The 15 FTSE 100 dividend heroes revealed

The 15 FTSE 100 dividend heroes revealed

The hunt for income shows no sign of slowing, given the backdrop of record low interest rates, which along with quantitative easing has pushed savings rates to record lows.

The good news, as far as investors are concerned, is that dividends are on course to hit a record high in 2017, according to the latest UK Dividend Monitor from Capita Asset Services.

Income investors should not necessarily be rushing to celebrate, however, as it’s not clear how sustainable this is likely to be. Dividends have been given a substantial boost from weakened sterling. In addition, there’s been a large haul of special dividends, and investors should bear in mind that these payments usually only occur during the good times.

One useful tactic to help investors focuses their sights on the most reliable payers, is to consider shares that have raised their dividends through both the good times and the bad.

Number-crunching by AJ Bell, the broker, has produced a list of 15 FTSE 100 shares that have increased their dividends for at least 15 years. When dropping the time period to 10 years, a total of 27 firms have achieved the feat.

But bear in mind that these so-called ‘dividend kings’ are far from bulletproof; Pearson for example boasted a 10-year plus dividend track record before moving to cut its dividend earlier this year.

- For warning signs a dividend cut is on the cards

As the table below shows, investment trust Scottish Mortgage leads the pack, having raised dividends for 34 years on the spin. In 1909 the trust was established on a simple premise - to buy global shares. Today it is still following its original brief - although North American railways are no longer the trust's dominant theme. Instead the trust buys businesses that are built on cutting-edge technology, including Alphabet (Google), Facebook and Alibaba, China's biggest online retailer.

The rest of the 14 names are a mixed bag in terms of sectors, but as Russ Mould, investment director at AJ Bell, points out, it is noticeable that none of them necessarily does anything that is seen as exciting or provides dramatic growth.

He adds: ‘For example SSE is a utility, British American Tobacco is a tobacco giant, Sage provides accounting and payroll software and Bunzl distributes essential items to other companies, ranging from mops to syringes to coffee cups.

'Yet all of them have a strong competitive position, a debt pile which is suitable for their type of business and good profit margins, which mean they can throw out plenty of cash flow – and good cash flow can mean good and growing dividends.’

- 10 'crisis-proof' shares to buy and hold forever

CompanyNumber of years
Scottish Mortgage34
Johnson Matthey31
SSE26
Bunzl24
Sage22
British American Tobacco20
Croda19
DCC19
Diageo19
Associated British Foods18
Compass17
Paddy Power Betfair17
Babcock International15
Imperial Brands15
Intertek15

Source: Thomson Reuters Datastream and AJ Bell.


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