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5 FTSE 100 Dividend-Raising Stars

http://www.fool.com/investing/international/2012/11/27/5-ftse-100-dividend-raising-stars.aspx

Kevin Godbold
November 27, 2012

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

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

 

2007

2008

2009

2010

2011

Dividend per Share (pence)

19.1

20.2

17.1

16.2

18.1

That's disappointing. 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 (you can see all of the companies I've covered so far on this page).

Over the last few weeks, I've looked at J. Sainsbury (LSE: SBRY.L  ) , Pennon Group (LSE: PNN.L  ) , Centrica (LSE: CNA.L  ) , SSE (LSE: SSE.L  ) , and GlaxoSmithKline (LSE: GSK.L  ) .

Let's see how each scored against my dividend growth and valuation criteria (each score in the chart is out of a maximum possible five):

 

Sainsbury

Pennon

Centrica

SSE

GlaxoSmithKline

Dividend Cover

3

3

3

3

3

Net Cash or Debt

3

2

3

3

3

Cash Flow

5

2

4

4

4

Outlook and Recent Trading

4

3

4

3

4

Total (out of 20)

15

10

14

13

14

This crop of dividend growers includes a bit of industry diversification and an opportunity to compare three companies operating in the utility space.

Food retailing
Britain's third-largest supermarket chain, Sainsbury, is battling it out in fresh food with the U.K.'s other players. They're not hurling carrots and knobbly potatoes at each other, though, but trying to out-maneuver each other in terms of the freshness and appeal of their fresh food offering in order to attract and retain customers. Sainsbury's strategy involves sourcing its fresh produce closer to home -- from Britain, in fact. "This will help develop British farming and protect livelihoods, while reducing food miles and delivering fresh, healthy, nutritious food to the table," the directors say. That sounds like a good idea that might catch on.

Utilities
Pennon derives 76% of its profit from its water and sewage business in southwestern Britain, with the remaining 24% coming primarily from waste management. Cash flows are strong, but as with other utility providers, the company's operations are highly regulated, which leads to constant investmen