20+ years of growing dividends! 2 cheap FTSE 100 shares I’d buy

There are quite a few shares in it FTSE 100 which has seen its dividend increase every year for a long time.

I love owning dividend stocks for the income potential they offer. But when buying any stock I also always consider the price. There are a number of FTSE 100 businesses that I like that consistently raise their annual dividends – but their share prices have me adding them to my portfolio today.

For example, I would love to have it Diageo but not willing to buy it at its current price-to-earnings (P/E) ratio of 27.

In contrast, here are some FTSE 100 stocks with a P/E ratio of around half that, or less. Both have raised their dividends every year for more than two decades. Both benefit the business which I think can help support shareholder payouts in the future. If I had the spare funds to invest today, I would happily add these two stocks to my portfolio.

DCC

conglomerate DCC (LSE: DCC) may not be a household name, although its subsidiary delivers bottled gas to households in markets across Europe and North America. But the company has always made a name for itself in the stock market, has raised its payout every year for 28 years.

This is not a rising token, either. Four of the past five years have seen dividend increases double the full-year rate.

Dividend powerhouse

Paying that dividend – it cost £173m last year – could be due to the strong performance of the business. It combines considerable profits from a large user base in energy sources with the growth opportunities of the medical and technology divisions. There are risks, though. Swings in energy prices can affect profits and profits, for example.

I have been looking at DCC for my portfolio for some time because of its potential for income generation. After a 30% share price fall last year, it is now trading at what I see as an attractive valuation with a P/E ratio of 14. The current yield is 4.1%.

British American Tobacco

I already have a stake in it British American Tobacco (LSE: BATS) and is happy to buy more.

Now I am receiving monthly dividend from the company. They grow every year since the beginning of the century. However, the big risk for tobacco companies is the decrease in profits and profits due to the decrease in the number of smokers. The dividend yield in 2019 is 2.5%.

Still, FTSE 100 shares trade at a P/E ratio in the single digits and yield 7.0%. That’s huge and could add up to a sizable passive income stream for me in the years to come.

Looking to the future

The company benefits from having a well-known brand like Lucky Strike and Pall Mall. It is also expanding its non-tobacco business rapidly. That could help keep the total profit down, although in the long run I doubt the product will be as profitable as cigarettes.

Despite the risks, I think the tobacco business still has a long future. I plan to hold BATS shares for the foreseeable future and hopefully benefit from many more dividends.