Shropshire water supplier Severn Trent has hiked its dividend to shareholders after profits rose by a fifth last year, despite sewage spills by the company rising by a third in 2023.

The FTSE-listed firm, which provides water to homes and businesses in the Midlands, lifted its final dividend 9% to 70.1p per share, while profit rose to £201.3 million.

Severn Trent, which supplies Shropshire as well as large parts of Powys and north Wales through its subsidiary Hafren Dyfrdwy, was responsible for more than 60,000 sewage spills last year, with those spill events lasting for more than 440,000 hours – equivalent to about 50 years.

The water firm said it had successfully raised £1 billion from investors, having announced the raise in 2023.

It said it is investing £450 million to improve 900 storm overflow points, about a third of the total across its infrastructure network, as part of a push to halve its average spill rate by 2030.

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Severn also said it had invested £1.2 billion this year to “continue improving performance levels”.

However, it comes after the water company asked to increase bills by 35.7% over the next five years.

In its five-year plan submitted to Ofwat, Severn Trent wants to invest £12.9 billion and increase customer bills to £546.

Between 2020 and 2025, the average annual bill for Severn Trent was £402.63.

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The latest bill hike demands come ahead of a crucial meeting this week when the industry regulator Ofwat will decide what companies can charge between 2025 and 2030.

Liv Garfield, chief executive of Severn Trent, said: “I’m proud of the performance our brilliant teams have delivered this year, whether for our customers, the environment or the wider region.

“The extra £1 billion we raised from our investors will help us continue to transform the network, reducing spills, improving river health and providing our customers with the best and most reliable service.

“We are planning record levels of investment in the coming years, while also keeping bills the second lowest in the country. Our customers and the communities in which they live are at the heart of our business and we’re doing more than ever to ensure we have a positive economic, environmental and social impact across our region.”

Ms Garfield faced heavy criticism earlier this week for her £3.2 million pay packet for 2023, which includes salary, bonuses and shares.

Meanwhile, over the past four years she has earned nearly £13 million.