A FTSE 100 dividend stock I'd buy and hold forever

Tritax Big Box facility

I last tipped telecoms colossus Vodafone Group(LSE: VOD) as an income stock worth buying ahead of November's half-year statement. And the strength of the update shows that my optimism was well placed.

The FTSE 100 business announced back then that organic group service revenues increased 1.7% to EUR20.6bn during April-September, while organic adjusted EBITDA rose 4.2% year-on-year to EUR7.4bn. And as a result, Vodafone hiked its full-year earnings estimates. It now forecasts a 10% improvement in organic adjusted EBITDA, up from its prior forecast of growth of between 4% and 8%.

Once again, the company continued to enjoy solid demand growth across both developed and emerging economies. On an organic basis service revenues in Europe and its Asia, Middle East and Asia Pacific (AMAP) territories leapt 0.8% and 7% respectively in the first fiscal half.

And sales are likely to keep on rising in my opinion thanks to Vodafone's massive infrastructure investments and busy M&A drive, not to mention soaring demand for voice and data services and particularly so from far-flung developing markets. These factors mean that I would be very happy to buy and hold the Footsie star for many years to come.

What's more, Vodafone continues to make significant progress in slashing operating costs under its 'Fit4Growth' efficiency programme, a scheme designed to bolster earnings still further by advancing the efficiency of its sales and office processes.

Stunning yields

Vodafone's latest statement in the autumn prompted brokers across the City to upgrade their near-term earnings forecasts. So current estimates point to a 22% bottom-line uptick for the year ending March 2018, and an additional 12% profits uptick is predicted for next year.

As a result, dividends for this year and next rock in at a very healthy 15.1 euro cents and 15.4 euro cents respectively for fiscal 2018 and 2019 respectively, projections that yield an eye-popping 5.8% through to the close of next year.

I reckon Vodafone is a top-quality stock worthy of a premium forward P/E ratio of 26.4 times.

Box up a beauty

I also believe that Tritax Big Box (LSE: BBOX) would prove an extremely sage dividend pick in the years to come.

You see, demand for the FTSE 250 firm's colossal warehouse and distribution hubs is likely to keep on climbing as the e-commerce phenomenon still has plenty of room to expand, and blue-chip companies increasingly seek to improve operational efficiencies through automation.

And Tritax is giving its revenues outlook an extra boost through its fizzy acquisition drive. Just last month the business stumped up £44.25m to take over a distribution facility in Cannock, Staffordshire, currently occupied by consumer goods giant Unilever.

City analysts certainly believe there is plenty of scope for earnings and thus dividends to continue growing. So a 4% profits improvement is forecast at Tritax for 2017, and this is anticipated to rev to 12% in the current year.

These projections are expected to drive the dividend from 6.2p per share in 2016 to 6.4p last year, and again to 6.7p in 2018. As a result shareholders can bask in a market-mashing forward yield of 4.5%.

A prospective P/E ratio of 19.9 times may be lodged above the widely-accepted value watermark of 15 times. But this should not be a deterrent in my opinion as the opportunity for strong and sustained earnings growth makes Tritax an exceptional share pick despite this toppy paper valuation.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.

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