FTSE dividend shares offer some incredible yields right now. Solid, defensive businesses like GlaxoSmithKline and Unilever currently pay income of around 5% a year. Insurer Aviva pays 5.22%, while one of my favourite FTSE dividend shares, Legal & General Group, pays an incredible 6.71%. These are just the first that spring to mind. Some stocks yield 8%, or more. I’m looking at you Imperial Brands Group (8.68%), and you Persimmon (10.34%).

I’m buying FTSE dividend shares

At the same time, the returns on cash are low. Even though the Bank of England has hiked base rates for three months in a row, Halifax, Lloyds, NatWest, Bank of Scotland and Santander are still paying just 0.01% on easy access.

Savers now have an estimated £250bn sitting in savings accounts that pay no interest, Hargreaves Lansdown figures show. I believe it makes sense to have a bit of rainy-day cash on instant access, to fund emergencies such as a broken boiler or car repairs.

Yet I’m not leaving my long-term wealth on deposit, because I feel it can work so much harder elsewhere. Investing in FTSE dividend shares is riskier than leaving money in the bank. Stock markets can go up and down (in fact, they do it all the time). They can crash (they do that pretty regularly too). Individual companies can run into trouble. Profits can plunge. Management may cut dividends. Even apparently big, solid firms can go out of business.

Cash is a safe haven, but with inflation set to hit 8% later this year, and possibly even 10%, it also carries risk. If I leave money sitting in a savings account paying 0.01%, the value of my money will plunge in real terms. Inflation is called the silent assassin because you do not see it at work. If I have £10,000 in the bank earning zero interest and look at it one year later, my statement will still say £10,000. But if inflation averaged 10% in that time, it would only buy me £9,000 worth of goods and services. So I’m relying on FTSE dividend shares to help my money maintain its value as prices rise.

I’m facing down the inflation threat

Right now, FTSE 100 dividend shares offer an average yield of 3.22%. Better still, that is a rising income, because most companies aim to increase their dividend payouts over time. I also have instant access to my money.

There is another reason why I favour FTSE dividend shares. I should get capital growth as well, if their share prices rise. That is far from guaranteed, of course. My stock picks may fall in value, possibly dramatically. Some may never recover.

Yet I limit my exposure by buying a spread of 15-20 FTSE dividend shares and hope my winners outweigh my losers. And I will keep reinvesting my dividends for growth, turbo-charging my returns. I’m hoping they will protect me against the growing inflation menace. 

The post I’m not accepting 0.01% on cash when FTSE dividend shares pay 6% or 7% appeared first on The Motley Fool UK.

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Harvey Jones doesn’t hold any of the shares mentioned in this article. The Motley Fool UK has recommended GlaxoSmithKline, Imperial Brands, Lloyds Banking Group, and Unilever. 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.

However, with the bank appearing to offer growth potential as well as a high degree of diversification, it could offer improving performance in the long run. Alongside another good value share that reported an encouraging update on Wednesday, it could be worth buying today.

Improving performance

The other company in question is home furnishings retailer Dunelm (LSE: DNLM). Its third quarter trading update showed it’s making good progress in expanding its online and omnichannel retailing performance. Like-for-like (LFL) sales growth was 12.5%, with its LFL growth in stores rising by 9.8% at a time when many UK-focused retailers are experiencing challenging operating conditions.

Furthermore, there was an increase in the company’s gross margin of 90 basis points. Improved sourcing and the closure of dilutive Worldstores businesses were the key reasons for this, with the company expecting there to be a further improvement in profitability in the final quarter of the year.

Since Dunelm is forecast to post a rise in earnings of 7% in the current year, it seems to be performing well at a time when it’s making major changes to its business model. With consumers continuing to go online for a variety of products, the trend towards omnichannel retailing could suit the business. Therefore, trading on a price-to-earnings growth (PEG) ratio of 1.9, it could offer good value for money.

Low valuation

As mentioned, the Santander share price appears to be cheap at present. It trades on a PEG ratio of only 0.9, which suggests that it has a wide margin of safety. This is largely due to the poor performance of the bank’s shares over the last few years, declining 34% over the last five years.

The problem facing investors is that it’s difficult to catch a falling knife. There has been little evidence to suggest that investors are becoming more positive about the prospects for the stock over recent months, with it continuing to lag the FTSE 100 even as the index has moved higher.

Therefore, there’s a risk that buying Santander now could mean that an investor experiences paper losses in the short run. In the long run, though, the bank’s position within a wide range of markets could mean it offers greater diversity than many of its sector peers, while it may be able to benefit from the continued positive growth rate of the global economy.

As such, since it trades on a low valuation, the stock could be attractive at the present time. There may be some short-term pain ahead, but its dividend yield of 6.2% and recovery potential over the long run could mean it becomes increasingly appealing to value investors.

The post Why I think the Santander share price could be the bargain of the year appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares 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.

As a result, the bank now trades on a relatively low valuation. But could a FTSE 250 growth share which released an investor update on Wednesday offer stronger total return potential over the long run?

Growth potential

The FTSE 250 company in question is IT infrastructure technology and services provider, Softcat (LSE: SCT). It released a trading update which showed that customer demand has been strong across all of its segments during the first quarter of its financial year. It’s been able to deliver growth in revenue, gross profit and operating profit versus the same period of the previous year. It’s also been able to maintain momentum in terms of building scale and developing its offering. Its Irish office, which opened during the period, has started well.

An ability to increase customer numbers and gross profit per customer could lead to rising levels of overall profitability in the long run. It seems to be well-placed to deliver a growing bottom line, with a broad offering potentially catalysing its financial prospects. However, with the stock having a price-to-earnings (P/E) ratio of over 20, it may lack a margin of safety at a time when a number of FTSE 350 stocks are trading on low valuations after recent market falls.

Low valuation

In contrast, the Santander share price appears to be cheap at the present time. Following its aforementioned decline during the course of 2018, it now has a P/E ratio of around 7.5. This indicates that it has a wide margin of safety, and that investors may be pricing in potential challenges for the business in some of its key markets.

Of course, this isn’t a major surprise. Fears surrounding the outlook for the UK have been ramped up in recent months. The Brexit process could include further twists and turns, and this could disrupt the financial performance of a number of companies which operate in the UK. Similarly, on a global level, there are continued concerns about the impact of tariffs on imports. And with further US interest rate rises seemingly ahead as GDP growth remains high, the cost of servicing debt could increase and squeeze profitability across various regions and industries.

Despite the risks it faces, Santander appears to offer investment potential for the long run. It may experience a period of uncertainty, and further share price falls cannot be ruled out. But with what seems to be a wide margin of safety, it could have appeal for value investors, in my opinion.

The post Is the Santander share price a bargain, or should I buy this FTSE 250 growth stock? appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares 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.

Of course, there are other shares which could beat the UK’s main index. Reporting on Monday was a company that seems to be performing well, and which could offer growth at a reasonable price. As such, now could be the right time to buy both stocks for the long run.

Impressive performance

The company in question is consumer security software specialist Kape Technologies (LSE: KAPE). It released interim results that showed a rise in revenue from core activities of 14.2%, increasing to $24.1m. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 45.1% to $4.3m, with the business achieving significant progress in developing its software as a service (SaaS) revenue model.

Following the end of the half-year period, the company acquired Intego. It is a highly complementary business that could help the company to deliver against its key growth priorities. It expects the momentum from the first half to continue into the second half of the year, and this could help to catalyse its share price performance.

With Kape forecast to post a rise in earnings of 20% in the current year, followed by further growth of 39% next year, it appears to have a bright future. Its price-to-earnings growth (PEG) ratio of 0.7 suggests that it could offer good value for money at the present time.

Low valuation

Also offering a low valuation is Santander. Following its share price fall over the last 12 months, it now trades on a price-to-earnings (P/E) ratio of around 9. This suggests that it offers a wide margin of safety, and may be able to deliver FTSE 100-beating performance over the medium term.

The bank’s income potential appears to be impressive. It has a dividend yield of 5.4% at the present time from a payout which is covered more than twice by profit. This suggests that there is scope for a fast pace of dividend growth over the medium term. The bank’s earnings growth of 5% this year and 9% next year are likely to make its management team increasingly confident in the financial prospects for the company.

With Santander being a global operation, it may benefit more than some of its UK peers from continued world GDP growth. Despite the risk of a full-scale trade war, the US and China continue to offer strong growth forecasts. This could help to catalyse the financial performance of the company, and also improve investor sentiment. As such, now could be the right time to buy it, the company having the potential to boost an investor’s retirement savings prospects.

The post Retire wealthy: why the Santander share price could smash the FTSE 100 appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares 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.

Of course, global shares such as Santander (LSE: BNC) could also benefit from a bright future for the world economy. Its dividend growth prospects appear to be bright, which means that it could be worth buying alongside another stock which released an upbeat update on Thursday.

Encouraging performance

The company in question is data solutions specialist D4T4 (LSE: D4T4). It released an update to coincide with its AGM that showed the business remains confident in its future outlook, with organic revenue growth of 13.7% being delivered in its recent financial period. The company’s focus on its higher-margin real-time customer data platform software, as well as on its hybrid cloud data platform services, seems to be paying off. And with its business investment programme delivering high returns, the prospects for the stock appear to be improving.

D4T4 also confirmed in its investor update that it intends to maintain its progressive dividend policy. In the last three years it has increased dividends per share from 0.56p to 2.5p. Despite this, its dividend is expected to be covered 4.3 times by profit in the current year. This suggests that further dividend growth could be ahead – especially with the company expected to post earnings growth of 12% next year.

While the stock’s dividend yield of 2% may be relatively low, it appears to have growth potential when it comes to shareholder payouts. As such, now could be a good time to buy it for the long term.

Low valuation

Santander’s dividend growth potential may also boost its investors’ retirement prospects. The bank is expected to report a rise in earnings of 5% in the current year, followed by further growth of 9% next year. This means that it has a forward dividend yield of 5.2% for the 2019 financial year. And with shareholder payouts expected to be covered 2.3 times by profit, its dividends could rise at a faster pace than profit over the medium term.

With Santander having improved its financial strength in recent years, it seems to offer a more appealing risk/reward ratio. Its diverse geographical exposure means that it could be catalysed by further global GDP growth, while challenges in one region could be offset by strong performance elsewhere.

Despite its improving prospects, the stock has a price-to-earnings growth (PEG) ratio of just 0.9. This suggests that it offers a wide margin of safety, and may deliver high capital gains as well as an impressive dividend yield. It appears to have the potential to beat the FTSE 100 over the long run.

The post Have £1,000 to invest? FTSE 100 dividend growth stock Santander could help you retire early appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares 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.

One company which seems to offer a low valuation and bright future prospects is Santander (LSE: BNC). However, it’s not the only FTSE 100 share which could prove to be a bargain at the present time.

Margin of safety

The price-to-earnings (P/E) ratio of Santander is exceptionally low. Using forecast earnings for the current year, it has a rating of 9.5. This suggests that investors are cautious about its outlook, with a mixed performance in its key markets potentially being a reason for this.

In the UK, for example, the company’s recent results were somewhat disappointing. With Brexit now only a matter of months away, a more cautious outlook is beginning to take shape, with economic growth rates having been downgraded by the Bank of England in recent months.

However, with the company having exposure to a wide range of economies, the UK’s performance continues to be offset by growth elsewhere. For example, the US has seen its performance pick up, while Brazil continues to deliver improvements after a tough period.

As such, Santander’s earnings growth outlook for the next couple of years is positive. It is expected to report a rise in its bottom line of 7% this year, followed by further growth of 11% next year. This puts it on a price-to-earnings growth (PEG) ratio of around 0.9, which suggests that it could offer a wide margin of safety. As such, it could be a strong growth and value opportunity over the medium term.

Growth potential

Also offering good value for money within the FTSE 100 is plumbing and heating products specialist Ferguson (LSE: FERG). The company released positive third quarter results on Tuesday which showed that ongoing revenue was 10.2% higher than last year. This included 7.1% organic growth, while the gross margin increased by 40 basis points to 29.3%.

With the company’s performance across all US regions being generally positive, the prospects for the business remain bright. Trading conditions have been strong in the US and Canada, while the restructuring plan in the UK continues to be executed. So far, its fourth quarter performance has also been positive, which suggests a successful outcome for the full year.

Looking ahead, Ferguson is expected to post a rise in earnings of 7% in the current year, followed by further growth of 17% next year. Despite this, it has a PEG ratio of just 1.2, which indicates that there may be a wide margin of safety on offer. As a result, and with the company’s prospects being bright in a growing US economy, now could be the right time to buy the stock for the long term.

The post Is the Santander share price the FTSE 100 bargain of 2018? appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares 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.

A strong quarter

CYBG (LSE: CYBG) has traded in line with expectations in the first quarter of the year. It has recorded sustainable growth in assets and deposit balances, while its net interest margin has remained broadly stable. It currently stands at 222 basis points and while the bank has faced uncertain and competitive market conditions, it was able to increase its mortgage book at an annualised rate of 4.4%. This is ahead of the wider market and was largely due to positive momentum within the new small and medium-sized enterprise lending segment.

In addition, deposit balances increased by 4.7% on an annualised basis, with investment in new products across the current account and savings range yielding upbeat performance. Further investment is being made in network optimisation and branch automation, which should help the bank to reach its target of a 5% reduction in net underlying costs in the current year.

Economic outlook

Although CYBG reports minimal disruption from Brexit, this does not necessarily mean it will avoid the the uncertainty that may arise as negotiations progress. Although it has a common equity tier 1 (CET1) ratio of 12.8% and a solid balance sheet in terms of asset quality, CYBG lacks diversification when compared to other banking stocks such as Santander (LSE: BNC).

Santander operates across the globe, and while the UK is a key market for the business, its geographic diversification may enable it to better ride out any challenges posed by Brexit. As a result, Santander may be a lower risk option than CYBG over the coming months.

Upside potential

However, CYBG has significant upside potential and I think that its shares could be set to rise by 25%+ over the medium term. It is forecast to record a move from loss to profit in the current year, which has the potential to boost investor sentiment. In the 2018 financial year, its bottom line is forecast to rise by 18% and this puts it on a price-to-earnings growth (PEG) ratio of only 0.8.

This indicates there is significant upside, since CYBG has a forward price-to-earnings (P/E) ratio of 13.4. If its share price rises by 25%, this would mean a forward P/E ratio of 16.8. Given its double-digit growth prospects, this would suggest fair value.

While Santander may be a lower risk option due to its diversity, it is expected to record a rise in its bottom line of just 3% this year, followed by 9% next year. While this represents an improvement on last year, its P/E ratio of 11.8 suggests it may struggle to deliver share price gains which are as high as those of CYBG. So, while Santander appears to be a sound long term investment, CYBG could deliver outperformance versus its sector peer.

The post Why this banking stock is set to soar by 25%+ appeared first on The Motley Fool UK.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The share price was already in deficit at the time of June’s referendum, with investors digesting the prospect of prolonged low interest rates in the UK. But the Brexit decision has really put the boot into Lloyds’ share value, the bank now dealing at a 28% discount to levels recorded at the start of the year.

The Bank of England has of course responded by slashing rates to fresh record lows. However, a recent uptick in data has suggested that the British economy may not be about to tip off a cliff, as some had widely predicted.

This has reduced speculation that another rate cut could be in the offing. Indeed, Monetary Policy Committee member Kristin Forbes played down the likelihood of another reduction in recent weeks by commenting that “the economy is experiencing some chop, but no tsunami.”

Forbes did add, however, that “the adverse winds could quickly pick up… and merit a stronger policy response.” Economic data has been extremely volatile since the vote, with gauges on the housing market, high street activity and business confidence all far from reassuring.

And the bad news has kept on coming for Lloyds. As if dealing with a potential cooldown in the British economy wasn’t enough to contend with, the Financial Conduct Authority added to Lloyds’ woes in August by stretching out a proposed PPI claims deadline to 2019, extending its prior suggestion of a 2018 cut-off.

All priced-in?

Still, many would argue that Lloyds’ troubles are more than baked-in at current prices. Indeed, predicted earnings declines of 14% and 13% in 2016 and 2017 respectively result in P/E ratings of 7.2 times and 8.3 times. These readings are far below the benchmark of 10 times one would expect of high-risk stocks.

And the City expects Lloyds to smash many of its rivals in the dividend stakes too. Payments of 3.1p and 3.5p per share are predicted for 2016 and 2017, yielding 5.8% and 6.6%. By comparison the FTSE 100 average stands closer to 3.5%.

No upturn in sight

However, the prospect of prolonged difficulties in the UK economy could bury the chances of any bottom-line turnaround at Lloyds, making investment in the bank still hard to justify regardless of these ultra-cheap multiples.

Besides, the jury remains very much out on whether Lloyds will be able to meet current dividend forecasts. Not only could sickly income growth and a further rise in PPI bills put paid to any hefty dividend lift, but the Bank of England’s guidance that British banks don’t lift dividends following July’s liquidity injection into the sector could prove another significant obstacle for dividend chasers.

I reckon the problems over at Lloyds are far too significant at the present time, and think the bank could be in for a long, hard slog in the years ahead.

The post Is Lloyds Banking Group plc an inspired — or insane — stock pick? appeared first on The Motley Fool UK.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The Department of Justice slapped a colossal $14bn fine on it for the sale of bad mortgage securities almost a decade ago. The sum will be subject to a much-reduced counter-offer from Deutsche Bank, of course, although a hefty hit fine is widely anticipated.

Some pundits have suggested the move was motivated by the EU’s decision to make Apple pay up to €13bn in back taxes earlier this month. Still, the decision further illustrates that regulators are rapidly running out of patience with banking’s major culprits.

Washington woes

Indeed, Bloomberg reported that US law enforcers are considering backpeddling on a deferred-prosecution agreement made with HSBC in 2012. The bank was fined $1.9bn for money laundering on condition that it improved internal controls and submitted to an outside monitor. But the deal could be scuppered should current investigations into currency market manipulation result in criminal charges.

Barclays and Royal Bank of Scotland are also sweating over severe regulatory action in the States too. Like Deutsche Bank, both firms are being investigated there for the wrongful sale of residential mortgage-backed securities in the run-up to the 2008/09 financial collapse.

And closer to home, the long-running saga of mis-sold PPI protection is yet to come to a head. The Financial Conduct Authority has already put back a proposed claims cut-off date, and a deadline of 2019 is now in mind. Lloyds is the biggest culprit here, the firm having set aside £16bn to cover costs already.

Sales struggles

But these aren’t the only problems to test the nerves of banking investors, naturally. An environment of low interest rates continues to whack profitability, and this looks set to continue as insipid global economic data continues to roll in — indeed, fresh stimulus in Europe and Japan in particular is being touted in the months ahead as economic turbulence continues.

Protracted cooling in Asia looks likely to keep sales under pressure at Standard Chartered and HSBC, while growing turmoil in Latin America is putting the earnings outlook at Santander under intensifying pressure. These firms also face further hefty losses from their commodity market trading activities.

And back in the UK, the full implications of Brexit on everything from credit demand and mortgage applications to business loans is likely to hammer those operators dependant on a strong domestic economy. Lloyds and RBS look particularly vulnerable given their small international footprints.

Risk vs reward

Could any of the firms be considered attractive ‘contrarian’ buys at the moment?

Hmmm. Standard Chartered offers stonkingly-poor value, in my opinion. A forward P/E rating of 31.4 times is indicative of a firm with white-hot growth prospects, rather than one in the early throes of huge restructuring and ongoing revenues woes.

Barclays’ multiple of 15.6 times and RBS’s reading of 15.7 times, like HSBC’s ratio of 13.2 times, are a vast improvement in terms of valuation, but still trade above the yardstick of 10 times indicative of high-risk stocks.

In this regard I believe Santander and Lloyds are more fairly priced, the banks dealing on prospective ratings of 9.7 times and 7.8 times respectively.

While these figures may tempt many hardy bargain hunters, I for one would resist taking the plunge given the scale their problems in the near term and beyond.

The post When will it be safe to buy into the banks? appeared first on The Motley Fool UK.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool UK has recommended Barclays and HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Both Lloyds (LSE: LLOY) and Halifax have already declared that they’re reviewing the rates offered on all of their accounts. In the same way that the major energy firms drop and raise prices en masse, expect further rate cuts from most of the UK’s biggest banks in the near future.

Having a proportion of your wealth in cash is no bad thing. A reasonably-sized reserve will help you to respond to life’s difficulties. Holding a substantial pile for no reason, however, makes little sense in the current low-rate world. To get the best from your money, make it work for you. And the best place for this to happen? The stock market, of course.

Dividends galore

Right now, 45 of the companies in the FTSE 100 offer dividends above the 3% rate offered (for now) by Santander. If the latter were to drop to 1.5% today, this number jumps to 81. Oil giant Shell (LSE: RDSB), for example, offers a pretty compelling dividend yield of almost 7.5%. Shares in one of the aforementioned energy firms, SSE (LSE: SSE), come with a 5.8% yield attached. Those that can endure some post-Brexit turbulence may also be interested in the 4.8% payout offered by low-cost carrier easyJet (LSE: EZJ). All three companies are sufficiently large and robust enough to withstand periods of uncertainty such as the one we’re currently in. 

And let’s not forget the banks themselves. Rather ironically, shares in some of our biggest banks now offer substantially better returns than those offered by their own savings and current accounts. Shares in Lloyds, for example, offer a dividend yield close to 6%. In contrast, their popular Club Lloyds account offers (for now) an interest rate of 4% but only for balances of £4,000-£5,000. HSBC‘s (LSE: HSBA) Online Bonus Saver comes with an pitifully low interest rate of just 0.5% and yet owning shares in the bank itself will generate a yield of over 7%.

Better rates, higher risk

Before moving your cash into a stocks and shares ISA straight away, it’s vital to remember that investing rather than saving puts your capital at risk. There’s no guarantee that a company will always be able to reward shareholders with their much-cherished dividends. During tough economic times, these bi-annual or quarterly payouts are among the first things to be shelved. That’s why it’s so important to look for companies that are in decent financial shape rather than simply seeking out the biggest yields you can find.

So, in addition to checking that dividends are covered by current earnings, you’re also looking for evidence that these payouts are consistently growing. A company able to raise its payout year after year, such as FTSE100 stalwart, Bunzl (LSE: BNZL) is an excellent sign. But why stop at the biggest index? The FTSE 250 also contains a large number of dependable payers, including health and safety equipment supplier, Halma (LSE: HLMA) which has grown its dividend by 5% or more every year for the past 37 years.

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Paul Summers owns shares in easyJet, Royal Dutch Shell B, Halma and Bunzl. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.