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Pearson: A FTSE 100 Dividend-Raising Star

Kevin Godbold
December 7, 2012

LONDON -- In an outcome that's tough on investors, the FTSE 100 (UKX) has failed to deliver a rising dividend payout over the last few years.

Just look at the iShares FTSE 100 ETF (LSE: ISF), for example. This is an exchange-traded fund that tracks the benchmark index, and we can see the aggregate payment from Britain's top 100 companies has yet to regain its pre-recession peak:

Year 2007 2008 2009 2010 2011
Dividend per share 19.1p 20.2p 17.1p 16.2p 18.1p

But some companies within London's premier index have performed well on dividends, despite these austere times, and this series aims to seek them out. One such name is Pearson (LSE: PSON) (NYSE: PSO).

The big question is, can the company's dividend continue to out-perform its index. Let's take a closer look.

Pearson is an international publishing house. With the shares at 1184p, the market cap is 9714 million pounds. This table summarizes the firm's recent financial record:

Year 2007 2008 2009 2010 2011
Revenue* 4,162 4,811 5,140 5,663 5,862
Net cash from operations* 463 718 819 1,006 872
Adjusted earnings per share 39p 57.7p 65.4p 77.5p 86.5p
Dividend per share 31.6p 33.8p 35.5p 38.7p 42p

*in millions of pounds.

So, the dividend has increased by 33% during the last five years -- equivalent to a 7.4% compound annual growth rate.

Recent news is that Pearson has agreed to combine its much-loved Penguin brand with Bertelsmann's Random H