In nearly every category you can think of, there are super-achievers. The NBA has its All-Stars. The film industry has Oscar winners. Science has Nobel Prize laureates.
There's also a group of super-achievers when it comes to dividend stocks. Dividend Kings are stocks that have increased their dividends for at least 50 consecutive years. As you might imagine, these Dividend Kings are especially popular with income investors.
But even within this elite club, some stand out more than others. How much income could you make investing $30,000 in the top three Dividend Kings? The answer might surprise you.
Image source: Getty Images.
Three kings
Fifty years in a row of dividend hikes is the minimum to qualify as a Dividend King. Quite a few stocks in the group have much longer streaks.
American States Water (AWR 1.88%) ranks at the very top of the list with 68 consecutive years of dividend increases. The company has paid dividends every year since 1931. As its name indicates, American States Water provides water services. It also owns Bear Valley Electric Service, which distributes electricity to customers in San Bernardino County, California.
Dover Corporation (DOV 0.73%) lags only a little behind American States Water with 67 consecutive years of dividend increases. The company has been in business since 1947 and went public in 1955. It now manufactures equipment and components for multiple industries, consumable supplies, and aftermarket parts. The company also develops software and digital solutions.
Northwest Natural Holding (NWN 2.98%) is tied with Dover, with 67 years in a row of dividend hikes. The company's roots go back to 1859. It distributes natural gas to customers in Oregon and southwest Washington state. Northwest Natural Holding also owns a water and wastewater utility, as well as a renewable energy business.
Counting the dividends
All three of these Dividend Kings have impressive dividend track records. Let's assume you bought $10,000 worth of each stock at the beginning of 2023 for a total investment of $30,000. How much income would you make this year? The following table provides the answer:
| Stock | Dividend Yield | Calculated Income |
|---|---|---|
| American States Water | 1.86% | $186 |
| Dover Corporation | 1.32% | $132 |
| Northwest Natural Holding | 4.13% | $413 |
| Total | $731 | |
Data source: Google Finance.
The total of $731 you could make this year amounts to an average yield of nearly 2.44% on your initial investment. That's not bad. And it could even be better than the above calculations show.
American States Water increased its dividend by 8.9% on dividends payable on Sept. 1, 2022. Dover's most recent dividend hike of 1% was payable on Sept. 15, 2022. Northwest Natural's small dividend increase of 0.5% was payable on Nov. 15, 2022. All three companies are likely to announce additional dividend increases this year that could boost the actual income you could receive somewhat.
Royal returns?
Don't get too excited about the income you could make from these three Dividend Kings just yet. You might want to also consider U.S. six-month Treasury bills, which currently yield more than 5%. They're risk-free investments that are even safer than the stocks of companies with 67 and 68 years of dividend increases.
It's also important to consider your potential total returns and not just the dividends you could receive. Over the last 10 years, Northwest Natural Holding's total return was only around one-quarter that of the S&P 500. Dover's total return was slightly below the total return of the S&P 500. Only American States Water managed to outperform the index.
Even super-achievers have their limitations. You won't see any Nobel laureates who make the NBA All-Star team. And Dividend Kings might not generate royal total returns.
