If you’re looking for great dividend growers then it’s hard to look past Halma (LSE: HLMA). It’s raised dividends for an astonishing 39 years on the spin and, thanks to its exceptional defensive qualities, it’s in great shape to continue doing so.
It provides a wide range of essential health, safety and environmental products across the world, technologies that remain generally in demand regardless of the broader health of the global economy.
Like any company, Halma’s not totally immune to blips in the broader macroeconomic environment, of course. But thanks to its expertise in classic defensive sectors like infrastructure, medical and environmental, it’s still in great shape to keep growing profits whatever the weather.
Another brilliant update
These qualities give Halma terrific earnings visibility, a critical characteristic for those seeking reliable dividend growth year after year. You only has to look at the Footsie firm’s brilliant record of profits growth to see cast-iron proof of its exceptional defensive qualities.
Latest trading details released last month provided further evidence that the bottom line should keep swelling, too. Thanks to a 16% revenues improvement in the six months to September, which advanced to £585.5m, adjusted pre-tax profit barrelled 19% higher to £112.9m. And this encouraged Halma to enhance the interim dividend 7% on an annual basis, to 6.11p per share.
City analysts are predicting that profits should keep rising in the medium term at least, rises of 12% and 9% currently forecast for the years to March 2019 and 2020, respectively. This naturally leads to predictions of beefed-up dividends as well. Last year’s 14.68p per share full-year reward is predicted to move to 15.9p this year and again to 17.1p in fiscal 2020. Yields therefore sit at 1.2% and 1.3%, respectively.
A hot selection
The number crunchers have been upgrading their profits and dividend projections in the wake of November’s record-breaking release, and it’s quite possible that the aforementioned figures could also receive tasty upgrades in the months ahead.
A quick scan of the FTSE 100 will reveal a galaxy of stocks with much, much higher dividend yields than Halma. But, as I described in a recent article, sensible dividend hunting is about much, more more than big yields. Market-beating dividends are worth little in the long run if the company has a poor profits outlook and a fragile balance sheet. With Halma, neither of these topics are an issue. Indeed, thanks to its strong financial base, it’s likely the business will continue on its aggressive, profits-boosting acquisition strategy, a programme that more recently saw it snap up radar surveillance specialist Navtech in November.
Its yields might not be the biggest. And it isn’t exactly exactly cheap either, Halma currently carrying a forward P/E ratio of 25.5 times. But it’s a top growth and dividend hero that’s a great buy for 2019… and in the years ahead, in my opinion.