New research from popular investing website The Motley Fool – Fool.co.uk, uncovers ten FTSE 100 companies that have consistently increased their dividends over the last five years by more than the rate of inflation.
The average dividend yield for FTSE 100 companies is 3.12%, which compares very well with interest paid on instant access savings accounts (1). However, equally important as the absolute level of dividends is the rate at which companies have increased their payouts.
The average year-on-year rate at which dividends have grown over the last five years is a steady 6% (2). Yet a number of companies have produced increases at many times this average rate.
For instance, Inmarsat, the satellite communications company, has increased its payout to shareholders by 48% a year over the last five years. International Power, the utility company, has managed dividend growth at around 38% a year, while mining giant BHP Billiton has ratcheted up its dividend by around 31% a year.
Commenting on the findings, Todd Wenning, Chief High Yield Analyst at The Motley Fool says:
“We look set for a period of relatively high inflation and dividend-paying stocks can offer investors a number of tremendous advantages. Not only have they accounted for the bulk of long-term overall stock market returns, in the shorter term they also provide investors with periodic cash returns that can often beat inflation.
“The companies identified have been shining examples of this phenomenon, and building a diversified portfolio of high-quality dividend-paying stocks is an attractive opportunity for many investors.”
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