The Best Dividend Share You've Never Heard Of

Published in Investing on 10 June 2011

And how you can find out two more...

I'm always on the lookout for shares that pay reliable, rising, dividends. You see, an illustrious payout record tells me the firm has coped well over time, and has been managed with ordinary shareholders in mind. I'm sure you'd agree such attractions are vital given today's uncertain economy and all the 'fat cat' headlines.

Sure, we all know about the current payout attractions of GlaxoSmithKline (LSE: GSK), Vodafone (LSE: VOD) and many other blue-chip stocks. 

Some of you may even know about the dividend achievements of Domino Printing Sciences (LSE: DNO) and Greggs (LSE: GRG) -- two mid-caps that have upped their payouts every year for 25 years now.

From 0.14p to 11.8p 

But among the market's small-caps, I'm pretty sure few private investors will recognise the achievements of Fuller Smith & Turner (LSE: FSTA). This £368m London-based pub group, known mostly for brewing London Pride, has lifted its dividend every year since 1974.

Today, loyal Fuller shareholders celebrated a further 7% payout lift, so marking the firm's 37th straight dividend increase. The dividend has actually advanced more than 8,000% in those 37 years -- equivalent to 13% average annual compound growth.

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Fuller family fortunes

Glance at Fuller's boardroom and share register and you'll understand why this share has been such a successful dividend investment.

It is a family-run business, with descendents of the original founders still controlling at least 21% and thus having £77m-plus riding on the share price. 

The lead executive director is Michael Turner, who has a £12m stake himself and no doubt wants to keep his family members happy with further dividend improvements. In fact, today's results from Fuller suggest Mr Turner is already planning dividend-lift number 38 for 2012.

Underlying sales in the core managed pubs division have increased 7% of late, while net debt at £89m still looks very manageable when set against property assets of £302m. Indeed, I'm pretty sure having that conservative balance sheet ensured Fuller's dividend kept on increasing as most other pub firms collapsed in the crunch.

Two more great dividend shares 

Right now I'm debating whether Fuller's sub-2% yield is enough to justify a purchase at 645p. I think at the moment I shall leave the share on my watch list and wait to capture the amazing dividend history at a lower price (and therefore on a higher income). 

Just so you know, Fuller is not the only obscure share I monitor that hides a distinguished payout record. I'm happy to tell you that some relentless searching within the market's lower reaches has unearthed another two names with first-class payout records.

Similar to Fuller, these shares may at first appear to be somewhat dull, family-run affairs, yet they also offer asset-flush balance sheets and top-notch dividend histories that stretch back decades. 

My Foolish colleagues reviewed both companies within this special free report, which you can request right now and study for your own watch list.

> The Motley Fool owns shares in GlaxoSmithKline.

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jedmotley 10 Jun 2011 , 3:40pm

Investing in the beerage is not plain sailing nowadays. Over leveraged pubcos, closing pubs, falling consumption all signal caution. The squeeze on incomes, inflation and worse to come will hit sales. On the upside the survivors include those making money from supermarkets, those offering cheap food and good value. The prospect of the women's world cup and drought will not turn fortunes, but staycationers and a decent hot spell could help. Could Wetherspoons be a better play for price growth or will all this staring into the bottom of the glass mean Fullers will fall back to a better price?

jedmotley 10 Jun 2011 , 3:41pm
johnlatkins 10 Jun 2011 , 5:10pm

Fullers have a real quality operation which is a winner in todays often shoddy world. I never seem to find a poorly run Fullers pub. This company should do especially well in Olympic year.

vintractor 11 Jun 2011 , 7:04pm

Hey -get real - Fuller is no dividend share - the fact that the divi has increased for so many years may be a great achievemet - but look at the yield - its lower tham most at around just 2% - But yes this is a great share for its capital appreciation and as you commented will no doubt do well next year with the Olymipcs and beyond...

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