Companies that pay a regular dividend and increase their share price consistently each year are the ultimate win for investors.
Not only do they provide income, if you reinvest this then your money can benefit from the power of compounding to the absolute maximum.
And a selection of FTSE 100 companies have fulfilled investors’ hopes and more over the past decade, with 15 of them having not only raised dividends every year for ten years but also delivered total returns of more than 500 per cent.
Top of the pile is the astonishing performance of Ashtead, with a stunning total return over ten years of 5,399 per cent.
A total of 27 FTSE 100 firms have increased their dividends every year for at least the past 10 years, but only 15 have also handed investors a return of more than 500 per cent
Analysis undertaken by online investment platform AJ Bell has revealed that just 27 firms in the FTSE 100 increased their dividend every year for at least the past 10 years.
Of these, 15 have increased their dividends every year for the past decade and delivered a return in excess of 500 per cent over that timeframe.
Identifying these stocks ahead of time is the trick, and there’s no guarantee that those which have performed previously will do so again in the future.
However, it’s still interesting to look at which firms have proven winners in the past.
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At the top of the list is Ashtead. Based on today’s dividend payout and the share price a decade ago, those who bought shares in the industrial equipment rental company 10 years ago, now earn an annual income equal to 71 per cent of their initial investment.
Overall they would have enjoyed a 5,399 per cent return in that time, turning a £1,000 investment into a staggering £53,990.
Online investment platform Hargreaves Lansdown takes second place, boasting a dividend yield of 18 per cent and a 1,512 per cent growth in share price over the period.
Closely behind in third is Croda, the specialty chemicals firm, which has upped its yield to 16 per cent and returned 1,182 per cent.
These calculations run from October 2008, the month when Lehman Brothers famously failed. Since then the average FTSE 100 listed company has returned 146 per cent since 2008 – the peak of the global financial crisis.
| Company | 10-year total return (%) | Current yield on 2008 share price (%) |
|---|---|---|
| Ashtead | 5,399% | 71% |
| Hargreaves Lansdown | 1,512% | 18% |
| Croda | 1,182% | 16% |
| InterContinental Hotels | 1,000% | 16% |
| Halma | 815% | 8% |
| DCC | 758% | 12% |
| Prudential | 695% | 17% |
| Scottish Mortgage | 694% | 5% |
| Compass | 682% | 12% |
| Paddy Power Betfair | 656% | 19% |
| Micro Focus International | 641% | 31% |
| Intertek | 619% | 10% |
| Whitbread | 610% | 13% |
| St. James’s Place | 595% | 22% |
| Bunzl | 571% | 8% |
| FSTE 100 average | 146 | – |
| Source: AJ Bell |
Russ Mould, investment director at DIY platform AJ Bell, said: ‘If someone said you could invest in something that handed you over four times the growth of the market you’d be pretty happy, but you’d be over the moon with one stock that’s delivered 35 times the return of the FTSE 100 over the past 10 years.
‘That’s exactly what equipment rental company Ashtead has done, turning a £10,000 investment 10 years ago into £539,900 today.’
The combination of reinvesting a steady level of income and decent capital growth can deliver massive gains for investors.
An investor who split £100,000 evenly between these 15 companies 10 years ago would now be sitting on a pot of well over £1million today in total return terms.
‘In addition to that, the annual dividend yield on these stocks today based on the purchase price 10 years ago is a whopping 19 per cent, with Ashtead yielding a staggering 71 per cent,’ added Mould.
‘This shows the power of investing for the long term, reinvesting dividends and waiting patiently for the magic of compound interest to shine through.’
None of these companies yields anywhere near that much if you buy their shares today. Ashtead, Hargreaves Lansdown and Croda yield 1.74 per cent, 1.67 per cent and 1.66 per cent respectively.
As already stated, past performance is not an indicator of future results, so don’t invest in the stocks mentioned expecting history to repeat itself.
It is important to scrutinise every investment proposition before taking the plunge.
