing, and support services group DCC (LSE: DCC) is one example. Sifting through the data, I can see the company has not only chucked out cash to shareholders year after year, it’s also hiked the amount on a regular basis.

Should you invest £1,000 in J D Wetherspoon Plc 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 J D Wetherspoon Plc made the list?

See the 6 stocks

That last bit is really important to me. I’d rather own a company boasting smaller but rising payouts over one with an enormous dividend yield that looks unaffordable (and often proves to be).

Right now, I can see that DCC shares come with a forecast 4.3% yield that looks set to be covered well over twice by projected profit. The valuation also looks pretty low at just 10 times earnings.

But a bit of context is needed.

Revenue drop

DCC’s share price has lagged the FTSE 100 by a considerable margin in 2024 so far. A 13% drop is in stark contrast to the latter’s 6% gain.

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

From what I can see, most of this appears to be down to a period of stodgy trading. Back in May, the company reported a near-11% fall in annual revenue thanks to the reduced wholesale cost of energy. More generally, I note that operating margins are (very) low in this line of work.

However, I do like that it has three divisions — DCC Energy, DCC Healthcare, and DCC Technology. This gives it some earnings diversification, which should help to support dividend growth going forward. Indeed, it helps to explain why the £4.9bn cap still managed to lift last year’s full-year payout by 5%.

With half-year numbers due on 12 November, I’m adding this firm to my watchlist for now.

Dividend king

I can’t talk about ‘super-safe’ dividend stocks and not mention Bunzl (LSE: BNZL). The international distributor has been dishing out increasing amounts of cash for decades.

But is this a complete surprise? I don’t think so. The items it delivers are needed by organisations and businesses all the time, even if they’re also things no one wants to spend long thinking about. Stuff like coffee cups, cleaning products, and safety boots.

Bunzl also operates in 33 countries. It’s therefore not overly dependent on any one economy to bring in the money from which those lovely dividends are eventually taken. I find that comforting.

Buy and hold

However, this is another low-margin business and one whose shares currently trade at a price-to-earnings (P/E) ratio of 18. Perhaps this is why sentiment has cooled a little since a record high was hit in mid-September.

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

The yield also stands at just 2.2%. A FTSE 100 tracker fund offers a higher cash return at arguably much less risk because my cash is spread around all companies in the index.

Then again, Bunzl has compounded value far better for investors over the years. And returns would have been even greater if those dividends had been reinvested.

I consider this to be a great stock to buy and hold. I just need the cash to do so.

Should you invest £1,000 in J D Wetherspoon Plc 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 J D Wetherspoon Plc made the list?

See the 6 stocks

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.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl 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.

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »