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MARKET COMMENT
FTSE Dividends Growing 10% Or More

By Maynard Paton (TMFMayn)
November 21, 2003

According to Credit Suisse First Boston's 2003 Equity-Gilt Study, 100 invested in shares in 1918 would now be worth around 34,000 with dividends reinvested. Had the payouts been spent instead, the 100 would be worth just 1,000. Long term, strong and growing company dividends ploughed back into the market make all the difference.

Within the FTSE 100, 25 firms have increased their annual dividend by an average of 10% or more over the past five years. Sadly, not all of them are set to continue the payout momentum. With growth generally harder to come by at the moment, most FTSE stalwarts are forecast to provide shareholders with single-digit percentage improvements over the next year or two.

However, the following list reveals the thirteen blue chips expected to maintain their 10%-plus dividend growth record:

Share                               Dividend Growth      Share  Yield   
                              Past five  Current  Next   price   (%) 
                              year ave.    year   year    (p)
                                 (%)       (%)     (%)

Sage (LSE: SGE)                  39.9     10.7     9.0    177    0.9
Northern Rock (LSE: NRK)         23.6     14.9    12.1    682    3.4
William Morrison (LSE: MRW)      20.8     16.3     9.9    221    1.4
WPP (LSE: WPP)                   20.5     19.8    18.5    546    1.2
Royal Bank of Scot (LSE: RBS)    17.2     14.6    13.0  1,564    3.2
Imperial Tobacco (LSE: IMT)      16.5     11.9     8.1  1,057    4.4
Man (LSE: EMG)                   14.9     16.4    19.6  1,432    1.9
Barclays (LSE: BARC)             14.6     10.3     9.9    486    4.2
Alliance & Leicester (LSE: AL.)  13.9     10.0     9.3    868    5.1
Unilever (LSE: ULVR)             13.7     11.9    11.2    509    3.5
Rentokil Initial (LSE: RTO)      12.6      9.9    10.2    221    2.8
Next (LSE: NXT)                  11.5     10.0    10.6  1,117    3.1
Wolseley (LSE: WOS)              11.1     10.8     9.8    720    3.3

It's a mixed bunch, involving steady activities like banking, food retailing, food manufacturing, smoking, rat catching and plumbing, as well as more racy pursuits such as software, advertising, hedge funds and fashion.

Despite a weighting towards banks, the general sector diversity could well make the list a portfolio in its own right. Holding the thirteen shares in equal amounts would give a forward portfolio dividend yield of 2.9%. That's forecast to rise to 3.3% for next year, to match the present yield of the FTSE 100. Though past performance is never a perfect guide to the future, owning those 13 proven achievers and reinvesting their dividends ought to outrun the market over time.

More: Fool's Guide To Dividends | Dividends Up 100% Or More | Dividends Are Still Increasing