14 FTSE 100 firms have broken their ten-year dividend growth streaks

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The pandemic and economic downturn have taken their toll on the FTSE 100’s elite list of serial dividend raisers. Just 14 firms can now point to a record of at least ten consecutive increases in their annual dividend, down from 25 at the start of the year, and that includes three newcomers - Pennon, Legal & General and Intermediate Capital.

The casualties are Associated British Foods, BAE Systems, Bunzl, Burberry, Compass, Imperial Brands, InterContinental Hotels, JD Sports, Johnson Matthey, Rightmove, St James’s Place and also SSE and Prudential, although in the case of the final two a change to the group structure was a contributory factor following the sale or spin-out of certain assets.

Ashtead confounded the sceptics when it squeezed out a small increase to maintain its proud run that dates back some fifteen years, according to data from Refinitiv while increases from London Stock Exchange, National Grid, RELX and United Utilities mean they are nurturing nine-year growth streaks with hopes of making it ten. However, Ferguson and Smiths Group both look destined to fall at the final hurdle after the cancellation of their first-half dividends for fiscal 2019-20.

The demise of so many dividend growth streaks shows just how hard it is to increase the annual shareholder distribution for a decade or more.

Any firm which can achieve a streak of ten or more increases in its annual dividend must, on balance, be doing something right and with the benefit of hindsight buying the FTSE 100’s 14 remaining serial dividend growers would have brought bumper returns to portfolio builders.

The average capital gain from the 14 ten-year dividend growers is 481% and the average total return is 622%. Both easily beat the FTSE 100, at 20% and 75% respectively.

If the streaks can be maintained then there could be rewards for patient shareholders. All of the 14 firms to have increased their dividend in each of the last ten years have beaten the FTSE 100 in capital and total return terms.

The tricky bit is that only four of the 14 – BAT, Diageo, Legal & General and Sage - were actually in the FTSE 100 a decade ago, so investors may need to burrow through the FTSE 250 if they are looking for the next generation of dividend growth champions.

  Total return 2010-2020 Dividend CAGR* 2010-19 Forecast dividend growth**2020E Forecast dividend growth**2020E
Ashtead 2589.6% 29.3% (1.7%) 18.5%
Halma 932.4% 7.0% 6.2% 8.2%
Spirax-Sarco Engineering 768.4% 11.8% 5.9% 5.8%
Intermediate Capital 693.4% 11.6% 5.4% 18.3%
Scottish Mortgage 683.2% 3.7% 4.0% 5.0%
Croda 536.3% 15.3% 5.2% 2.6%
Hargreaves Lansdown 518.0% 19.1% 4.8% (15.0%)
DCC 429.1% 11.5% 0.8% 5.6%
Legal & General 355.5% 16.4% 2.9% 5.4%
Intertek 339.7% 15.3% (13.4%) 14.6%
Sage 266.1% 8.6% (2.2%) 6.1%
Diageo 242.9% 6.6% (0.3%) 4.4%
Pennon 223.8% 6.9% 4.4% 4.6%
British American Tobacco 128.3% 7.8% 2.9% 6.8%
Average 621.9% 12.2%    
FTSE 100 74.9% 5.2%    

Source: Refinitiv data, Company accounts. *Compound annual growth rate. **Source: Sharecast, consensus analysts’ forecasts.

Dividend growth is so powerful as it almost inevitably drags a share price higher and if you’d purchased these shares ten years ago, the yield you would be receiving on your original investment is well over 10%.

The average dividend yield for the 14 ten-year raisers is forecast to be 2.9% in 2020, below the 3.6% average across the FTSE 100.

But the yield offered by their forecast 2020 dividend on their June 2010 share price is an average of 11.7% - and if anyone offered an investor a 11.7% dividend yield they would be delighted to pocket it. That shows how a rising dividend can lift a share price, boosting income and capital gains for a powerful total return.

  2020 estimated dividend yield on June 2010 share price 2010 actual yield on December 2010 share price
Ashtead 36.3% 2.7%
Legal & General 21.4% 5.6%
Intermediate Capital 20.3% 6.5%
Hargreaves Lansdown 12.6% 2.1%
British American Tobacco 9.9% 4.6%
DCC 8.8% 3.0%
Croda 8.7% 2.0%
Spirax-Sarco Engineering 8.3% 3.1%
Pennon 8.3% 4.5%
Sage 6.7% 3.0%
Halma 6.7% 3.2%
Intertek 6.3% 1.8%
Diageo 6.1% 3.2%
Scottish Mortgage 2.9% 1.9%
Average 11.7% 3.4%

Source: Refinitiv data, company accounts, Digital Look, consensus analysts’ forecasts

For our forecast of dividend payouts for FTSE 100 companies, take a look at Q2's Dividend dashboard.

These articles are for information purposes only and are not a personal recommendation or advice.


russmould's picture
Written by:
Russ Mould

Russ Mould has 28 years' experience of the capital markets. He started at Scottish Equitable in 1991 as a fund manager and in 1993 he joined SG Warburg, now part of UBS investment bank, where he worked as equity analyst covering the technology sector for 12 years. Russ joined Shares in November 2005 as technology correspondent and became Editor of the magazine in July 2008. Following the acquisition of Shares' parent company, MSM Media by AJ Bell Group, he was appointed AJ Bell’s Investment Director in summer 2013.