I’ve waited years to buy this top FTSE 100 dividend growth stock – is now my time?
I’ve had a top UK growth stock on my ‘buy’ list for years. The first time I wrote about it, yonks ago, I called it the ultimate FTSE 100 dark horse. Why? Because it’s the kind of company that doesn’t make headlines but keeps delivering. Quietly lifting profits, expanding the business and lifting dividends year after year.
The stock in question is Bunzl (LSE: BNZL). I’ve admired it for ages but never quite found the right time to pounce. That might finally be changing.
Bunzl shares wobble
Bunzl provides the unglamorous but essential items that keep hospitals, shops and factories ticking over: gloves, packaging, paper towels, cleaning kit and the like.
It’s built a strong business by snapping up smaller rivals around the globe. Last year, it sealed 13 deals worth £883m, and it hasn’t let up in 2025 either, acquiring Solupack in Brazil just last month.
In April, its forward march hit a bump in the road, when the board issued a profit warning after a rocky start to the year. North America, its biggest market, struggled with soft demand and rising costs, while Europe and the UK came under pressure too. The shares crashed 23% in a day.
That was a shock for long-time fans like me. Over 12 months, the share price is now down almost 25%. The price-to-earnings (P/E) ratio has dropped to 11.98 times, easily the cheapest I can recall. The dividend yield is nudging 3.2%, the highest I can remember.
Back on track?
Yesterday’s half-year update (24 June) brought some reassurance. Bunzl said trading had met expectations, despite the murky global economic outlook. The company expects the second half to be stronger, helped by management efforts to boost performance, especially in North America and continental Europe.
First-half revenue is on track to rise 4% at constant exchange rates, with acquisitions doing most of the lifting. Operating margins are forecast to sit around 7%, down a little on recent years, but with room to improve later in the year. Investors will have priced that improvement in by now, of course. Bunzl will have to beat it, to lift the shares.
The long-term record still stands out. It has now grown its dividend every year for 32 years. Over the past 15, payouts have risen by an average of 8.56% a year. That’s consistency.
Still watching
Even so, I’m treading carefully. I’ve been burned before by jumping too quickly into falling stocks. My biggest portfolio regrets – Diageo, Glencore, JD Sports Fashion and Ocado Group – follow that exact pattern. A single profit warning often leads to another, and the losses can spiral. So I’m not diving in just yet.
Analysts are split. Of the 18 covering Bunzl, three rate it a Strong Sell and another says Sell. The majority still lean towards Buy, but only just. They’re pencilling in a 12-month target of 2,700p, which would mean a 15% gain from today’s 2,354p.
I’d like to believe they’re right. That P/E now looks tempting, and if sentiment turns, recovery stocks can climb sharply. Often when investors least expect it.
The global outlook remains bumpy though. With tariffs, life’s tougher for international companies like this one. Bunzl’s still top of my wishlist. But I’m holding fire for now.
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Harvey Jones has positions in Diageo Plc, Glencore Plc, JD Sports Fashion, and Ocado Group Plc. The Motley Fool UK has recommended Bunzl Plc and Diageo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
