“There is always the exception that proves the rule. Twenty-seven FTSE 100 firms have increased their annual dividend every year for (at least) the last ten years and only one – SSE – has not beaten the FTSE All-Share on a total returns (capital gains plus dividends reinvested) basis over that time span.
|
|
Total shareholder return |
Dividend CAGR |
|
|
2008-18 |
2008-17 |
|
Ashtead |
30,933.6% |
27.8% |
|
Hargreaves Lansdown |
1760.8% |
18.1% |
|
Croda |
882.1% |
15.2% |
|
Halma |
822.6% |
6.4% |
|
InterContinental Hotels |
696.6% |
11.7% |
|
DCC |
662.9% |
11.2% |
|
Micro Focus International |
583.3% |
27.5% |
|
Paddy Power Betfair |
539.0% |
16.8% |
|
Intertek |
518.9% |
13.1% |
|
St. James's Place |
514.0% |
25.6% |
|
Compass |
478.8% |
10.8% |
|
Scottish Mortgage |
437.7% |
3.6% |
|
Shire |
390.4% |
15.2% |
|
Whitbread |
378.4% |
10.7% |
|
Bunzl |
368.9% |
8.4% |
|
Prudential |
295.9% |
9.5% |
|
Sage |
280.9% |
7.9% |
|
Diageo |
270.9% |
6.1% |
|
Associated British Foods |
238.5% |
7.3% |
|
Johnson Matthey |
181.0% |
8.0% |
|
Imperial Brands |
127.6% |
10.5% |
|
Standard Life Aberdeen |
122.8% |
6.2% |
|
BAE Systems |
108.4% |
4.2% |
|
Vodafone |
106.0% |
5.4% |
|
British American Tobacco |
93.1% |
8.8% |
|
SSE |
67.1% |
3.7% |
|
|
|
|
|
Average |
1,667.7% |
12.4% |
|
FTSE 100 |
93.1% |
5.7% |
Source: Company accounts, Thomson Reuters Datastream. Covers period 12 September 2008 to 11 September 2018
“This shows the power of dividend growth when it comes to performance over the long term and investors will be intrigued to see how SSE has stuck to a planned 3% increase in the pay-out to 97.5p for this year despite the substantial profit setback announced today.
“The commitment to maintaining a dividend growth streak that dates back to 1992 may persuade some investors to look afresh at the stock today, especially in the context of the radical changes the company is planning for 2019.
“SSE intends to demerge its retail Energy Services operations and then – pending clearance from the competition authorities by 22 October – merge them with the nPower business owned by Innogy, to leave SSE’s shareholders a two-thirds stake in the new venture.
“That will leave the tightly regulated SSE ‘core’ Networks business which is still on track to record a mid-single digit increase in operating profit, on an adjusted basis, this year, despite today’s trading alert, where a sharp drop in earnings from Energy Services is a key culprit.
“That will allow investors to assess the respective, distinctive merits of the two operations, their share prices and especially their dividend yields.
“The spin-off could recover a big chunk of this year’s profit shortfall if the weather normalises relatively quickly, although it looks set to come with a lower dividend payment and yield, judging by analysts’ estimates.
“Management’s plan to pay a 97.5p dividend per share for SSE under its current structure suggests the new, core business could come with a very meaty dividend yield that could catch the eye of income seekers, especially after today’s share price slide.”
