LONDON -- One of the most popular funds tracking the FTSE 100 (INDEX: ^FTSE), the iShares FTSE 100 (LSE: ISF.L) exchange-traded fund, announced its latest dividend today.
The payout confirmed that aggregate dividends from Britain's 100 largest companies continue to advance following the widespread cuts seen during the banking crash of 2008. However, the current aggregate dividend from the FTSE 100 index remains below the level seen prior to the credit crunch.
Today's 4.56 pence-per-share payout now means the iShares FTSE 100 ETF has declared dividends of 18.62 pence per share during the last 12 months. As the following table shows, that 18.62 pence figure is 7% higher than the payout for the prior 12 months but 7% below the peak reached during fiscal 2008.
|
Fiscal Year* |
iShares FTSE 100 Dividend (pence per share) |
|---|---|
|
2007 |
17.37 |
|
2008 |
20.12 |
|
2009 |
18.17 |
|
2010 |
16.4 |
|
2011 |
17.39 |
|
2012 |
18.62 |
Source: iShares.com, Bloomberg. *12 months to August.
Recent dividends from the iShares FTSE 100 may have been bolstered by good results from major blue-chip shares.
Indeed, members of the FTSE 100 raising their payouts of late include Rio Tinto, with a 34% advance; BG Group, with a 10% advance; and GlaxoSmithKline, with a 6% advance.
However, there's no disguising that the loss of dividends at Royal Bank of Scotland and Lloyds Banking, as well as the payout cutback at BP, have kept a lid on the income growth delivered by the FTSE 100 over the last few years.
The possibility of better returns
While index trackers such as the iShares FTSE 100 are a great way of capturing the long-term collective power of British companies and the stock market, there are always individual shares that have better dividend records -- and could deliver better returns -- than the wider index.
Here are three quick ideas that might beat the iShares FTSE 100.
|
|
Five-Year Dividend Growth |
Price (pence) |
Trailing Yield |
|---|---|---|---|
|
iShares FTSE 100 |
7% |
588 |
3.1% |
|
Sage |
248% |
300 |
3.5% |
|
Vodafone |
57% |
190 |
5% |
|
Wm. Morrison |
117% |
284 |
3.8% |
Source: Bloomberg.
Of course, you must do your own further research before buying any individual share. While some companies may offer better payout histories than the blue-chip index, a tracker will always provide greater dividend diversification.
Nonetheless, you always have the option of building a portfolio of shares that could beat the all-round dividend progress of the FTSE 100. Indeed, one investor whose portfolio dividends have been thrashing those of the FTSE is Neil Woodford, the head of investments at Invesco Perpetual and quite possibly the City's finest dividend-devoted stock picker.
As you can see from this table, the income from one of Woodford's funds hardly buckled during the banking crash:
|
Fiscal Year* |
Invesco Perpetual Income (pence per share) |
|---|---|
|
2007 |
45.59 |
|
2008 |
45.56 |
|
2009 |
46.27 |
|
2010 |
46 |
|
2011 |
49.97 |
|
2012 |
49.24 |
Source: Bloomberg. *12 months to August.
What's more, Woodford's longer-term dividend performance far outstrips that of the iShares FTSE 100:
|
|
2002 |
2012 |
Change |
|---|---|---|---|
|
iShares FTSE 100 |
12.15 |
18.62 |
53% |
|
Invesco Perpetual Income |
24.81 |
49.24 |
98% |
Source: Bloomberg.
To learn more about Woodford, his dependable style of dividend investing, and the shares he favors right now, this free Fool report -- "8 Large-Cap Dividend Plays Held By Britain's Super Investor" -- can be requested to your inbox right now. You never know; the shares covered by the report could easily help your dividends outpace those of the FTSE 100 in the years ahead.
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