The holy grail for dividend investors is a stock that slowly increases dividends over time. This doesn’t just boost the yield year after year, but it lets the power of compound interest create some of the best investments going.
The FTSE 250 has a bunch of companies that fit the bill in this regard. London’s second index has 19 stocks that have increased the dividend for 20 years or more on the trot! Here are three such stocks that might be worth considering.
In a row
The first dividend stock is Primary Health Properties (LSE: PHP), which has been increasing its dividend for 29 years in a row. The yield stands at 7.26% at present.
PHP is a real estate investment trust (REIT). This means it owns a lot of properties that are rented out for income. This can create the kind of stable income that many investors prize for dividends.
The type of properties it owns are health-related. Think of a GP surgery or a pharmacy location. Much of the income from these rents come from the NHS, which makes it reliable and long-lasting. The UK’s ageing population means the demand for these services could grow long into the future and keep those dividends rising for many more years yet.
As for downsides, the share price has struggled of late. The shares have fallen 41% in value since 2021. Part of the reason for this is that debt has become more expensive in light of higher interest rates.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
Two more
A second stock for investors to consider is FTSE 250 engineering firm Rotork. The firm has bumped up its dividend for 24 years in a row now.
The company sells products in ‘flow control’ – these include valves for oil & gas plants or water facilities. These unglamorous but important items are getting a boost as a result of changing infrastructure in the green energy transition.
The yield stands at just 2.41% at present. This makes it a less attractive option for those wanting big payments now as opposed to a jam tomorrow play. The lower yield does signify that investors find the company’s long-term growth prospects better however.
The last of the three is food producer Cranswick, which has also increased dividends for over 25 years in a row. The yield is also on the lower side at 2.03%.
The firm supplies some of the nation’s well-known supermarkets – retail sales in UK account for 77% of revenue. Its wide range of products includes a great deal of pork and poultry, including gourmet goods and pet food. One of its key selling points is vertical integration, where it manages every aspect of the supply chain to cut down on costs.
One potential negative is that the company came in for some criticism for animal welfare issues of late. Such reputational damage might affects earnings and ultimately that dividend too.
