For those of us who rely on passive income, dividend shares are the bedrock of a long-term portfolio. Reliable payouts mean an investor can reinvest or spend without overly worrying about sudden cuts.
Of course, there’s always a balance between yield and dependability — the FTSE 100 tends to provide stable but modest payouts, while the FTSE 250 sometimes offers higher yields that are more fragile.
Every so often however, a handful of companies manage to deliver the best of both worlds. Here are five FTSE stocks with yields above 5% that have never missed a payment in 20 years: Admiral Group, BP, TP ICAP, Primary Health Properties, and Telecom Plus (LSE: TEP).
I already own shares in the first four and have covered them extensively. So in this piece, I’ll focus on the lesser-known fifth entry.
Telecom Plus
Telecom Plus is the holding company behind Utility Warehouse, which bundles broadband, mobile, energy and insurance into a single package. Founded in 1996 and headquartered in London, the company has quietly built a loyal customer base.
Over the past five years, the share price is up 37% — better than Admiral, TP ICAP and Primary Health Properties, though it trails BP’s 61% rise. For a mid-cap stock, that’s not a bad showing at all.
The dividend is the big draw here. At 5%, it’s comfortably above the FTSE 100 average. Coverage is thin but just about sufficient, with a payout ratio of 97.5% and cash dividend coverage of 1.5 times. That’s not perfect, but the company has proven resilient in keeping payments flowing.
Recent results were interesting. Revenue fell 9.9% year on year, mainly due to the reduction of the UK’s energy price cap. Yet earnings moved in the opposite direction, up 6.9%. Pre-tax profit for the year to March rose to £105.9m from £100m.
So overall, its operational efficiency seems to be improving — the company’s net margin has almost doubled since 2022, from 2.7% to 4.2%.
A stock to consider?
There’s a lot that’s attractive about Telecom Plus but also a few concerns worth noting. Firstly, it isn’t screamingly cheap. The price-to-earnings growth (PEG) ratio sits at 2.8, which suggests the stock could be overvalued based on its earnings outlook. I think that’s worth keeping in mind for any investor looking to consider it.
Furthermore, its balance sheet raises some concerns. Debt has more than doubled in two years, climbing from £90m to £194m. Cash reserves meanwhile, have halved from £193m to £79m. Cash flow’s critical when it comes to dividends, and if debt keeps rising, a payout reduction can’t be ruled out.
Another risk is competition. Telecom Plus operates in crowded sectors where rivals are willing to fight hard on price. That could make growth difficult, particularly as household budgets tighten.
Still, while Telecom Plus may not have the deep roots of BP or the defensive strength of Admiral, its dividend record makes it a stock worth considering for income. Growth could be tough in a competitive market and debt’s worth watching closely. But for a company that hasn’t missed a payout in 20 years, it earns a place on my radar.
