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I’ve purchased a heap of FTSE 100 dividend shares during the last 12 months, largely concentrating on these providing very excessive yields of 6%, 7%, 8% or extra. There’s a hatful to select from, however a excessive yield isn’t all the pieces.
Firms with a decrease headline yield can be dividend heroes, in the event that they hike shareholder payouts 12 months after 12 months after 12 months. Which is precisely what these two have finished.
The primary is an organization I haven’t checked out for yonks, engineer Spirax Group (LSE: SGX). Its trailing dividend yield is simply 1.81%, effectively beneath right this moment’s FTSE 100 common of three.7%.
Lengthy-term rising yields
Its share worth efficiency hasn’t been all that both. It’s crashed 18.44% over 12 months. Over 5 years, it’s up simply 6.58%. Regardless of that poor efficiency, the Spirax share worth continues to be valued at 28.52 instances earnings! No marvel I neglected it.
But AJ Bell lately despatched me some a desk itemizing FTSE 100 firms with the very best report of climbing dividends and Spirax was proper in there, with a median compound progress price of 10.5% a 12 months. Not many matched that.
Over 10 years, the inventory had delivered a complete return of 284.7%, with all dividends invested. Not the very best on the FTSE 100, however not unhealthy both. And that’s regardless of the current unhealthy run. So ought to I feel once more?
The Cheltenham-based thermal power administration and pumping specialist suffered a 21% drop in pre-tax earnings in 2023 to £244.5m. It hiked its dividend however solely 5.26%, modest by its requirements.
For 2024 it’s predicting income progress of solely mid-to-high-single-digits, because it fights market weak point and foreign money headwinds. Demand is flat, particularly for its semiconductor wafer fabrication gear.
As I mentioned, I like shopping for shares when the market doesn’t wish to know. Nevertheless, I like them to be low-cost and Spirax isn’t. Not for me, not right this moment.
FTSE 100 rising earnings play
Gross sales and advertising and marketing agency DCC (LSE: DCC) additionally wants a extra buoyant international economic system for its shares to kick on. But it hasn’t finished so badly with out one. The DCC share worth is up 23.78% during the last 12 months, though it’s down 14.44% over 5 years.
It’s not all about share worth progress. AJ Bell’s figures present DCCt has hiked its dividend by a median of 10.8% yearly for the final decade. Its whole return over that point is 138.6%, which isn’t so thrilling once I give it some thought, however continues to be acceptable. The dividend has finished a lot of the heavy lifting right here.
DCC operates throughout the power, healthcare and expertise sectors. 2023 group revenues fell 10.6% to £19.9bn, largely as a result of falling wholesale power prices. Adjusted working earnings nonetheless climbed 4.1% to £682.8m.
At the moment, the trailing yield is 3.44%, increased than Spirax. DCC is quite a bit cheaper too, buying and selling at 12.61 instances trailing earnings.
When firms are struggling, the advertising and marketing spend is commonly the primary to be reduce. So it’s hardly shocking that DCC’s shares have struggled in our troubled instances. When the economic system picks up (it has to get better in some unspecified time in the future, absolutely), so ought to DDC.
The inventory has been in the back of my thoughts for a 12 months now. Given its dividend monitor report, I’m tempted to purchase it when I’ve the money. However I’m not so taken with Spirax.