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The FTSE 250 is home to some stocks with cracking long-term dividend records.
Derwent London (LSE: DLN) is one of them, having lifted its annual payout for 31 years in a row now. We’re looking at a 4.9% forecast dividend yield for 2025.
A dividend like that, if it can keep on growing year after year, can be worth a lot more than the kind of headline big yield that’s here today, gone tomorrow.
Forecasters see it rising at least for the next few years too. The predicted 6.5% increase between 2024 and 2027 isn’t huge. But if it’s close to long-term inflation, it can add up.
Derwent London is a real-estate investment trust (REIT), specialising in London office properties. And that might help explain the share price fall of the last five years. High inflation coupled with low growth has made property investing less popular — especially the high-priced commercial sector.
But on the bright side, investment trusts can hold back excess cash in good years to even out dividend payments in poorer years. And that’s why I rate them highly for investors seeking regular income. The dividends can’t be guaranteed, so diversification is still essential, but it can help keep our personal cash flow steadier.
Despite the property risks, I do think income investors should consider adding Derwent London — or a similar investment trust or two — to their long-term portfolios.
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Not just pig feed
Cranswick (LSE: CWK) has come a long way since making pig feed back in the 1970s. It’s since expanded to food manufacturing, retail food supplies, and various food services. And a look at the chart below shows how the share price has soared over the long term.
The history, however, suggests investors might have to handle a few down spells. They suffered quite a dip between mid-2021 and late 2022 — though those who hung on then enjoyed a strong bull run.
The company’s success has led to a 20-year record of annual dividend increases. The forecast dividend is around a modest 2%, so not going to provide the biggest income. But I do think Cranswick is a nice example of a nicely-balanced investment. Not many in the FTSE 250 can match those long-term total returns.
My main concern is there might not be much safety margin in the current valuation. The forward price-to-earnings (P/E) multiple stands at 18.2. That’s a slight premium to market averages, with not a lot of wiggle room in the event of a poor year — and Cranswick has had those.
Against that though, a company involved in multiple stages of food production and distribution also has a defensive nature during harder times.
Even if the dividend yield might not be a big one, it’s well covered by earnings. The 2024 dividend was covered 2.4 times, and forecasts have it staying around that level until at least 2028.
I reckon Cranswick is definitely worth considering for a long-term capital-building portfolio. And think about reinvesting the dividend cash.
