20+ years of growing dividends! 2 cheap FTSE 100 shares I’d buy

There are quite a few shares in the FTSE 100 that have seen their dividends increase every year for a long time.

I enjoy owning dividend shares for the income potential they offer me. But when buying any share I also always consider its valuation. There are some FTSE 100 businesses I like that have consistently raised their annual dividend — but whose share price puts me off adding them to my portfolio at the moment.

For example, I would happily own Diageo but balk at buying it at its current price-to-earnings (P/E) ratio of 27.

By contrast, here are a couple of FTSE 100 shares with P/E ratios around half of that, or less. Both have raised their dividends annually for over two decades. Both benefit from businesses I think could help support shareholder payouts far into the future. If I had spare funds to invest today, I would happily add these two shares to my portfolio.


The conglomerate DCC (LSE: DCC) may not be a household name, though its subsidiaries deliver bottled gas to households in markets across Europe and North America. But the company has certainly made a name for itself in the stock market, having raised its payout annually for 28 years.

Those are not token rises, either. Four of the past five years have seen double-digit percentage dividend increases at the full-year level.

Dividend powerhouse

Paying those dividends — an expense of £173m last year — is possible thanks to the strong performance of the business. It combines the sizeable revenues of a large user base in energy supply with the growth opportunities of medical and technology divisions. There are risks, though. Swings in energy prices could hurt revenues and profits, for example.

I have been eyeing DCC for my portfolio for a while thanks to its income generation potential. After a 30% share price fall over the past year, it now trades at what I see as an attractive valuation with a P/E ratio of 14. The yield is currently 4.1%.

British American Tobacco

I already own shares in British American Tobacco (LSE: BATS) and would happily buy more.

Currently I receive quarterly dividends from the company. They have been growing annually since the turn of the century. A big risk for tobacco companies, though, is falling revenues and profits as the number of cigarette smokers declines. Last year’s dividend increase was only around 2.5%.

Still, the FTSE 100 shares trade on a P/E ratio in the single digits and yield 7.0%. That is substantial and could add up to a sizeable passive income stream for me in coming years.

Looking to the future

The firm benefits from owning renowned brands like Lucky Strike and Pall Mall. It is also developing its non-cigarette business at speed. That could help keep total revenues buoyant, though in the long term I doubt such products will have profit margins as attractive as those of cigarettes.

Despite the risks, I think the tobacco business still has a long future. I plan to hold my BATS shares for the foreseeable future and hopefully benefit from many more dividends.