3 FTSE 100 Shares That Have Increased Dividends Super-Fast: British American Tobacco plc, Reckitt Benckiser Group Plc And Prudential plc

Shareholders in British American Tobacco plc (LON:BATS), Reckitt Benckiser Group Plc (LON:RB) and Prudential plc (LON:PRU) have been well-rewarded in recent years as they have increased dividends at pace.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

British American Tobacco

Cigarette manufacturer British American Tobacco (LSE: BATS) (NYSE: BTI.US)  paid dividends of 66.2p for 2007. This was increased, year-on-year throughout the financial crisis. By 2012, the payout was 134.9p.

That’s an average annual growth rate of 15.3%.

Smokers are loyal (addicted) customers. This brings a high degree of certainty to BATS’ earnings. Expectations are for earnings per share (EPS) to rise 8.4% this year. The dividend is expected to increase similarly, offering a yield of 4.2%.

However, I have concerns about the company’s ability to increase sales in the long term. In March, analysts were expecting BATS to report EPS of 230p for 2013. That figure is now 223p — suggesting that it is not just me that has doubts.

Prudential

Prudential (LSE: PRU) shares are 132% up in the last five years. In that time, dividends have increased from 18p to 29.2p per share — an average annual increase of 10.2%.

Prudential’s geographical spread of business helped the company to come through the financial crisis relatively unscathed. While EPS dipped in 2008, by 2010 it was ahead of pre-crisis levels.

Slower growth is forecast for the next two years. The consensus of analyst forecasts is for a 6.6% rise in dividends this year, followed by the same rise again in 2014.

Forecasts put the shares today on a 2014 P/E of 12.2, with an expected yield of 3%. That’s not expensive for such a successful company.

Reckitt Benckiser

Reckitt Benckiser (LSE: RB) is the consumer products company behind big brands such as Harpic, Calgon and Nurofen. These brands give RB pricing power that flows through to profits and dividends.

In the last five years, Reckitt Benckiser has increased its dividend at an average rate of 19.5% a year.

Dividend increases at the company are expected to slow this year and next. City analysts are forecasting a 3.6% rise this year, followed by a 5.4% increase for 2014. EPS is forecast to increase at a slightly lower rate. This puts the shares on a 2014 P/E of 16.6, with a forecast yield of 3.2%.

Shares in a company like RB are only ever cheap in a market panic. Would you be brave enough to buy then?

Five companies that our analysts expect to continue performing in the long term are covered in the latest Motley Fool report “5 Shares To Retire On”. This research is 100% free. Just click here to start reading today.

> David does not own shares in any of the companies mentioned above. He has bet that the share price of British American Tobacco will fall.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »