Tens of thousands of companies have gone public over the years, so when we look at the few hundred dividend stocks that increase their payout annually, it's a small club. Most exclusive of all are the Dividend Kings, companies that have paid and increased their dividend annually for 50 or more consecutive years. We are talking about just a few dozen such companies, the true elite of the business world.
So let's explore five Dividend Kings that will likely continue paying you for years to come.
1. Coca-Cola
One of the world's largest beverage companies and a Warren Buffett favorite, Coca-Cola (KO 1.50%), has increased its dividend payout for each of the past 59 years. The company is best-known for its namesake soda, but it owns more than 200 brands of soft drinks, water, juices, and coffee worldwide.
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Coke is no longer a rapidly growing company, but it has world-class distribution to develop new products. It can also play with portion sizes and pricing to manage revenue growth in the low- to mid-single digits year after year.
The company doesn't need many investments to operate; it primarily creates just the concentrates and outsources its bottling operations, so it can afford to pay out a lot of its profits to shareholders. The stock currently offers a dividend yield of 2.9% -- more than twice that of the S&P 500 -- and its payout ratio is a manageable 76%, so investors can expect the cash to keep coming.
2. Genuine Parts
There are roughly 289 million vehicles on the road in the United States with an average age of 12 years. This creates a constant need for maintenance and repairs, so business is always steady for Genuine Parts (GPC -0.97%). The leading global distributor of vehicle parts is led by its flagship store brand, Napa Auto Parts.
The company has increased its dividend annually for 65 consecutive years. Yet its payout ratio today remains low at just 33% despite the long history of increases -- and that's because the business is steadily growing. Genuine Parts has averaged 4% revenue growth per year for the past 10 years.
There is a lot of hype around electric vehicles, so the eventual shift away from combustion-engine cars over time could create some uncertainty. Still, with so many cars on the road, investors should feel good about the company's prospects for years to come -- and they can enjoy a 2.5% dividend yield in the meantime.
3. Lowe's
The housing market might be scorching right now, but people have always invested in fixing up and remodeling their homes. Lowe's (LOW -1.40%) is one of two dominant home improvement chains in the United States (along with Home Depot). The dividend yield might not be the highest at 1.25%, but the payout has grown over the past 59 years and counting.
E-commerce has disrupted much of retail, but the company has held its own, mainly because the nature of home improvement products doesn't always translate online very well. It's often much easier to buy things like lumber and large appliances in stores, which has helped Lowe's continue growing its business. But when customers do want to order online, Lowe's does a good job of that too.
Lowe's is one of the faster-growing businesses on our list; revenue has increased by high single digits over the past decade and accelerated by a whopping 24% over the past year during this housing boom. The dividend payout ratio is just 27%, so investors can hold Lowe's with the confidence that the dividends will continue to flow.
4. 3M
Industrial conglomerate 3M (MMM -1.05%) has been inventing for decades with more than 100,000 patents for products like films, adhesives, Post-it notes, respirator masks, and more.
These products are used in cars, electronics, healthcare, energy, government, and virtually every other end market worldwide, making the company very diversified and thus able to get through economic downturns.
Revenue growth has been a bit lacking over the past decade at just 2% per year on average. But the company's long history of innovation makes it reasonable for investors to expect new products to continue coming out and driving steady growth over time.
3M has increased its dividend for an astounding 63 years. Shareholders can enjoy a healthy 3.3% yield on the stock today, and the payout ratio is 52%, which means it is well-funded.
5. Colgate-Palmolive
When you go to the store for household items like toothpaste and soap, you might be contributing to Colgate-Palmolive's (CL 0.33%) business without realizing it. The company sells all kinds of household, personal hygiene, and pet food products. Colgate is also the leading toothpaste brand worldwide with a nearly 40% market share.
Consumers use these products daily and purchase them frequently, regardless of whether the economy is doing well or poorly. This consistency in the business makes it an outstanding dividend stock. Colgate shares currently yield 2.2%, and that payout has grown for an impressive 58 years. What's more, the payout ratio is 63%, so the dividend is well-funded considering Colgate's steady business.
One potential concern is that the company isn't growing very fast: just 0.5% per year over the past decade. So investors will want to monitor this over the years to come, but its track record with its brands gives it a solid revenue stream that continues to pay investors.
