The UK inventory market hosts a broad spectrum of dividend shares, lots of which have been rising their shareholder payouts for many years. These so-called Dividend Aristocrats are a well-liked alternative for income-seeking buyers. Their lengthy monitor file of paying out an ever bigger quantity every year reinforces their picture as extraordinarily protected investments.

Arguably, two of the preferred within the UK are Authorized & Common (LSE: LGEN) and Imperial Manufacturers (LSE: IMB). Each firms have been rewarding shareholders with dividends for greater than 20 years. However trying forward, can they proceed to keep up this spectacular monitor file?

A protected lifeline

Authorized & Common has supplied insurance coverage and asset administration providers to Brits for so long as I can bear in mind. This established family title has roots tracing again to the early 1800s.

One factor to search for in dividend shares is a historical past of accelerating funds. L&G actually knocks it out of the park right here, with 11.3% annualised dividend development over the previous 15 years. 

For 5 years it has centered on a cumulative dividend plan to reward shareholders with £5.9bn in payouts. Now boasting an 8.9% dividend yield, it’s at the moment the fifth-highest on the FTSE 100.

However the yield is simply the beginning. What impresses me is its market dominance in an trade with regular and steady development. With every technology residing longer, the demand for insurance-related merchandise is more likely to proceed rising.

In fact, nothing is 100% protected on the subject of investing. Markets rise and fall just like the solar and the moon and Authorized & Common isn’t any exception. It’s extremely uncovered to financial danger, with clients fast to withdraw funds when occasions get robust. 

A take a look at the price chart reveals the robust declines it endured when the financial system struggled. So whereas dividend funds could also be dependable, the price generally is a roller-coaster trip not for the faint-hearted.

Shifting with the occasions

Imperial Manufacturers has been making nice strides in adapting to altering market situations. Since rebranding, the tobacco big has embraced the transfer in the direction of a extra wholesome, smoke-free society. 

Positive, it’s as a lot a profit-driven train as an ethical necessity nevertheless it highlights the corporate’s dedication to success. And a stable monitor file of steadily rising dividend funds exhibits its dedication to its shareholders.

There was a short minimize when the pandemic hit however earlier than that, funds had been rising by 10% per yr. With a yield now above 7%, it’s working its manner again to pre-Covid highs.

Whether or not Imperial can adapt to altering occasions stays to be seen. So its unsure future makes it a dangerous funding. There’s no query that dangerous tobacco merchandise have to be phased out — and they’ll. However there stays excessive demand for tobacco-free and smokeless replacements.

From what I can see, Imperial is doing nicely to satisfy this demand. It’s up 22% previously three months but nonetheless has a low price-to-earnings (P/E) ratio of 8.5. 

That appears like good worth to me. 

The underside line

It’s no shock that being awarded the title of Dividend Aristocrat is a much-coveted feat that not many firms obtain. The long-term, dependable funds make them engaging choices as passive revenue earners.

However as is the case with any funding, even these seemingly dependable revenue alternatives carry dangers.