Over the years, some of the best FTSE 100 stocks to buy have been what is known as ‘Dividend Knights’. The usual definition is a stock that increases its dividend for 25 consecutive years. Companies that achieve this feat over such long periods tend to be very rewarding for those owning the shares.
The problem? Hindsight, as they say, is 20/20. Picking out the firms that pull off the ascent into stock aristocracy is simple after the fact. Picking those firms before the good times requires some blend of experience, research, and luck.
One way we can swing the odds in our favour is to look at the trajectory of dividends, trying to spot early signs of a strong, growing dividend. With that in mind, I’ve picked out two Footsie stocks with some of the fastest-growing dividends.
Number two
One of the fastest-growing dividends comes from the nation’s number-one supermarket by market cap, Tesco (LSE: TSCO). The metric I’m using is the 10-year dividend growth rate. Tesco’s growth rate over the last decade is 28% calculated annually. For context, the median average rate across the FTSE 100 is 3.2%.
This metric is not perfect, however. In Tesco’s case, the firm didn’t pay dividends for a few years in the 2010s, which makes the calculation a little janky. But comparing the dividend from 2017 (1.27p) and 2025 (9.45p) suggests this is a stock investors may consider.
There are drawbacks to the shop with the red and blue logo. Chief among them lately is what some are calling ‘governmentally inflicted costs’ like National Insurance increases, minimum wage rises, and whatever is in store in November’s Budget. With a huge workforce of 340,000, Tesco may struggle to continue growing dividends as it has done.
Number one
The award for the fastest-growing FTSE 100 dividend goes to tabletop game firm Games Workshop (LSE: GAW). Its 10-year dividend growth rate is 31.58%. That’s many times higher than even some of the strong dividend stocks on the index – the Legal & General rate is just 6.17%, for instance.
Interestingly, the dividend yield for the Nottingham-based firm stands at just 2.25%. Why is the yearly yield so low after all that growth? Because the share price has surged along with it. Games Workshop has grown into a £5bn behemoth, selling its paints and figures all over the world.
I’m bullish on the future prospects of the brand, too. While risks like increasing input costs must be taken into account, the Warhammer name has a ‘cool factor’ that many other intellectual properties simply don’t have these days. The hotly anticipated Amazon television series starring Henry Cavill is proof enough of that. I’d say any investor might want to think about buying the stock.
