Market-leading multinationals and cash-rich companies make the FTSE 100 a great place to find dividend stocks.
Investors don’t just tend to capture superior dividend yields compared with overseas shares. They can also enjoy spectacular payout growth as earnings on many UK blue-chip stocks explode.
Coca-Cola Europacific Partners (LSE:CCEP), Alliance Witan (LSE:ALW), and BAE Systems (LSE:BA.) are three top dividend growth shares I’m considering. Want to know why?
Fizzy growth
Coca-Cola Europacific Partners has tapped strong emerging market growth to boost dividends. They rose 7% in 2024, and City analysts expect similar increases this year and next.
This leaves dividend yields of 2.7% and 3% respectively.
Coca-Cola’s other advantage is brand strength. Demand for its heavyweight labels like Coke remains high across the economic cycle. Exceptional brand power also enables it to effectively raise prices, giving earnings an additional boost.
Combined, they mean the company can be relied upon to consistently increase dividends.
That said, the company isn’t immune to shocks. In 2020, dividends fell as pandemic lockdowns hit drinks sales in pubs and restaurants. But barring some once-in-a-generation catastrophe, I’m expecting the drinks bottler to keep raising dividends for the foreseeable future.
Top trust
Investment trusts like Alliance Witan can be among the most durable dividend stocks out there. By holding a diversified basket of shares, they spread risk across regions and sectors, providing a reliable passive income stream.
This FTSE trust has one of the greatest dividend growth records out there. Cash rewards have risen for 58 straight years.
Alliance Witan’s portfolio today suggests it’s in great shape to keep this record going. It owns 224 shares in total, covering dozens of industries including financial services, information technology, healthcare, and mining.
The dividend for 2025 is tipped to rise 6%, resulting in a 2.2% dividend yield. Be mindful that dividends on equity-based trusts are less predictable than ones that hold fixed-income securities like bonds.
Defence dividends
BAE Systems has one of the best dividend growth records on the FTSE. Not only have they grown consistently each year for over two decades, they’ve also risen at a robust 8% since 2020.
Can they continue at this pace? I’m confident they will, even though high competition and supply chain problems could hamper earnings.
BAE’s market-leading positions mean sales are booming as Western nations rapidly rearm, driving earnings skywards. It’s a trend that’s set to continue — NATO chief Mark Rutte said just this week that members “must be prepared for the scale of war our grandparents and great-grandparents endured” following Russia’s invasion of Ukraine.
City analysts share my bullish take. They expect dividends on BAE Systems shares to rise 8% and 11% in 2025 and 2026 respectively.
This leaves yields of 2.1% and 2.4%.
