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I’d buy this FTSE stock after 30 years of unbroken growth in the dividend

Not many companies can claim an unbroken record of dividend growth stretching back 30 years. But the FTSE 250’s Cranswick (LSE: CWK) can. And it just hiked the full-year payment by a further 8.1%.

Indeed, the meat-based food products supplier has been expanding ever since its establishment during the 1970s. And there’s an impressive long-term record of rising revenue and earnings backed by solid cash flow.

A FTSE stock backed by a quality business

The business has defensive qualities, which we’ve seen in evidence through the coronavirus crisis. The company kept trading throughout and didn’t need to call on any financial support from the government.

Today’s full-year results report for the trading year to 28 March reveals revenue 13% higher year-on-year and an 8.4% uplift in adjusted earnings per share. It’s the kind of steady growth we’ve become used to from the firm over the past few years.

Cranswick has built up the breadth and depth of its operations. Its products include fresh pork, poultry, convenience and gourmet offerings.  And sales go to the major grocery chains and the growing premium and discount retailers.  The company also has “a strong presence” in the food-to-go sector and a “rapidly growing” export business.   

One of the things I like about Cranswick is the way it’s developing its vertical integration. The firm has its own pig breeding and rearing operations. And the chicken operation includes a feed mill, hatchery and broiler farms.

The chickens and pigs the farm produces supply the processing plants.  My guess is that localisation, sustainability and traceability will continue to be important for food chains in the years and decades ahead.

Chief executive Adam Couch explained in the report the firm made progress with its diversification strategy in the period. Highlights include the acquisition of Katsouris Brothers, which expands the non-meat operation. And in Eye, Suffolk, Cranswick commissioned its new poultry facility. Couch said two further acquisitions increased the company’s vertical integration in pork.

Steady growth

With the share price at 3,777p as I write, it’s up more than 135% over the past five years. And the valuation has re-rated higher to reflect the steady growth characteristics of the company. Today, the forward earnings multiple for the trading year to March 2021 stands close to 22 and the anticipated dividend yield is around 1.6%.

But the outlook is robust, and trading has hardly missed a beat because of the Covid-19 pandemic. The directors reckon the new trading year has started well and they haven’t changed their expectations. City analysts have pencilled in an uplift in earnings of just over 11%.

There’s a note of caution in the report about the longer-term effects of Covid-19 and Brexit. But I reckon the business will power through. We could even see enhanced export trading because of the UK’s new Free Trade Agreements around the world. This is a company I’d like to own shares in and it’s on my watch list of quality shares.

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Kevin Godbold has no position in any share mentioned. 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.