The stocks that haven’t cut di­vis for decades

The Daily Telegraph - Your Money - - MONEY -

For long-term in­vestors, the div­i­dends paid by listed com­pa­nies have a huge ef­fect on re­turns. If you missed these reg­u­lar pay­ments the ef­fect would be stark. If you had in­vested £1,000 in the FTSE All Share in­dex 20 years ago, it would be worth £1,682 to­day based purely on the cap­i­tal growth of the con­stituent shares. But with div­i­dends rein­vested, the to­tal re­turn is nearly dou­ble that, at £3,268.

It is for this rea­son that in­vest­ment ex­perts and fi­nan­cial ad­vis­ers rec­om­mend us­ing div­i­dends to buy more shares and to use the “ac­cu­mu­la­tion” ver­sions of funds, which rein­vest the div­i­dends, rather than “in­come”, which pay out cash.

The ques­tion then is what to buy. The As­so­ci­a­tion of In­vest­ment Com­pa­nies com­piles a list of “div­i­dend he­roes”, which are quoted funds that have in­creased div­i­dends ev­ery year for at least two decades.

How­ever, noth­ing sim­i­lar ex­ists for con­ven­tional shares. Tele­graph Money com­mis­sioned Har­g­reaves Lans­down, the stock­bro­ker, to rank the listed Bri­tish firms that have the best records of main­tain­ing or in­creas­ing pay­outs to share­hold­ers.

The anal­y­sis con­verts all div­i­dends paid in for­eign cur­ren­cies into ster­ling, which ex­plains the sur­pris­ing omis­sion of Royal Dutch Shell. It is of­ten claimed that the oil gi­ant hasn’t cut its div­i­dend since the Sec­ond World War, but this is only in dol­lar terms.

Har­g­reaves Lans­down’s Laith Kha­laf said: “Com­pa­nies that have a long record of grow­ing or at least main­tain­ing their div­i­dend through­out a num­ber of mar­ket cy­cles have clearly demon­strated

IN­COME KINGS: BEST DIV­I­DEND PAY­ERS Com­pany

Halma PZ Cus­sons Schroders Spi­rax-Sarco En­gi­neer­ing Greene King IMI Reckitt Benckiser Meg­gitt AG Barr Cran­swick Years of di­vis 39 39 38 38 37 35 35 33 31 31 a com­mit­ment to pre­serv­ing the pay­ment, as well as an abil­ity to do so.”

He added: “One thing of­ten over­looked when it comes to in­come in­vest­ing is the po­ten­tial for div­i­dends to rise. This isn’t al­ways in a straight line up­wards and there can be set­backs, but if you need in­come and are in it for the long term you should ex­pect the pay­ments from an in­come port­fo­lio of shares to grow.”

Har­g­reaves’ re­search iden­ti­fies the top 10 stocks from the FTSE 350, based on the num­ber of years for which div­i­dends have been held or in­creased since 1980.

Top of the list are a £5.4bn spe­cial­ist man­u­fac­turer of safety equip­ment, and £1bn which owns a large range of con­sumer brands in­clud­ing Im­pe­rial Leather and

Halma, PZ Cus­sons,

St Tropez fake tan. Both firms have kept pay­outs steady or raised them for at least 39 years (it may even be longer but com­pa­ra­ble data was not avail­able be­fore 1980).

He­lal Miah, an an­a­lyst at The Share Cen­tre, an­other bro­ker, said: “There has been a grow­ing need, in de­vel­oped and emerg­ing na­tions, for im­proved health and safety stan­dards in many walks of life, from both reg­u­la­tors and con­sumers. has ex­pe­ri­enced good or­ganic growth. It has also been an ac­quis­i­tive com­pany and in the last fi­nan­cial year group rev­enues breached £1bn for the first time. Div­i­dends have fol­lowed the same tra­jec­tory.” The firm en­tered

Halma

the FTSE 100 in­dex at the end of last year.

Mr Miah was less op­ti­mistic about PZ Cus­sons, which he said was go­ing through a “wob­bly patch” be­cause of in­creased com­pe­ti­tion among con­sumer goods and cost in­fla­tion.

“It is also very heav­ily ex­posed to Nige­ria, where dis­pos­able in­comes are un­der pres­sure and po­lit­i­cal uncer­tainty ahead of a gen­eral elec­tion in Jan­u­ary could add fur­ther stress,” he said.

Pub chain fifth on the list, has de­fied ex­pec­ta­tions in the face of decades of ris­ing al­co­hol duty and daily pub clo­sures. The £1.6bn firm runs nearly 3,000 pubs and ho­tels, and also owns the Loch Fyne chain of seafood restau­rants.

De­spite a boost from Eng­land’s suc­cess­ful run dur­ing the World Cup this sum­mer, a yield of 6.5pc sug­gests that in­vestors think the

Div­i­dends are the life blood of in­vest­ing, but the best pay­ers are not who you’d ex­pect, finds Sam Brod­beck

div­i­dend is un­der pres­sure, said Mr Kha­laf. “The squeeze on real wages hit de­mand last year, while an ex­plo­sion in new ca­sual din­ing venues means com­pe­ti­tion for a share of the pub­lic’s purse has rarely been higher. Add a whole raft of cost pres­sures and a size­able debt pile, and things aren’t look­ing quite as se­cure as they once did.” He was more pos­i­tive about

the £800m pro­ducer of Scot­land’s favourite soft drink, IrnBru. Con­sis­tent fam­ily own­er­ship means the board makes sen­si­ble, sus­tain­able de­ci­sions and should thrive de­spite new en­trants such as Fever-Tree, Mr Kha­laf said.

third on the list, has trans­formed from “bluest of blue­blood in­vest­ment banks” to a truly global as­set man­ager, said Mr Miah. It has a mar­ket value of £7.3bn.

“It must be cred­ited for grow­ing the size of its funds un­der man­age­ment,” he added. “There is no doubt that ris­ing stock mar­kets and ul­tra-low in­ter­est rates have been a key con­trib­u­tor to its suc­cess.”

AG Barr, Greene King,

‘In­vestors of­ten over­look the po­ten­tial for div­i­dends to rise’

Schroders,

PZ Cus­sons, pro­ducer of St Tropez fake tan, has raised its div­i­dend for 39 years

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