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2 FTSE 100 dividend growth stocks I’m planning to own forever

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There are two companies in the FTSE 100 that stand out to me as built for the long term. Cruise business Carnival (LSE: CCL) is one of these. 

Carnival has been around in one form or another since 1972. Since then the business has grown from having just one ship (the Mardi Gras) to being the world’s largest cruise ship company. 

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And it does not look as if the group’s expansion is going to slow down any time soon. Carnival is planning to launch a total of four new ships in 2019, and a total of 20 between 2019 and 2025.

Huge market

Some analysts are concerned that Carnival is growing too fast, and the world does not need all the new cruise ships it is planning to launch over the next few years. But I think these concerns are unfounded. A total of 29m people travelled on cruises last year, making up just 2% of the overall global travel industry, which seems to leave plenty of room for growth in the years ahead. 

Some analysts are also worried about Carnival’s environmental credentials. But as the biggest in the industry, I think Carnival is well positioned to deal with these concerns effectively, and indeed it has been. 

With a long runway for earnings growth ahead of the company, I think this stock has enormous potential. The dividend has grown at a compound annual rate of 14% for the past six years, and as earnings continue to expand, I see no reason why this trend cannot continue.

At the time of writing the stock supports a dividend yield around 4.7% and trades at a forward P/E of 9.7.

Emerging markets

Carnival is set to benefit significantly from the rising demand for cruise holidays from emerging markets, and consumer goods giant Unilever (LSE: ULVR) is already profiting from the same trend. For the second quarter of 2019, the company’s emerging markets sales rose 7.4% against a 1.6% decline in developed economies.

Off the back of this growth, City analysts are expecting the company’s earnings per share to grow by around 13% in fiscal 2019 and a further 10% in fiscal 2020. A combination of both sales growth and margin expansion is expected to contribute to this income growth.

With earnings growth of more than 10% expected, analysts are expecting management to hike Unilever’s dividend for 2019 by 9.4%, leaving the stock yielding 2.9% at current levels. On top of this capital return, Unilever is also using spare cash to repurchase shares. Including the money being used to repurchase stock, the total shareholder yield rises to around 5%. 

Unilever is currently trading at a forward P/E of 22.6, which might look expensive at first. However, when you consider the company’s double-digit earnings growth, near double-digit dividend growth total shareholder yield, I think it is a price worth paying for a globally diversified consumer goods champion that is undoubtedly putting shareholders first.

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Rupert Hargreaves owns shares in Unilever and Carnival. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Carnival. 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.

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