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Imagine a company that has grown its dividend 5-plus per cent for 45 years on the trot. Neither capital intensive nor showy, it has hoovered up 160 acquisitions in the past 50 years or so, nearly all in the tens of millions of pounds.

Halma is no figment of the imagination. Sure, it has merited less than 100 mentions in the FT over the years but the £10bn safety and equipment maker has rewarded investors with annual total returns of 43 per cent in the past two years.

Boasting a business model that borrows from the playbooks of both private equity and franchisers, Amersham-based Halma provides capital, IT and other support to the companies it acquires, but manages them on a highly decentralised basis. Head office is lean.

It is also far from the only low-profile high-performance stock. Lex’s nine-strong “XFT” Index of the biggest wallflowers has beaten returns on the FTSE 100 by 6 per cent over the past five years.

The grouping also offers a pleasing counterpoint to the gloomy narrative on British manufacturing: more than a third of Halma’s 50 companies operate domestically.

Yet these are classic London Stock Exchange constituents, operating globally and making products that may not set hearts beating — think fire detection and prevention, steam pumps, flow control systems — but cater to long term environmental and healthcare trends. 

Typically acquisitive, growth is intrinsic at organic levels too. Both Halma and recently rebranded Spirax Group, in thermal energy management, generated average organic growth above the sector in the last 15 years, says Barclays, and double-digit compound annual growth rate of earnings per share.

Inevitably, there have been M&A stumbles along the way. Spirax’s $415mn purchase of Chromalox in 2017 included a lossmaking French manufacturing facility which it subsequently sold.

It can also be gruelling. Halma is monitoring 600-700 targets at any time, many of which are still run by founders and most of which have not hoisted for sale signs. 

Other caveats attach. Global reach and diverse end users do not mean immunity from the vicissitudes of the economic cycle. Depressed industrial production, inflation and higher interest rates take a toll. Spirax took a hit in 2022 when orders booked in 2021 were shipped out the following year. As such, they did not benefit from price increases but bore the burden of higher raw material costs, shrinking margins.

Depressed demand from China hit Spectris. The healthcare diagnostics and measuring instruments group last month said that first-quarter trading was “slightly softer than anticipated”, but stuck with full-year expectations.

Moreover, going unremarked does not mean going unnoticed. Since announcing results last week, Halma’s share price is up by nearly a third; it now trades on nearly 30 times next year’s earnings, well ahead of its peer group. Spirax trades on over 26 times forward earnings on S&P Capital IQ forecasts.

Dividends, while growing in absolute nominal terms, are shrinking as a proportion of profits as the companies reinvest. Halma’s 39 per cent payout ratio in 2014 had dropped to 26 per cent by last year. 

Higher multiples and prioritising investment over dividends is, of course, exactly what would be expected of growth stocks — even those that do their growing sotto voce.