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5 Top Dividend Kings to Buy in 2022 and Hold Forever

By Keith Noonan – Jan 4, 2022 at 8:10AM

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Sturdy businesses and reliable dividend growth? Yes, please.

Dividend Kings are companies that are part of the S&P 500 index and have increased their annual payouts to shareholders annually for at least 50 years. That's no small feat, and there are currently fewer than 40 publicly traded stocks that have been able to gain entrance into this exclusive club.

Providing a half-century of annual payout growth signals that a company has a relatively strong underlying business and has been able to survive and thrive through big changes and shakeups along the way. If you're seeking companies that can reliably increase their dividend payouts, read on for a look at five top Dividend King stocks to buy in 2022 and hold for the long term. 

A crown on top of cash.

Image source: Getty Images.

1. Target

Big-box retail giant Target (TGT 1.47%) joined the ranks of the Dividend Kings in 2021, and its stock currently yields roughly 1.6%. The company has deftly navigated the challenges of the pandemic era, with e-commerce and curbside pickup initiatives helping the business post impressive sales growth.

Target has managed to take market share from Amazon over the last year, and it looks like the company is on track to continue delivering more strong earnings and payout growth. Reflecting the strong performance, the retail giant's last payout increase came in at an impressive 32%.

Target's massive size and infrastructure allow it to offer competitive prices. The stock continues to look reasonably valued, trading at roughly 17.5 times this year's expected earnings and in line with projected sales. While e-commerce disruption will continue to put pressure on the overall brick-and-mortar space, the company has shown that it can succeed with its hybrid, omnichannel model. The business's strong foundations have it on track to continue delivering wins over the long term. 

2. Johnson & Johnson

With a market capitalization of roughly $450 billion, Johnson & Johnson (JNJ -0.20%) stands as the largest of the Dividend Kings. The healthcare giant has increased its payout annually for 59 years running, and it looks well-positioned to continue thriving in the decades to come. Johnson & Johnson stock currently yields roughly 2.5%, and the company has increased its dividend payout by 86% over the last decade.

Between its pharmaceuticals, medical devices, and consumer goods segments, J&J has a diversified business that looks primed to benefit from trends, including the aging of the global population, overall population expansion, and the growth of the global middle class. The company's biotech and surgical robotics initiatives also present some opportunities that could significantly expand its sales and earnings growth and help it increase the rate at which it returns cash to shareholders. 

A person stacking '2022' on increasing stacks of coins.

Image source: Getty Images.

3. Genuine Parts Company 

With 65 years of consecutive annual payout growth, Genuine Parts Company (GPC 1.12%) has a longer streak of dividend increases than any other stock on this list. The automotive and industrial parts company was founded in 1928, and its NAPA Auto Parts retail, service, and industrial segments look like sturdy long-term growth drivers. 

Genuine Parts has quietly been posting very solid performance, and the company has been making use of data analytics technologies to improve efficiency and set the stage for future wins. The company grew sales 10% year over year last quarter and notched its 16th consecutive quarterly margin expansion. Genuine Parts also managed to grow earnings 15% year over year in that period, setting a new quarterly record. 

Whether the economy is booming or going through a rough patch, there will always be a need for automotive and industrial part replacements and servicing. Genuine Parts stock yields roughly 2.4% at current prices, and there's a great chance that the company will announce another payout hike in the near future.

4. Altria Group

While sin stocks might not be for everyone, Altria Group's (MO -0.06%) huge dividend and non-prohibitive valuation mean that its shares could be an income investor's dream. The tobacco giant trades at less than 10 times this year's expected earnings and pays a dividend yield of roughly 7.4%. Altria stock boasts the highest yield of any Dividend King stock, and the company has increased its payout 56 times over the last 52 years. 

While unit sales for its core cigarette products have been declining, Altria has still grown sales 9% over the last five years, thanks to its strong pricing power. The company has also been making moves to diversify its business away from traditional smokable tobacco products -- pushing into the electronic-cigarette category and making a significant investment in cannabis company Cronos Group. Between the strength of its core brands and expansion opportunities that could have underappreciated upside and help spur new growth phases, Altria stands out as a cheap stock that offers tremendous yield. 

5. Lowe's

Lowe's (LOW 0.51%) has 59 years of consecutive annual dividend growth under its belt. Whether economic conditions prompt the construction of more new houses or encourage homeowners to spend on renovating and updating their properties, Lowe's stands to generate business. The retailer's last payout increase came in at a hefty 33%.

While Lowe's has been investing in building out its e-commerce offerings and expanding the availability and efficiency of curbside pickup, its core business looks relatively sheltered from the impact of online retail disruption. Many of the company's products are best evaluated in person or very expensive to ship, and that means the business looks well-positioned to thrive over the long term despite the overall retail shift and online disruption created by Amazon and other online retail leaders.

Lowe's 1.1% dividend yield might not look like much, but the company has increased 471% over the last decade, and there's a good chance that shares purchased today will sport a much bigger yield in the future. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon. The Motley Fool recommends Johnson & Johnson and Lowes and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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