The key to making excellent returns from income stocks is thinking long term. I’m personally not interested in buying UK shares just based on their near-term yields. I want to know each dividend stock I buy has a good chance of paying large and growing cash rewards for years to come.
With this in mind, here are three FTSE 100 income shares to consider today. I think they could be great stocks to possibly buy and hold for at least the next 10 years.
Rock solid
Only 10% of FTSE dividend shares have grown the annual dividend for 25 years or more. Bunzl (LSE:BNZL) is one of these — shareholder payouts here have risen for 33 straight years.
The reason? While it makes more than half of sales from North America — which creates a big geographic risk — in other ways it’s actually well diversified. The firm sells a wide range of products across the globe many different industries (including healhcare, grocery and food service). This lessens the danger of localised profit shocks that can hit dividends.
That’s not all. Products ranging from toilet paper to surgical gowns, to food packaging, plastic cutlery and hi-vis vests stay in high demand across the economic cycle, supporting steady cash flows. Bunzl’s forward dividend yield is currently 3.4%.
A top trust?
The F&C Investment Trust (LSE:FCIT) has raised annual dividends for 55 consecutive years. One reason is trust rules that allow it to hold back 15% of income reach year. The result? In tough times, trusts can dip into their cash reserves to maintain dividend stability.
This particular one has another trick up its sleeve: exceptional diversification, with holdings across 387 different global stocks. What’s more, its portfolio is well split across cyclical and non-cyclical companies. It’s a mix that allows it to deliver dividend growth as well as a durable dividend even in tough times.
F&C’s dividend yield is 1.2%. That’s not the biggest, though that’s offset by the trust’s great record of inflation-busting raises. Be mindful that its sole focus on equities leaves its share price more vulnerable to stock market volatility.
Stunning dividend growth
Halma (LSE:HLMA) makes products that serve health, safety and environmental purposes. We’re talking about critical equipment like fire alarms and medical diagnostics systems. The result? Demand remains robust from year to year, underpinning strong cash flows it can use to pay dividends.
In fact, shareholder payouts have risen by 5% or more for 46 consecutive years. But that’s not Halma’s only secret. Like those other two income stocks I’ve described, its operations are well diversified thanks to its portfolio of 45 different businesses.
Changing health and safety regulations could impact future earnings, and with it dividends. However, I believe rules in Halma’s key markets are likely to tighten rather than slip back. The firm’s dividend yield is currently 0.8%.
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.
