If you're hunting for stocks that you can expect to keep hiking their dividends year after year, look no further than the Dividend Kings. Every member of this elite group has a history of raising dividend payments year after year without interruption for at least 50 years, and many of the businesses are eager to do the same for the next 50 years.
Investing in one of those companies is a fair bet that you'll get the advantage of those hikes for the long haul, so let's examine three of the juicier royals that are ripe for buying today.
1. Becton, Dickinson
Becton, Dickinson (BDX 0.41%) makes the healthcare goods that the world's clinics, laboratories, and operating rooms need, like sterile dressings, diagnostic tests, and test tubes. And it's getting into cloud-based software for pharmacies and research groups, too.
With more than $20 billion in trailing-12-month (TTM) revenue, it's also one of the biggest businesses on the planet, which should go a long way to convince investors that it'll be sticking around for the foreseeable future.
While it isn't a rapidly growing company -- diluted earnings per share (EPS) increased 13.2% year over year in its fiscal third quarter -- that shouldn't matter much for long-term investors. In the last 10 years, its dividend has increased by 93.3%, and there's likely more on the way, given its proven ability to expand, albeit ploddingly, into global biomedical markets.
In other words, slow growth isn't a problem if it's relatively consistent and has few pullbacks over time, like with BD. Its customers aren't about to reduce their orders for evergreen medical supplies, and given the expansion of the global population over time, it's reasonable to expect that BD will face slowly rising demand in the future, just like it did in the past.
2. Abbott Laboratories
Much like BD, Abbott Laboratories (ABT -0.59%) produces diagnostic tests and surgical goods, but it also makes medical devices like pacemakers and medical nutrition products like baby formula. Most of its products exhibit consistent levels of demand over time, which generates steady cash flows regardless of economic headwinds.
And it has the distinction of paying its dividend for 394 consecutive quarters, growing it by more than 77.3% in the last five years. To accomplish that, it has innovated in response to opportunity, often quite quickly.
For example, its coronavirus diagnostic tests brought in $2.3 billion in revenue in the second quarter of this year alone, accounting for a significant portion of its quarterly haul of $11.3 billion. That's a couple of billion dollars in sales roughly every three months that it wasn't making a mere three years ago, before the pandemic.
And it won't be the last time the company successfully chases an emerging market while simultaneously maintaining and expanding its revenue from existing products. Medical devices are likely to be its biggest growth segment, as the margins are even more attractive than with diagnostics.
3. AbbVie
AbbVie (ABBV 0.25%) is a pharmaceutical company that develops and sells medicines, and it's a spin-off of Abbott Laboratories. Because its drugs eventually lose their exclusivity protections, opening the door for generics to steal their market share, AbbVie can't rest on its laurels or expect to develop a base of revenue that's safe in the long term. So it goes big on squeezing as much money as it can out of its drugs by investigating them for new indications once they're approved for sale.
As a result, in the first quarter of this year, it was waiting on regulators to weigh in on a grand total of four different programs, all of which were based on its existing medicines. Plus, it has dozens of programs in late-stage clinical trials, with even more working their way through the earlier parts of the process. And consistent success with commercializing its drugs is why its annual revenue rose by nearly 100% in the last five years.
It'll need to keep up the good work if it wants to continue hiking its dividend, which investors have been pleased to see expand by 120.3% since around this time in late 2018.
And this Dividend King isn't without risks. Management expects to expand its top line at a compound annual rate in the low single digits from 2025 through 2030 after weak growth in 2023 and 2024 stemming from the exclusivity expiration of one of its biggest-selling drugs, Humira. For long-term investors, that period of slow growth just might be a great time to buy AbbVie's shares should they become priced at a discount.
