Dividend stocks in focus: a FTSE 100 firm with 34 years of consecutive increases
Image source: Getty ImagesAmong UK dividend stocks,Croda International(LSE:CRDA) rarely tops the yield tables. But there’s another big reason why it might be worth a look. Should you buy Croda International. . .
Image source: Getty ImagesAmong UK dividend stocks,Croda International(LSE:CRDA) rarely tops the yield tables. But there’s another big reason why it might be worth a look. Should you buy Croda International Plc shares today?Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about. That’s why this could be an ideal time to secure this valuable research – Mark’s analysts have scoured the markets to reveal 5 of his favourite long-term ‘Buys’. Please, don’t make any big decisions before seeing them. The firm has spent the last three years working through a cyclical downturn without touching its dividend. That resilience, more than the headline yield, is the real story. Dividend yieldCroda shares currently come with a 3. 42% dividend yield. That’s essentially in line with the FTSE 100’s forward yield of around 3. 4%. In other words, Croda isn’t offering income investors much of a premium over the index right now. It’s offering parity, but that’s not the only thing investors need to pay attention to. The FTSE 100’s biggest dividend payers includebanks,minersandinsurers. But those are often cyclical and dividends have fallen as well as risen over time. With Croda, things are different. The firm goes through ups and downs, but it has a 34-year record of consecutive dividend increases. Beneath the surfaceThe growth isn’t always smooth. Croda’s has held its interim dividend steady in recent years and increased the final one only. It’s been a tough time in the chemicals industry as elevated inventory levels have weighed on demand. And the UK’s high energy costs have also been a real nuisance. The latter’s an ongoing risk. Energy’s always a subject of political interest, but the likes of Croda will feel the impact of industrial electricity prices the most. Nonetheless, the firm’s shown a very impressive ability to maintain its dividend through the rough patches. That’s not luck – it’s management knowing what it’s doing. Latest situationCroda’s half-year results, published 28 July, showed sales up 4. 6% organically to £880. 5m and adjusted operating profit up 6. 7% to £155. 8m. That’s a positive sign. Consumer Care led the way, up 8%, while Life Sciences was essentially flat. The smallest division – Industrial Specialties – fell 2%. Chief executive Steve Foots called it“a good first half performance… in line with our expectations,”with expanding margins. Guidance for the full year was left unchanged. The results mean the firm’s getting back to having its dividend covered by its earnings. And that helps remove one of the key risks on the horizon. Looking aheadThe big challenge for the rest of the year is how Croda’s going to handle higher costs. The conflict in Iran is pushing up energy prices and doesn’t seem to be settling down. Croda however, is in a decent position to respond. It’s been raising prices selectively across Asia and Europe to offset the impact. The reason it can do this is that it has some unique strengths. Its ingredients are often specified by regulation, which makes switching to other suppliers impossible. Croda also has thousands of patents that prevent competitors from copying its key products. These give the firm more pricing power than a typical commodity chemicals business. Watching and waitingI own Croda, and I think it’s still worth a look at today’s prices. But a more disciplined move might be to add it to the watchlist right now, and be ready to strike the next time it falls out of favour. What income stock do we like better than Croda International Plc right now?One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income. And the best bit is that you can see if for yourself, right now,absolutely free of charge!No jargon. No hard sell. Just a clear look at an income share we think is worth your time. Stephen Wright owns shares in Croda International.