Dividend stocks are a great way to build long-term wealth and these three all have one special attribute. So what makes them so special?
Only a dozen FTSE 100 companies have increased their dividends for at least 25 consecutive years, and sometimes longer. It’s a hugely impressive achievement, as it means generating the cash to fund shareholder payouts through thick and thin, decade after decade. These three really jumped out at me.
Halma is an income hero
Halma (LSE: HLMA) is the first. Many investors wouldn’t even spot it as a dividend stock because the trailing yield is only 0.65%. That low yield hides its real strength. The share price is up an incredible 33% over the last year and 70% across two years, suppressing the headline yield.
The Halma share price is still climbing, despite today’s choppy markets. First-half results published on 20 November showed revenues up 15.2% to £1.23bn and margins widening by 210 basis points. The board also lifted the interim payout by 7% to 9.63p. It’s increased dividends for 45 straight years, compounding at 6.9% over the last 15.
Nothing is risk-free. Halma earns large sums overseas, so currency movements can affect results. The price-to-earnings ratio now stands at 37.6, well above the FTSE 100 average of around 18. So it’s not cheap. Investors might still consider buying on a stock market dip, assuming Halma dips too. It may not.
DCC rewards shareholders
Marketing and support services group DCC (LSE: DCC) has lifted its dividend for 31 consecutive years. It’s in the middle of a major strategic shift as CEO Donal Murphy works to turn it into a global leader in energy distribution, but this could be an opportunity for long-term investors.
DCC shares have disappointed lately, falling 13% in a year, yet the valuation looks appealing as a result with a P/E of just 12. The trailing yield sits at 4.22%, and the dividend has grown at an average annual rate of 8.97% across the last decade.
On 17 November, DCC said it would return up to £600m to shareholders via a tender offer funded by the £1bn sale of its healthcare arm. There are risks in any transition, but for long-term investors, this could be a moment to take another look.
Sage Group looks strong
My third long-term dividend superstar is Sage Group (LSE: SGE). The software provider’s shares are up 80% over five years but have slipped 16% in the last 12 months. I’ve watched this one for a while. The valuation was always too high for me at roughly 33 times earnings, but today it’s nearer 26 times. Still pricey, but better value than before. Sage has earned its premium price.
It has increased dividends every year for a spell-binding 37 years. So don’t be fooled by that modest trailing yield of just 2%. Over the last 15 years, payouts have compounded at 7.11% a year. Risks include a slowing global economy and the threat that AI could undercut some of its services.
Nothing lasts forever, but these three companies show how determined, well-managed businesses can reward investors, with share price growth and dividend increases running back decades. Fingers crossed it continues. And there are plenty of other great FTSE 100 dividend stocks on the index too.
