FTSE 100 companies have been slashing dividend payouts in response to the coronavirus crisis. However, it’s still possible to generate a rising passive income from a portfolio of FTSE 100 shares.
The good news is that some FTSE 100 companies have a terrific long-term track record of paying dividends, and continue to pay income despite Covid-19. If I had £5,000, or any other sum, I’d rather invest in top dividend stocks than put money in a Cash ISA.
Why I favour top dividend stocks
Rock bottom interest rates mean you get a negligible rate of interest from a Cash ISA. Shares are more volatile in the short term, but offer a far superior return in the longer run.
Interactive Investor has picked out five FTSE 100 stocks that have increased their dividends for each of the last 10 years. These companies continue to forecast dividend growth of at least 2%, despite today’s anxous times. All five are worth a closer look.
Dividends aren’t guaranteed. Any of the following payouts could be cut but, for now, they look like some of the most solid dividend stocks on the FTSE 100.
Major dividend payers, such as the oil giants and pharmaceutical companies, get most of the attention, but Interactive Investors’ list include some lesser-known names you may have overlooked.
Rising income for retirement
Croda International is a speciality chemicals company with a great dividend track record. Right now, the forecast yield looks low at 1.9%, but don’t let that put you off. Croda has increased its dividend for each of the last 21 years. If it keeps that up, your income will rise steadily over time.
Halma specialises in life-saving technologies designed to improve workplace safety, food and water quality, and healthcare, essentials in today’s uncertain world. The forecast yield is low at 0.8%, but the payout has increased every year for an incredible 26 years.
You’ll be more familiar with insurance giant Legal & General Group, and more impressed by its yield. Currently, it’s forecast an income of 9.1%. Its impressive 10-year track record of dividend growth shows why management has reluctant to cut its payout so far.
FTSE 100 heroes
Utilities are a top source of reliable dividends and water utility and waste management company Pennon Group has upped its payout for 12 consecutive years. The forecast yield is now 3.8%, and could underpin your portfolio nicely.
And how about this for dedication to dividends. Spirax-Sacro Engineering, which specialises in pumps and steam management systems, has increased its payout for 27 consecutive years, the longest run on the entire FTSE 100. While the yield is just 1.2%, that reflects strong share price performance rather than low dividend growth. The Spirax-Sacro share price is up an incredible 170% over five years.
There are no guarantees with dividends, but these five have history on their side. I’d choose them over a Cash ISA any day.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International, Halma, and Pennon Group. 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.