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

Many investors are familiar with Dividend Aristocrats. 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. To become a Dividend King, a company must boost its dividend for at least 50 years in a row. Here's what you need to know about current Dividend Kings and how they can fit into your investment portfolio.

Piggy bank with a crown on top of it next to a roll of $20 bills

Image source: Getty Images.

2020 Dividend Kings

Only 27 stocks qualified as Dividend Kings in 2020:

Company Sector Consecutive Years of Dividend Increases
American States Water (NYSE:AWR) Utilities 66 
Dover Corporation (NYSE:DOV)  Industrials 65 
Emerson Electric (NYSE:EMR) Industrials 65 
Northwest Natural Holding (NYSE:NWN) Utilities 64 
Genuine Parts (NYSE:GPC) Consumer cyclical 64 
Proctor & Gamble (NYSE:PG)  Consumer defensive 64 
Parker Hannafin (NYSE:PH) Industrials 63 
3M (NYSE:MMM) Industrials 62 
Cincinnati Financial (NASDAQ:CINF) Financial services 60 
Johnson & Johnson (NYSE:JNJ) Healthcare 58 
Coca-Cola (NYSE:KO) Consumer defensive 58 
Lancaster Colony (NASDAQ:LANC) Consumer defensive 58
Lowe's (NYSE:LOW)  Consumer cyclical 58
Colgate-Palmolive (NYSE:CL) Consumer defensive 57 
Nordson (NASDAQ:NDSN) Industrials 57
Farmers & Merchants Bancorp (OTC:FMCB) Financial services 55 
Hormel Foods (NYSE:HRL) Consumer defensive 55 
ABM Industries (NYSE:ABM) Industrials 53 
California Water Services (NYSE:CWT) Utilities 53 
Stanley Black & Decker (NYSE:SWK) Industrials 53 
Federal Realty Investment Trust (NYSE:FRT) Real estate 53 
Stepan (NYSE:SCL) Basic materials 53 
SJW Group (NYSE:SJW) Utilities 52 
Commerce Bancshares (NASDAQ:CBSH) Financial services 52 
Sysco (NYSE:SYY) Consumer defensive 52 
Altria Group (NYSE:MO) Consumer defensive 51 
H.B. Fuller (NYSE:FUL) Basic materials 51 

Data sources: Company press releases, Yahoo! Finance.

Two sectors -- consumer defensive and industrials -- each have seven stocks on the 2020 Dividend Kings list. There were also four utility stocks in the group. This shouldn't be a surprise. Companies in these sectors tend to pay dividends, and many of them have been in operation for a long time.

There aren't any exchange-traded funds (ETFs) that focus exclusively on Dividend Kings. However, the ProShares S&P 500 Dividend Aristocrats ETF owns shares of all Dividend Aristocrats. Since Dividend Kings are also Dividend Aristocrats, investing in this ETF would allow you to buy most of the Dividend Kings in one fell swoop (plus a lot of other stocks with great track records of dividend increases.)

Potential changes for 2021

It's likely that all the Dividend Kings in 2020 will remain on the list in 2021. Why? There's a tremendous amount of 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 to mess up an impressive dividend track record.

However, there could be new companies on the Dividend Kings list in 2021. Three companies that were just shy of 50 consecutive years of dividend increases in 2020 were:

Company Sector Consecutive Years of Dividend Increases
Grainger (NYSE:GWW) Industrials 49 
Leggett & Platt (NYSE:LEG) Consumer cyclical 49 
Target (NYSE:TGT) Consumer defensive 49 

Data sources: Company press releases, Yahoo! Finance.

Of course, there's no guarantee that these three companies will join the ranks of the Dividend Kings. However, the same factors incentivizing the current Dividend Kings to continue increasing their dividends are incentivizing the companies close to making the cut.

Likely winners in 2021

There are two key factors that should affect many stocks in 2021, including several of the Dividend Kings:

  • Turning the corner on the COVID-19 pandemic
  • Continued low interest rates

These factors could benefit some stocks but hurt others. Here are five Dividend Kings that should be winners in 2021.

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) might not just benefit from the world turning the corner on the COVID-19 pandemic; the healthcare giant could be key to making it happen. J&J ranks among the leaders in the race to develop coronavirus vaccines.

Sure, a few other COVID-19 vaccines could win Emergency Use Authorization from the U.S. Food and Drug Administration (FDA) before J&J's vaccine candidate JNJ-78436735 does. However, J&J's experimental vaccine stands out from the pack because it requires only one dose instead of two. This could give the company an important competitive advantage if JNJ-78436735 is successful in late-stage testing.

In addition, Johnson & Johnson's multibillion-dollar medical device segment should see its revenue rise as the pandemic subsides. This business was hurt in 2020 because many people put off nonurgent surgical procedures.

Federal Realty Investment Trust

Federal Realty Investment Trust (NYSE:FRT) seems like a surefire winner if COVID-19 cases fall significantly in 2021. The real estate investment trust (REIT) owns more than 100 retail properties. Its stock was hammered in 2020 as retail shopping plunged in the midst of the pandemic.

The key problem for Federal Realty was that some of its tenants simply didn't have enough money to pay their rents. If the availability of coronavirus vaccines help increase Americans' confidence in shopping in 2021, the company's retail tenants will be in a stronger position financially -- and that's good news for Federal Realty.

Federal Realty should also benefit from sustained low interest rates. REITs usually have to borrow money to fund the addition of new properties. When interest rates are low, it reduces the interest expenses the companies must pay.

Sysco

Sysco (NYSE:SYY) was the kind of stock many investors wanted to avoid throughout much of 2020. More than 60% of the company's revenue comes from selling food and other products to restaurants. Many of Sysco's restaurant customers were hit hard by the COVID-19 pandemic, resulting in the company's sales tanking.

However, a stock to avoid during a pandemic could be a stock that soars when the coronavirus crisis subsides. Sysco should be poised for a solid recovery if Americans return to past levels of eating out in 2021. 

The company just might find that its customer base is more loyal than ever before when the pandemic is over. Sysco has worked hard to help its restaurant customers navigate the coronavirus challenge, including by helping them extend their outdoor dining season and revise their menus to boost profitability.

Lowe's

Home-improvement retail giant Lowe's (NYSE:LOW) performed quite well during the worst of the COVID-19 pandemic in 2020. The company's sales and profits soared as many Americans embarked on home-improvement projects.

Could this home-improvement fever cool down as we turn a corner with the pandemic? Maybe. However, Lowe's should continue to deliver solid growth thanks to its new products and services targeting the professional construction market.

Also, the company is likely to continue benefiting from low interest rates. As long as interest rates remain low, home sales should be strong. People who buy new homes often have to fix up their old homes first, which could translate to more business for Lowe's. 

Stanley Black & Decker

The same trends that helped Lowe's in 2020 also worked to the advantage of Stanley Black & Decker (NYSE:SWK). The company's sales of tools used in do-it-yourself (DIY) projects skyrocketed during the pandemic.

Also like Lowe's, Stanley Black & Decker's tool sales for the DIY market should continue to grow as long as interest rates remain low. Many Americans who start to make repairs to their existing homes in anticipation of buying new ones will need tools for these efforts. 

However, Stanley Black & Decker's commercial and industrial tools and automotive tools businesses haven't performed well during the pandemic. These segments should bounce back as the overall economy recovers, which is likely to happen if worries about the coronavirus diminish in 2021. 

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, four of the five Dividend Kings with the longest records of dividend increases underperformed the S&P 500 over the last 10 years. 

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