Over the past few months, many FTSE 100 companies have decided to slash their shareholder dividends. This dividend drought has become a big headache for income investors. Where do you look for a secure income stream in the current market?
Luckily, there are a couple of companies, like the two businesses profiled below, with unshakable dividend credentials. As a result, it may be worth buying these FTSE 100 dividend growth stocks today.
FTSE 100 dividend growth stocks
Quality assurance service provider Intertek (LSE: ITRK) is hardly the most exciting business in the FTSE 100. However, what the company lacks in excitement, it more than makes up for in predictability.
For many of Intertek’s 300,000-plus customers, the company provides essential, mission-critical, services. For example, it recently launched Protek. This service offers, among other things, learning and certification solutions on how to use face masks, gloves and PPE, and courses on food safety, hygiene, cleaning and prevention. These aren’t the sort of services customers can just ignore, which gives this FTSE 100 giant a defensive nature.
That said, Intertek isn’t wholly immune to the coronavirus pandemic. It’s expecting overall group revenue to decline this year as a result of the disruption. Still, the overall impact is going to be manageable, according to management.
Therefore, the business is sticking to its dividend commitments. It’s still planning to pay out 50% of earnings this year. Based on current analyst forecasts, this suggests the stock will yield 1.9%.
This low single-digit yield may not look like much but, over the past six years, the FTSE 100 stock’s per-share payout has nearly doubled. That’s why Intertek stands out as a FTSE 100 dividend growth share.
3i Group
3i Group (LSE: III) doesn’t have the same defensive qualities as Intertek. Still, the company has some stand-out dividend qualities.
The company, which manages everything from infrastructure funds to discount retailers, recently confirmed its commitment to pay a dividend in 2020. The current yield on the shares stands at 4.4%.
Over the past five years, this payout has grown at a compound annual rate of 12%. 3i has been able to fund its dividend growth by increasing assets under management. This has also helped the firm’s share price produce substantial capital gains for investors.
Going forward, management is looking to take advantage of the opportunities created by the pandemic. The FTSE 100 asset manager entered the crisis with a strong balance sheet. It also has a good track record of buying assets at distressed prices.
Considering this track record, the firm may produce high total returns for investors in the years ahead. A combination of investments in distressed assets, as well as stable infrastructure investments, could yield steady cash flows for the group. There’s also the potential for capital returns when it sells growth businesses.
As such, it may be worth considering buying this FTSE 100 income and growth champion as part of a diversified portfolio today.