These 2 dividend stocks have increased their annual income payments for multiple decades

Not all dividend stocks are created equal. Some deliver impressive headline yields, while others quietly keep increasing payouts year after year. Lately, I’ve favoured high-yielders such as wealth manager M&G, that offers a bumper income of 7.85% a year.

I’ve typically shunned income stocks with low yields, even those with a long track record of rewarding shareholders with annual dividend increases, like these two FTSE 100 dividend superstars. Now I’m having a rethink.

Halma keeps hiking payouts

First up is global health and safety technology specialist Halma (LSE: HLMA). It has a modest trailing yield of just 0.69%, but it’s a real champion for dividend growth.

The company has lifted its annual payout for an astonishing 45 years in a row. Over the last five years, it’s hiked dividends at an average rate almost 7% a year. The Halma share price has done well too, up 31% over 12 months and 60% over two. Calculations from AJ Bell show Halma has delivered a stunning total return of 352% over the last decade, with dividends reinvested. That’s the miracle of compound returns.

Of course, that doesn’t guarantee a repeat performance. The stock looks seriously pricey with a price-to-earnings (P/E) ratio of 35.9. As an international company, Halma is exposed to currency swings and tariffs. Yet for patient investors focused on long-term growth, its track record makes it well worth considering. There’s every chance those dividends will keep rolling in, but its share price could slow after such a strong run.

DCC looks better value

At the other end of the spectrum sits sales, marketing and support services group DCC (LSE: DCC). It has in-built diversification across the energy, healthcare, technology and retail sectors, but that’s about to change.

It’s in the middle of a major transformation as CEO Donal Murphy hones its focus purely on energy, where he hopes DCC can become a global leader in distribution. The healthcare division is being sold for over £1bn, with £800m earmarked for shareholders, starting with a £100m share buyback.

DCC has increased its dividend for an eye-popping 31 consecutive years. Latest results for the year to 31 March showed a 5% increase to 206.4p, giving a 4.4% yield, above the FTSE 100 average of around 3.25%. Free cash flow reached £588.8m, with 84% conversion, suggesting payouts are sustainable.

DCC shares look a lot cheaper than Halma’s, with a P/E of just under 12. However, that’s a result of recent poor performance, with the stock down 8% in the last year and 25% over five years. So this is a value stock, rather than a momentum play.

The company’s dividend has compounded at 10.4% over the last decade, but the total return in that time is a disappointing 20%. The rising yield has failed to compensate for the stagnating share price.

Balancing investment risk

Halma offers growth and consistency, albeit at a premium, while DCC provides a higher yield and potential recover potential if its energy focus pays off. A mix of the two could balance momentum and value, providing reliable income with some growth potential.