Could dividend forecasts from FTSE 100 shares be in danger of a sharp downgrade? It’s something investors need to seriously think about as the Middle East crisis rolls on. The impact of soaring energy prices on company earnings — and inflation and economic growth — could be significant.
If you need dividends to fund your retirement, you could be in big trouble. Investors who hold income stocks to reinvest their dividends for portfolio growth might also feel some pain.
I myself buy FTSE 100 stocks for passive income. But I’m keeping my cool. Why? There are stacks of top dividend shares I’m confident will keep paying large and growing cash rewards regardless of broader pressures.
Here is just one passive income hero to consider today.
Dividend growth
Bunzl (LSE:BNZL) has a stunning 33 straight years of dividend growth behind it. For 2026, its dividend yield is 3.2%, fractionally above the FTSE 100 average.
So what makes Bunzl such a dividend hero? It has a highly defensive business model, supplying a range of everyday products from food packaging and medical gloves, through to cleaning supplies and industrial safety gear, all over the globe.
All very boring, you might say. But I love boring in this case — selling everyday essentials gives it excellent earnings visibility and robust cash flows, the lifeblood of any successful dividend stock.
What else?
There’s another big advantage to Bunzl’s excellent cash generation. It underpins the firm’s acquisition-based growth strategy. In the last 22 years it’s made 230 acquisitions, delivering robust long-term earnings growth that’s supported Bunzl’s proud dividend record.
Since 2004, Bunzl has committed £6.2bn in acquisitions to support a growth strategy that has delivered an annual adjusted earnings per share CAGR of c.9%, and has also returned £3.1bn to shareholders through dividends and share buybacks.
Richard Howes, chief financial officer
The problem is Bunzl’s under the cosh right now due to rare pressure in North America, its single largest market. Sales and margins have fallen, and conditions could remain tough if inflationary pressures persist.
Yet, I’m confident Bunzl’s share price will recover. And, in the meantime, investors can likely continue enjoying a growing and above-average dividend.
How so?
Dividends are never, ever guaranteed. But for the next two years, predicted earnings cover expected dividends between 1.9 and 2 times. This is widely in line with dividend cover of two times that investors seek out, providing a margin of error if profits are blown off course.
Bunzl’s strong balance sheet also provides flexibility for it to keep growing dividends. As well as enjoying resilient cash flows, the company’s net debt to EBITDA (earnings before interest, tax, depreciation, and amortisation) ratio is falling at the bottom of its target range of 2 to 2.5 times.
City analysts are confident dividends will keep rising over the near term. And so the 3.2% yield for this year moves to 3.3% for 2027. Investors seeking dividend security should give Bunzl shares a close look.
Should you invest £5,000 in Bunzl Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bunzl Plc made the list?
Royston Wild does not hold any positions in the companies mentioned.
