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 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 (in pence) 19.1 20.2 17.1 16.2 18.1

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 GlaxoSmithKline (LSE: GSK.L) (NYSE: GSK).

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

GlaxoSmithKline is one of the world's largest pharmaceutical companies. With the shares at 1347 pence, the market cap is 66,346 million pounds. This table summarizes the firm's recent financial record:

Year 2007 2008 2009 2010 2011
Revenue (in millions of pounds) 22,716 24,352 28,368 28,392 27,387
Net cash from operations (in millions of pounds) 6161 7205 7841 6797 6250
Adjusted earnings per share (in pence) 99.1 104.7 121.2 53.9 114.1
Dividend per share (in pence) 53 57 61 65 70

So, the dividend has increased by 32% during the last five years -- equivalent to a 7.2% compound annual growth rate.

U.K.-based GlaxoSmithKline describes itself as one of the world's leading research-based pharmaceutical and healthcare companies with over 97,000 employees spread across more than 100 countries.

The firm makes prescription and over-the-counter medicines, vaccines, and oral and nutritional health care products to treat, amongst other things, major disease areas such as asthma, virus control, infections, mental health, diabetes, and cardiovascular and digestive conditions. It's also developing new treatments for cancer.

Despite a flat U.S. market and a 4% decline in revenues from Europe last year, strong sales growth from emerging markets continued. However, the company's largest markets are the U.S., which delivers around 32% of revenues, and Europe, which generates about 30%. Emerging markets, although growing at a fair clip, only delivered about 19% of revenues last year, followed by Japan at 8%, Asia Pacific at 7%, and other countries, which supplied the remaining 4%.

Cash flow seems constant: medicine has great repeat-purchase credentials. That's why Glaxo attracts income investors so consistently.

GlaxoSmithKline's dividend growth score
I analyse four different features of a company to judge whether its dividend can continue to rise:

  1. Dividend cover: adjusted earnings covered the last dividend 1.63 times. 3/5
  2. Net cash or debt: net gearing of 124% with borrowings about 1.25 times earnings. 3/5
  3. Cash flow: cash flow supports earnings. 4/5
  4. Outlook and recent trading: mixed recent trading and a cautiously positive outlook. 4/5

Overall, I score Glaxo 14 out of 20, which encourages me to believe the firm's dividend can continue to outpace dividends from the FTSE 100.

Foolish summary
Despite recent mixed trading, Glaxo has a decent late-stage pipeline of products, which encourage the cautiously positive outlook. Pockets of perky growth around the world, and reliable repeat business in other markets, ensure a robust flow of cash. It's encouraging to see the company so committed to shareholder returns, which bodes well for the prospects of the dividend.

Right now, the forecast full-year dividend is 78.22 pence per share, which supports a possible income of 5.8%. That looks attractive to me.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.