Centrica's (LSE:CNA) Dividend has grown faster than most in the FTSE 100, rising 22.2% year on year on the latest data. It has done so while the British Gas owner has been reported to be prioritising Investment over share buybacks. For income investors, the attraction of a fast-growing payout has to be set against a dividend record that is still very young.

Half-year results and the buyback question

Centrica's (LSE:CNA) interim results for the six months ended 30 June 2026 were published in July, and it declared an Interim Dividend of 2.0p. One account said that transformation costs had weighed on earnings. That title of "transforming Centrica" was also the theme of the company's own messaging, suggesting that this is a deliberate period of change rather than a one-off blip.

Separately, reports have described the group raising its dividend while pausing its share buyback in order to fund investment, with one account referring to an £800m programme being halted to fund major infrastructure projects. The timing of those reports could not be pinned down precisely, so that detail is best read as background rather than as fresh news. The direction is nevertheless clear enough: when a company stops Buybacks to invest, the dividend becomes the main visible form of cash return.

The dividend in numbers

The figures here come from a data snapshot dated 7 October 2026, converted from sterling into pence. The annual Dividend per share is 5.5p, and the latest payment is 2p, in line with the declared interim. The trailing 12-month and indicated yields are both 3.8%, a respectable level that leaves the shares offering a reasonable income, without appearing to signal distress.

The standout figure is the 22.2% annual increase. Growth at that rate is unusual for a large UK company, and it reflects both the low base from which the payout has been rebuilt and the confidence of the board. It is unlikely to be a figure that investors can simply extrapolate. Dividends do not usually grow by more than 20% a year for long unless Earnings are growing fast too, or cover is being used up.

Cover and the record

The Payout Ratio of 36.1% implies that earnings cover the dividend about 2.8 times over. That leaves meaningful headroom, and it goes some way to explaining how such a sharp increase has been possible. Even so, energy Supply and trading profits can swing considerably from year to year, and a ratio that looks comfortable on trailing earnings may look very different if profits fall. A move from buybacks to heavy investment also means that more of the group's cash is committed elsewhere.

The record is the weak spot. The snapshot shows just four years of continuous payments and three of continuous growth. That reflects an interruption in the not-too-distant past and is a reminder that this dividend has been stopped before. Compared with the three-decade records of many other companies in the index, four years is an unproven run. Investors cannot yet judge how the policy would hold up in a prolonged downturn, or if a large investment programme ran over budget.

What to watch

The next full-year results will show whether the rapid dividend growth continues, and whether the final payment lifts the annual total above 5.5p. Investors should also look for any change in the position on buybacks, and for updates on transformation costs and how quickly the investments are expected to contribute to earnings. Trading conditions will matter too, since the earnings behind that 2.8 times cover can be volatile.