In search of dividend growth stocks that promise robust payout growth in the coming years? Look no further than these notable FTSE 100 stocks primed for steady dividends.
BAE Systems:
- Dividend yield: 2.5% for 2024, 2.7% for 2025
The defense industry, known for its stability in arms spending, is a reliable sector for dividends. As global tensions escalate, fueling rapid rearmament in the West, companies like BAE Systems (LSE:BA.) stand out for their consistent dividend growth. With a history of increasing shareholder payouts since 2011, BAE Systems is poised to continue this trend, making it an intriguing prospect for investors.
Forecasts project an 8% increase in payouts to 32.3p per share this year, with dividend growth expected to accelerate to 10% in 2025, resulting in a full-year payout of 35.5p per share. Anticipated profits rises of 7% and 12% in 2024 and 2025, respectively, support these dividend forecasts. The estimated dividends for both years are covered 2.1 times by predicted earnings, surpassing the safety benchmark of 2 times and providing added security to dividend projections.
With a solid financial base boasting £2.8bn in cash as of June, BAE Systems is well-positioned to fund dividends even in the face of potential earnings disruptions. The company’s surging order backlog of £74.1bn at the midpoint of 2025 indicates continued growth prospects, signaling potential for sustained dividends.
Airtel Africa:
- Dividend yield: 5.4% for 2025, 5.5% for 2026
Telecom provider Airtel Africa (LSE:AAF) offers a different dividend growth story compared to BAE Systems. Despite a shorter track record on the London Stock Exchange and dividend cuts in 2021 to reduce debt, Airtel Africa has seen significant increases in cash payouts since then, a trend that analysts expect to persist.
For the current financial year ending in March 2025, a total dividend of 6.52 US cents per share is projected, marking a 10% year-on-year increase. An additional 3% rise is forecasted for financial 2026, bringing the dividend to 6.70 cents.
While Airtel’s forecasts may not be as robust due to declining profits and increasing leverage levels, there are underlying positives. City analysts anticipate a strong profit rebound in financial 2026, with robust dividend cover expected at 2.7 times. Despite near-term uncertainties, Airtel Africa shares present an opportunity for risk-tolerant investors.
Looking ahead, the long-term outlook for Airtel Africa remains compelling, driven by the soaring demand for telecom services across Africa. With a 6.1% year-on-year increase in its customer base to 156.6 million in September, Airtel Africa stands poised for continued growth.
In conclusion, both BAE Systems and Airtel Africa offer distinct growth opportunities for investors seeking dividend-paying stocks with strong potential for future returns. Consider these companies for a balanced portfolio that combines stability and growth in dividends.
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