Dividends are never guaranteed, but dividend stocks can be a great way to build income. And the best UK companies have been growing their payments for years.

Addictive yield

There might be reasons to avoid British American Tobacco (LSE: BATS), but the dividend is surely not one of them.

We’re looking at an 8.4% forecast dividend yield for 2024, even after a strong share price recovery so far this year. And analysts expect 9.3% by 2026.

The dividend cash has increased every year for at least the last 20 years, which is as far back as I checked.

And, as of July’s interim update, the firm said it remains “committed to our progressive dividend based upon 65% of long-term sustainable earnings“.

The main risk comes from the future of the tobacco industry, and that’s hard to predict. The firm is putting a lot into alternative products, though, and that could keep it going well into the future.

Slow and steady

ITV (LSE: ITV) doesn’t have huge forecast dividend rises. But slow and steady over the long term can turn out to be a big winner.

The share price has had a weak few years, with advertising coming under pressure. And companies like Netflix are competing harder for our eyes too.

But, at H1 time, CEO Carolyn McCall told us the firm “has been transformed over the last five years“. And ITV reckons it should be on for record profits for the full year.

It’s still early days, and the competition isn’t going away. And analysts don’t see much earnings growth in the next few years.

But the weak share price puts the forecast dividend yield up at 6.4%.

REIT round-up

Investment trusts are able to retain cash in better years to keep their dividend growth stable at weaker times. And that’s worked well for these two real estate investment trusts (REITs).

Primary Health Properties has lifted its dividend for years. Back in 2012, adjusting for a 2015 split, the trust paid a 4.625p equivalent. In 2023, it was up to 6.7p. That’s not massive growth, but long-term annual rises are good to have. And with the share price down, the forecast 2024 yield is 7.5%.

Supermarket Income REIT has even bigger forward yield, at 8.2%, again boosted by share price weakness. And this one’s been lifting its annual dividend steadily too.

Both of these have further raises forecast. They also pay quarterly, which could be good for those who want to take income.

The main risk with both, I think, is high debt, which most REITs have. Especially when property values are pressured, that could hit the dividend prospects.

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Trust in wind

Oh, I can’t resist another investment trust. In this case it’s Greencoat UK Wind, which owns a number of onshore and offshore wind farms.

Alternative energy investments carry risk, and we really don’t know which technologies will supply the bulk of our future needs yet.

But I can see wind going strong for many years. And Greencoat’s policy is to return most of its cash as dividends, and to keep up with inflation.

Forecasts show a 7.4% yield this year, rising ahead of expected inflation over the following two years.