People who know me know that I love a dividend. I’m always talking about the benefits of dividends and explaining how they can potentially make you wealthy over the long term. Yet when it comes to dividend investing, there’s one thing I look for in particular and that’s dividend growth. While these payouts can make you wealthy, growing dividends can really turbo-charge your wealth.
Today, I’m looking at three FTSE 100 companies that have all announced increases recently. Could these stocks help you achieve your financial goals?
You may not be familiar with the name Reckitt Benckiser (LSE: RB) but there’s every chance you’ll know its products – the £49bn consumer goods giant owns a powerful stable of health and hygiene brands, including trusted names such as Nurofen, Dettol and Durex.
While RB’s dividend yield is not the highest in the FTSE 100, at 2.4%, it’s worth noting that the company has an excellent track record of increasing its payout. Over the last decade, the cash distribution to shareholders has been increased from 55p per share to 164.3p, which equates to an annualised growth rate of 11.6%.
There was more good news for dividend investors recently, with the group announcing a FY2018 interim dividend of 70.5p per share, a 6% increase on last year’s interim payout. Investors have had their doubts about the company’s strategy in the recent past, but a 6% dividend hike suggests that management is confident about the outlook.
Insurance specialist Aviva (LSE: AV) doesn’t have the same enviable dividend growth track record as Reckitt Benckiser and has had its problems in the past. As a result, its dividend history has been a little up and down. Yet in recent years, it looks to have transformed itself into a leaner, stronger organisation, and the company has put together a nice string of dividend increases. Over the last three years, the payout has risen from 18.1p to 27.4p per share, an increase of more than 50%.
Aviva reported half-year results last week and there was good news for those who hold the stock for its dividend. The group increased its interim payout by a healthy 10% which marked four consecutive double-digit increases in the half-year payout. Clearly, the company is doing something right. With City analysts expecting a full-year figure of 30.1p per share, Aviva’s prospective yield is currently a high 6%, offering appeal to those looking for high income.
St. James’s Place
Saving the best until last, take a look at the dividend history of wealth manager St. James’s Place (LSE: STJ). Not only does the group have an outstanding dividend growth history, having recorded 14 consecutive increases, but the dividend is growing at a powerful rate.
STJ released half-year results last week and the numbers were excellent, with gross inflows rising 15% and group funds under management increasing 16% on the same period last year. However, what was most impressive, in my view, was the massive 20% increase in the interim dividend – a fantastic result for dividend investors.
For the full year, analysts currently expect STJ to pay out a dividend of 49.2p per share, which at the current share price, equates to a prospective yield of a healthy 4.2%. With that level of yield on offer and the payout growing quickly, I believe the stock is worth a closer look from a dividend-investing perspective.
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Edward Sheldon owns shares in Aviva and St James's Place. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.