What's the most exclusive group of dividend stocks? It might not be what first comes to mind.
Many investors are familiar with the S&P 500®Dividend Aristocrats®. (You can see the full list of them here.) 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 current Dividend Kings and how they can fit into your investment portfolio.
2023 Dividend Kings
Here are the 48 stocks that qualified as Dividend Kings as of Mar. 29, 2023, plus two "unofficial" Dividend Kings that qualify depending on how you interpret dividend growth.
|Dividend King||Sector||Dividend Increase Streak|
|American States Water (NYSE:AWR)||Utilities||68|
|Dover Corporation (NYSE:DOV)||Industrials||67|
|Northwest Natural Holding (NYSE:NWN)||Utilities||67|
|Genuine Parts (NYSE:GPC)||Consumer Goods||67|
|Procter & Gamble (NYSE:PG)||Consumer Goods||66|
|Parker Hannifin (NYSE:PH)||Industrials||66|
|Emerson Electric (NYSE:EMR)||Industrials||66|
|Cincinnati Financial (NASDAQ:CINF)||Financials||62|
|Coca-Cola (NYSE:KO)||Consumer Goods||61|
|Johnson & Johnson (NYSE:JNJ)||Healthcare||60|
|Lancaster Colony (NASDAQ:LANC)||Consumer Goods||60|
|Colgate-Palmolive (NYSE:CL)||Consumer Goods||60|
|Farmers & Merchants Bancorp (OTH:FMCB)||Financials||57|
|Hormel Foods (NYSE:HRL)||Consumer Goods||57|
|ABM Industries (NYSE:ABM)||Industrials||56|
|California Water Service Group (NYSE:CWT)||Utilities||56|
|Stanley Black & Decker (NYSE:SWK)||Industrials||55|
|Stepan Company (NYSE:SCL)||Industrials||55|
|Federal Realty Investment Trust (NYSE:FRT)||Real Estate||55|
|Commerce Bancshares (NASDAQ:CBSH)||Financials||55|
|SJW Group (NYSE:SJW)||Utilities||55|
|Sysco (NYSE:SYY)||Consumer Goods||55|
|MSA Safety (NYSE:MSA)||Industrials||53|
|H.B. Fuller (NYSE:FUL)||Materials||53|
|Altria Group (NYSE:MO)||Consumer Goods||53|
|National Fuel Gas (NYSE:NFG)||Energy||52|
|Universal Corporation (NYSE:UVV)||Consumer Goods||52|
|Black Hills Corp. (NYSE:BKH)||Utilities||52|
|Illinois Tool Works (NYSE:ITW)||Industrials||52|
|W.W. Grainger (NYSE:GWW)||Industrials||51|
|Target (NYSE:TGT)||Consumer Goods||51|
|Leggett & Platt (NYSE:LEG)||Industrials||51|
|PPG Industries (NYSE:PPG)||Industrials||51|
|Computer Services, Inc. (OTV:CSVI)||Technology||51|
|Becton, Dickinson & Co. (NYSE:BDX)||Healthcare||51|
|Abbott Labs (NYSE:ABT)||Healthcare||51|
|Kimberly Clark (NYSE:KMB)||Consumer Goods||51|
|Canadian Utilities (OTV:CDUAF)*||Utilities||51|
|PepsiCo (NASDAQ:PEP)||Consumer Goods||50|
|S&P Global (NYSE:SPGI)||Financials||50|
|Tootsie Roll Industries (NYSE:TR)**||Consumer Goods||50+|
|WalMart Inc (NYSE:WMT)||Consumer Goods||50|
|The Gorman-Rupp Company (NYSE:GRC)||Industrials||50|
Two sectors make up a significant portion of the Dividend Kings list, with 14 consumer goods and 17 industrials companies comprising more than half the list. There were also four healthcare stocks, four financials stocks, and seven utility stocks in the group. 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.
There aren't any exchange-traded funds (ETFs) that focus exclusively on Dividend Kings. However, the ProShares S&P 500 Dividend Aristocrats ETF (NOBL 0.0%) owns shares of all Dividend Aristocrats®.
Changes in 2023
While there's some risk that a potential recession in 2023 could upend one or more of these dividend streaks, it's rare for companies that make this list to lose status. 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 who messed up an impressive dividend track record. Of course, there's no guarantee that these 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.
We have seen a number of companies recently join the Dividend Kings list in recent months. The most recent additions are:
- S&P Global
A note on the two "unofficial" Dividend Kings
We have added Canadian Utilities and Tootsie Roll Industries to this list, as both have characteristics that make them Dividend Kings by some measures. With Canadian Utilities, it's certainly a King if you're a Canadian investor; however the changes in foreign exchange rates have made the effective dividend paid to U.S. investors fall recently. We don't want to short-change the company or our Canadian readers because of this, as 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 winners in 2023
There are three key factors that could affect many stocks in 2023, including several of the Dividend Kings:
- Interest rates
- Possible recession tied to the two factors above
These factors could benefit some stocks but hurt others. Here are four Dividend Kings that could be winners in 2023:
The second half of 2022 was not kind to shares of Target. 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 flows. But despite a big stock decline in 2022, Target the business is in solid shape. It may not be a big growth year, especially if a recession becomes a reality. However, its e-commerce investments and large physical presence will play in its favor if consumers have to tighten their purse strings, whether that means less eating out or less spending, Target is a major supplier of consumer staples, and price-conscious shoppers may favor it over luxury retailers when they're bargain hunting. Trading for a reasonable valuation and paying a safe dividend, Target looks primed for a bounce-back year.
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, then Altria should be on your list. The company has had a number of missteps in recent years around vaping products, and its ability to crack the cannabis market isn't clear (as is the future of its legality in many of Altria's markets). Yet it continues to generate mountains of cash -- $8.1 billion in free cash over the past four quarters -- and returns much of that -- $6.6 billion -- to shareholders in dividends. It also sells a product that its customers continue to buy across every economic condition, making its sizable dividend safe in every economic environment.
Genuine Parts Co.
The company behind Napa and Motion Industries is in an interesting position for 2023. Its primary business is selling parts and supplies for automotive, food and beverage, and industrial industries. And while it's not immune to the threat of recession, its business is less at risk. This is because the items it sells are things that keep customer cars, trucks, and machines up and running. And, in times of economic weakness, it's not uncommon for both people and businesses to defer new equipment purchases, which means more money spent on repairs and maintenance. That doesn't guarantee a great year for Genuine Parts, but it puts the company in a favorable position in an uncertain time.
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Future Dividend Kings
The following well-known companies are very close to joining this august group of stocks:
- S&P Global (SPGI 0.0%) – 49 years of dividend growth; set to raise its payout in early 2023
- Lowe's (LOW 0.0%) – 48 years of dividend growth; set to reach 49 years in mid-2023 and join the Dividend Kings in 2024
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, three of the five Dividend Kings with the longest records of dividend increases have underperformed the S&P 500 over the past 10 years, although all have handily outperformed since 1990.
Dividend Kings can be a great component of retirement portfolios or for investors looking for reliable income. 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 anyone depending on income generated by the dividend stocks they own.
S&P 500® and Dividend Aristocrats® are registered trademarks of Standard & Poor’s Financial Services LLC.