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There are many high yield dividend-paying companies from the UK, with the FTSE 100 index carrying a weighted dividend yield of 3.5%. By contrast, the weighted average dividend yield of the S&P 500 is only 2.0%. But, there are much fewer companies in the UK with a history of 25 or more years of consecutive annual dividend increases. Perhaps because of the typically higher dividend yields, and therefore payout ratios, UK companies seem more inclined to cut their dividends to preserve free cash flow during times of uncertainty. Royal Dutch Shell (NYSE:RDS.A) and Tesco (OTCPK:TSCDY) previously had more than 25 years of consecutive annual dividend increases, until they froze their dividend payouts in 2010 and 2013, respectively. (But, Shell has since resumed to increase its quarterly dividend to $0.86 per ADR in 2012, and to $0.90 in 2013.)

S&P Dow Jones Indices have created the S&P UK High Yield Dividend Aristocrats index to track the performance of high yield UK dividend-paying companies. To be eligible in the index, a stock must have a history of increasing or stable dividends for at least 10 consecutive years. The index is then weighted by their indicated annual dividend yields to ensure that higher yielding stocks represent a greater proportion of the index's portfolio.

The S&P UK High Yield Dividend Aristocrats index seems to use a similar methodology to the S&P High Yield Dividend Aristocrats index for US stocks. But, the eligibility conditions for the US index are far more stringent, by only including stocks that have increased dividends for at least the last 20 consecutive years. If the UK index used the same eligibility rule, the index would not be feasible, as very few stocks have consistently increased dividends over two decades. The S&P 500 Dividend Aristocrats has an even stricter eligibility rule, by only including stocks that have increased dividends in each year for the last 25 consecutive years.

Here are three UK companies, which do meet the criteria of at least 25 years of consecutive annual dividend increases:

Unilever PLC (NYSE:UL), the Anglo-Dutch consumer products group, has increased its dividends for the past 41 consecutive years. Unilever determines its dividends in euros, and currently pays a quarterly dividend of €0.269 (which converts to about $0.365) per share. Each ADR represents one ordinary share. Dividends from Unilever PLC shares, unlike Unilever N.V. shares (NYSE:UN), are subject to UK tax law. The UK has no withholding tax on dividends.

Emerging markets account for more than half of the company's total sales, and the recent weakness in emerging market currencies has affected Unilever's sales. Together with declining sales in developed markets, the company reported that 2013 revenue fell 3.0% to €49.8 billion. But, increased margins from higher prices and cost reductions led net income to rise 8.8% to €5.26 billion ($7.10 billion). With a dividend yield of 3.9%, Unilever has a dividend payout ratio of 64.8% and has a net debt-to-EBITDA ratio of 0.98.

The other two stocks are mid-cap companies with an OTC listing in the US. Because of the very low liquidity of these stocks, investors may consider trading directly from the London Stock Exchange.

Halma (OTCPK:HLMAF), a specialist manufacturing group, has increased its dividends for the past 34 consecutive years. Halma, with a market capitalization of $3.67 billion, designs and manufactures protection devices, products for hazard detection, medical devices and equipment for environmental analysis. These markets are typically non-cyclical and fast growing, because of the increasingly strict health and safety regulations being introduced in both developed and developing economies.

Halma's dividend payments in its 2012/13 financial year totaled 10.43p and currently carries a dividend yield of 1.8%. Typical of most UK listed companies, Halma makes two dividend payments a year, with the interim payment being smaller than the final dividend payment. The company is on course to make its 35th consecutive year of annual dividend increases, as it increased its 2013/14 interim dividend to 4.35p, representing a 7.1% rise over the previous year. Halma has a dividend payout ratio of 41.4%, and a net debt-to-EBITDA ratio at 0.73x.

PZ Cussons (OTC:PZCUF), a personal healthcare products and consumer goods group, has increased its dividends for the past 40 consecutive years. PZ Cussons, with a market capitalization of $2.50 billion, offers a dividend yield of 2.1%. The company owns numerous brands, including Carex, Imperial Leather and Original Source and operates across Europe, Asia and Africa. Its sales in developing economies have been rapidly growing, and Africa has recently overtaken Europe as the region contributing the most to the company's revenue.

Revenue for the company's 2013 financial year rose 2.8% to £883 million ($1.42 billion), whilst net income rose 86.8% to £71.0 million ($114 million). However, net income had been affected by restructuring costs. Net income before restructuring costs rose 17.2% to £79.0 million ($127 million). The company has a dividend payout ratio of 50.1%, and has net funds of £3.4 million.

Note: Foreign companies tend to declare dividends in a non-US dollar currency, and so the value of the dividend in US dollar terms may fluctuate with changes in the underlying exchange rates. This also means that the annual dividend increases may not represent actual dividend growth in US dollar terms.

Source: 3 U.K. Dividend Champions