In 1974, the Ford Cortina was the UK’s most popular car and Leeds United topped the First Division. It was also the year in which the directors of the Murray Income Trust decided to increase the full-year dividend from just under to just over half a penny.
This year Murray Income celebrated its 100th anniversary and its 50th consecutive annual dividend increase, paying a total dividend of 37.5p to its shareholders (representing a healthy compound annual growth rate throughout the period of 9.15%).
The longevity of Murray Income’s dividend record can be explained by three factors.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
- The structure of investment trusts, with revenue reserves, has helped to smooth income
- The strength of overseas currencies have helped with a dividend paid in sterling.
- But to my mind the overarching reason for the payout’s heroic performance has been the portfolio’s focus on high-quality businesses able to grow their earnings and hence their dividends over the long term, through good times and bad.
In light of the above I’ve chosen four high-quality companies with exposure to three enduring trends – digital transformation, the energy transition, and ageing populations – that can hopefully deliver similar levels of long-term earnings growth, long-term dividend growth and capital appreciation.
1. Sage (LSE: SGE)
Sage (LSE: SGE), a company I last mentioned in this column in March 2012, is a leading supplier of accounting and business management software to smaller companies that have underinvested in digital tools.
Sage has a competitive product portfolio, aided by the success of the acquisition of Intacct a number of years ago, to provide help. There is scope to grow geographically and through further product innovation, while margins should benefit from operating leverage. The firm’s products are typically embedded in their customers’ workflow and provide a large benefit for a relatively limited cost.
2. Rotork (LSE: ROR)
The next company is Rotork (LSE: ROR), a leading manufacturer of actuators. The company has an attractive part to play in the energy transition helping to remove methane emissions in oil and gas wells while also enabling the development of hydrogen and carbon capture, utilisation and storage (CCUS).
Rotork has strong quality characteristics with attractive margins, a high return on capital employed, robust brand resonance and a net cash balance sheet.
3. Oxford Instruments (LSE: OXIG)
Oxford Instruments (LSE: OXIG) is exposed to several structural growth markets as a leading provider of advanced instrumentation equipment used for scientific research, chemical analysis, semiconductor processing and diagnostic imaging.
It benefits from technological leadership, a strong brand and good commercial nous. The company should deliver attractive revenue growth with improving margins. The net cash balance sheet provides additional avenues for expansion.
4. Convatec (LSE: CTEC)
The final stock is Convatec (LSE: CTEC), which is in the midst of a turnaround under a management team we rate highly. Convatec has operations in the areas of infusion care, ostomy care, advanced wound care and continence care. These areas provide exposure to chronic care with recurring revenues and high customer dependency in growing markets driven by population ageing. Convatec has a clear plan to enhance revenue growth and greatly improve operating margins. The firm trades at an unjustifiably large discount to its nearest rival.
This article was first published in MoneyWeek's magazine and all information was correct at the time of writing. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Review: The Grill at the DorchesterThe Grill at the Dorchester has a new, easy-going atmosphere, but the food is serious: from punchy beef wellington to grown-up tarte tatin, says Dan McEvoy
-
Review: The Hut, Colwell Bay – a seafood lunch with a holiday feelTravel Getting to The Hut in Colwell Bay on the Isle of Wight is almost as rewarding as actually eating there
-
Pierre-Édouard Stérin wants to make France great againConservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Global investors have overlooked the top innovators in emerging marketsOpinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Pinewood Technologies: a drive for growthPinewood Technologies’ platform is one of the best in the business. Investors should buy in
-
'EV maker Faraday Future will crash'Faraday Future Intelligent Electric is failing dismally to live up to its name, says Matthew Partridge
-
Investors should cheer the coming nuclear summerThe US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with folliesThe best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuationAEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefullyShares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?
