Five of the best dividend achievers

We've compiled and published a Dividend Achievers portfolio from FTSE All-Share constituents for the last two years and a list of stocks that currently meet the 10-year criteria can be found below. This week's screen is based on trying to pick the best of the dividend achievers, or the 'over-achievers', as we've termed them in the past. The criteria we use for this is as follows.

■ A dividend yield above the market median average.

■ Above-average dividend growth over one, five and 10 years.

■ Above-average forecast EPS growth in the current and next financial year.

We found 18 dividend achievers that passed these criteria. We've taken a closer look at five shares below which are the most noteworthy stocks on our list based on a number of different fundemental measures. The rest of the 'over-achievers' can be found in the table below along with the 'achievers'.

FIVE OF THE BEST

Highest yield

Pharma giant GlaxoSmithKline (GSK) is the highest-yielding of our over-achievers. There was some disappointment that the pace of dividend growth slackened somewhat last year, but overall the group also has plenty going for it.

GSK looks like it is neatly coming though a period of patent expiry and increased generic competition. Indeed, a recent decision to hive off older non-core medicines into a separate business, in addition to plans to sell its Lucozade and Ribena brands, demonstrates management's confidence in its drugs development pipeline and the core portfolio. What's more, analysts believe the group could raise £9bn if the non-core business is ultimately sold. This is in addition to forecasts of about £1bn from the sales of the drinks brands. Given that GSK has a sound balance sheet already, this may mean a major windfall for shareholders.

A recent approval of a new lung drug, Breo Ellipta, in the US also adds to confidence about prospects for the core business, which has now dealt with the worst of its patent expiries. The shares are valued at a slight premium to the sector on a PE ratio basis, but the group looks in better shape than many of its rivals.

Source: S&P Capital IQ

Last IC view: Hold, 1,463p, 6 Feb 2013

Best dividend growth

Specialist distribution company Diploma (DPLM) boasts the best dividend growth based on the combined average growth rate over 10, five and one year. The group has a reputation in the market for the reliability of its business and for delivering positive surprises. That said, a rare dip in profitability is expected as it starts to funnel cash in its 'investment for growth' programme, which will focus on upgrading infrastructure.

Given the track record, this move should be welcomed by long-term holders even if it holds the shares back in the short term. Diploma also has a strong record of using its robust balance sheet for canny acquisitions, although deals have recently been taking longer than usual to close. Tough trading conditions in Europe are providing a headwind at the moment and the shares are not cheap for a distributor, even a top-end one. Nevertheless, Diploma continues to have major charms as a buy-and-hold investment.

Last IC view: Hold, 580p, 15 May 2013

Lowest forecast PE

Despite being the cheapest stock on our list of over-achievers on a forecast PE ratio basis, construction and support services group Interserve (IRV) has lofty plans for earnings growth. Indeed, management's aim is to double EPS to 80p by 2015. Granted, this won't be easy as the construction business, both in the UK and overseas, is at a very low ebb. However, things look unlikely to get much worse.

Meanwhile, conditions have improved for the support services and equipment services operations, which are expected to do the really heavy lifting if the EPS target is to be achieved. Most of the improvement is expected to come from raising margins and the group has already started to make some encouraging progress on this front. Broker Numis Securities is not taking anything as read yet, but nevertheless has pencilled in EPS of 65p for 2015, which would represent a 40 per cent increase on its 2013 forecasts. The group also recently raised £104m from PFI asset sales to help shore up the balance sheet and address pension issues.

Last IC view: Hold, 490p, 28 Feb 2013

Lowest EV/EBIT

The enterprise-value-to-operating-profits (EV/EBIT) ratio accounts for a company's net debt or cash and the interest paid on or generated from it. Engineering consultant RPS (RPS) is the cheapest share based on this measure. The company also has a tremendously consistent record of growing its dividend by 15 per cent a year, which management is unlikely to concede without a major trading calamity.

That's good news, because trading has softened recently due to the slowdown in the Australian resources sector, which is a noteworthy market for RPS. Tough conditions in Europe are also an issue. However, performance has been good elsewhere and the group's energy operation, which accounts for over half of profits, is expected to have a strong second half. So useful EPS growth is still predicted for this financial year and next, although not in line with expected dividend increases of 15 per cent.

Last IC view: Buy, 225p, 3 May 2013

Best three-month momentum

Shares in printing and promotional products group 4imprint (FOUR) have been powering away on the back of excellent growth in the US. The company, which provides businesses with marketing products, now generates about 90 per cent of revenue from across the pond and it is benefiting from a growing end market and its ability to win share from smaller competitors. US revenue growth in the first quarter of the current year was 14 per cent, which is consistent with what was achieved in 2012. Given the fragmented nature of the US promotional market, there could still be more to go for.

4imprint also looks on a firmer financial footing after using proceeds from a business disposal to de-risk its defined contribution pension scheme, which was still £23m in deficit at the end of last year.

Last IC view: Hold, 397p, 5 Mar 2013