Dividend Kings of 2024

Dividend Kings have a long history of delivering market-beating returns for investors and proving to be generally steady, safe holdings. A Dividend King is a company that's grown its dividend payment for at least 50 consecutive years.

Companies that pay -- and then grow -- their dividends every year generally have the sort of characteristics investors should look for:

• Durable competitive moats that help them generate steady profits year after year
• Some ability to grow earnings per share over the long term
• Prudent board members and management who prioritize returning excess profits not needed for reinvestment back to shareholders

What is a Dividend King?

What is a Dividend King?

What's the most exclusive group of dividend stocks? It might not be what first comes to mind.

Many investors are familiar with the Dividend Aristocrats® (the term Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC). These stocks are members of the S&P 500 that have increased their dividends for at least 25 consecutive years.

But there's an even more elite group of dividend stocks that doesn't receive as much attention. Dividend Kings don't have to be members of the S&P 500, but they must reach an ultramarathon-like dividend streak -- at least 50 consecutive years of payout growth.

Here's what you need to know about the Dividend Kings of 2024 and how they can fit into your investment portfolio.

2024 Dividend Kings

2024 Dividend Kings

These 55 stocks qualified as Dividend Kings as of Jan. 22, 2024, including two "unofficial" Dividend Kings that qualify depending on how you interpret dividend growth.

The industrial and consumer goods sectors make up more than half of the 2024 Dividend Kings list. This shouldn't be a surprise. Companies in these sectors tend to pay dividends and raise their prices with inflation, and many have also been in operation for a long time. The list breaks down as follows:

• 18 industrial companies
• 16 consumer goods
• 9 utility stocks
• 4 healthcare stocks
• 5 financial stocks
• 1 energy stock
• 1 materials stock
• 1 real estate stock

There aren't any exchange-traded funds (ETFs) that focus exclusively on Dividend Kings. However, the ProShares S&P 500 Dividend Aristocrats ETF (NOBL -0.36%) owns shares of all Dividend Aristocrats®.

Changes in 2024

Dividend King changes in 2024

While there's some risk that a potential recession could upend one or more of these dividend streaks, companies that make this list rarely lose their status. There's tremendous pressure on companies that have increased their dividends for 50-plus years to keep their streak going. No CEO wants to be known as the leader who messed up an impressive dividend track record.

Conversely, it takes a half-century to make this list, a rare feat indeed. Yet, we have recently seen several companies achieve Dividend King status. Here are the companies that joined the exclusive club in 2023:

• ADM
• S&P Global
• Nucor
• Walmart
• Kenvue (spinoff of Johnson & Johnson, maintaining former parent's status)
• Fortis Inc.
• RPM International
• United Bankshares

Consolidated Edison joined the Dividend Kings list in 2024, announcing its 50th year of consecutive dividend increases in mid-January. We should have one more new Dividend King added to the list soon. Telephone and Data Systems (TDS -0.2%) is likely to raise its dividend for its 50th year in a row in February 2024.

Later this year, ADP (NYSE:ADP) is also set to join. If it follows its historical schedule and increases its dividend in November, that would make a 50-year payout growth streak for the payroll giant.

Two "unofficial" Dividend Kings

A note on two "unofficial" Dividend Kings

We have added Canadian Utilities and Tootsie Roll Industries to this list. Both have characteristics that make them Dividend Kings by some measures.

Canadian Utilities is certainly a king if you're a Canadian investor; however, the changes in foreign exchange rates have recently made the effective dividend paid to U.S. investors fall. We don't want to shortchange the company or our Canadian investors because of this. The money the company has paid from its coffers every year has indeed increased for five straight decades.

Tootsie Roll is a little more complex. To start, the company has a long history of paying a dividend, but the $0.09 quarterly cash portion of the dividend has remained unchanged for years. Its payout has grown via the 3% stock dividend it also pays every year. So long as the stock price increases in value, the total dividends paid grows. We thought this quirk was worth explaining in detail.

Likely Dividend King winners in 2024

Likely Dividend King winners in 2024

Three key factors could affect many stocks in 2024, including several of the Dividend Kings:

1. Inflation
2. Interest rates
3. A possible recession tied to the two factors above

These factors could benefit some stocks but hurt others. Here are three Dividend Kings that could be winners in the second half of 2024:

1. Target

Target has been on a seriously rough ride in recent years. Like many other big-box retailers, the impact of inflation and supply chain challenges left the company with too many of the wrong goods and rising costs, pressuring its cash flow following the coronavirus pandemic.

Despite a big stock decline in 2022 and a continued sell-off in 2023, Target the business is in solid shape. Its focus on efficiency and more lean inventory paid off with a return to profit growth in the third quarter of 2023.

Its e-commerce investments and large physical presence are expected to continue paying off, too, as consumers pull back. Whether that means less eating out or less spending, Target is a major supplier of consumer staples.

Price-conscious shoppers may favor it over luxury retailers when hunting for bargains. Trading for a cheap valuation and paying a safe dividend, Target looks like a great Dividend King to buy.

2. Altria

Some investors look at the tobacco giant with disdain; others simply won't buy a company whose products cause so much harm. But if that's not a concern for you, Altria should be on your list.

The company has had a number of missteps around vaping products in recent years, and its ability to crack the cannabis market isn't clear (nor is the future of cannabis's legality in many of Altria's markets).

However, it continues to generate mountains of cash -- $8.5 billion in free cash flow over the past four quarters -- and returns much of that, $6.7 billion, to shareholders in dividend income. It also sells a product its customers buy across every economic condition, making its sizable dividend safe in every economic environment.

3. Johnson & Johnson

Another Dividend King that's gone through a tumultuous past several years, healthcare giant Johnson & Johnson (J&J), could emerge as a winning stock this year. To start, today's J&J is a more streamlined business, having divested Kenvue, its consumer products business, in 2023. Now the company is focused on pharmaceuticals and medical devices and technology exclusively.

In 2023, the company generated 9.5% operational sales growth from its innovative medicine segment (excluding COVID-19 vaccine revenue), while its medtech segment grew 9.1%, adjusting for foreign exchange. Looking ahead, the new, leaner, more focused company has a strong pipeline of treatments in various developmental stages and a strong existing portfolio of approved treatments generating strong, profitable revenue.

There remains some overhang from litigation over its legacy talc-based baby powder, but management said it has largely moved past those issues and opioid-related litigation. Many moving parts and mostly resolved liabilities have weighed on J&J in recent years, but the company finally looks positioned to move forward. This could be a great year to own J&J in your long-term dividend growth portfolio.

Future Dividend Kings

Future Dividend Kings

The following companies haven't quite made it to 50 years of annual payout growth but are closing in:

• ADP (ADP 0.06%): The human resources and payroll outsourcing giant raised its dividend for the 49th straight year in November 2023, putting it on track to become a Dividend King in late 2024.
• Consolidated Edison (ED -1.81%): We have another utility set to join the Dividend Kings very soon. Consolidated Edison usually announces its annual dividend increase in mid-January. If that pattern continues, it will become a Dividend King in early 2024.

Related investing topics

Why invest in Dividend Kings?

Why invest in Dividend Kings?

Dividend Kings aren't necessarily a good fit for every investor. Many of these stocks frequently deliver relatively low growth. For example, of the five Dividend Kings with the longest records for dividend increases, only one has underperformed the S&P 500 over the past 10 years, while three have outperformed since 1990.

In other words, their long records of growing payouts can make them reliable income generators but may not be the best way to safely grow your total wealth.

Dividend Kings can be a great component of retirement portfolios or for investors looking for reliable income. Most of these stocks offer higher dividend yields than the average yield of S&P 500 members. Their consistency in paying and increasing dividend payouts can also provide a measure of confidence for anyone depending on income generated by the dividend stocks they own.

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