Updated on September 25th, 2023 by Bob Ciura
The Dividend Kings consist of companies that have raised their dividends for at least 50 years in a row. Many of the companies have turned into huge multinational corporations over the decades, but not all of them.
You can see the full list of all 50 Dividend Kings here.
We created a full list of all Dividend Kings, along with important financial metrics like price-to-earnings ratios and dividend yields. You can download your copy of the Dividend Kings list by clicking on the link below:
Dover Corporation (DOV) has raised its dividend for 67 consecutive years, giving it one of the longest dividend growth streaks in the entire stock market.
The company has achieved such an exceptional dividend growth record thanks to its strong business model, its decent resilience to recessions, and its conservative payout ratio, which provides a wide margin of safety during recessions.
Dover is a time-tested dividend growth company. This article will examine its future prospects in greater detail.
Dover is a diversified global industrial manufacturer, which provides equipment and components, consumable supplies, aftermarket parts, software and digital solutions to its customers.
It has annual revenues of about $9 billion, with just over half of its revenues generated in the U.S., and operates in five segments: Engineered Systems, Fueling Solutions, Pumps & Process Solutions, Imaging & Identification and Refrigeration & Food Equipment.
The past few years have been difficult for Dover, as the coronavirus pandemic caused a prolonged business deterioration. As its customers are primarily industrial manufacturers, they were significantly impacted by the global recession caused by the pandemic.
However, Dover and its customers rebounded from the pandemic, and Dover is back to growth.
Source: Investor Presentation
In the 2023 second quarter, revenue declined 2.8% year-over-year. Adjusted earnings-per-share of $2.05 declined 4.2% year-over-year. Both figures missed analyst estimates. By segment, Engineered Products decreased 8% organically, as gains in waste handling were more than offset by weaker results in vehicle services. Clean Energy & Fueling revenue declined by 9% due to general de-stocking in distribution channels.
Imaging & Identification was flat as gain in core marking and coding in Europe and America was offset by lower volume in Asia. Pumps & Process Solutions was up 1% due to gains in polymer processing, thermal connectors, precision components, and hygienic dosing systems.
Climate & Sustainability Technologies grew 4% as this segment was led by strength in food retail and heat exchangers. Dover’s backlog fell 7% from the preceding quarter to $2.8 billion.
The company updated 2023 guidance and now expects revenue growth of 2% to 4% for the year. Adjusted earnings-per-share are expected in a range of $8.85 to $9.00.
Dover has pursued growth by expanding its customer base and through bolt-on acquisitions. Dover has routinely executed a series of bolt-on acquisitions, along with an occasional divestment, to reshape its portfolio to maximize its long-term growth.
Below is a sampling of some of the portfolio activity the company has undertaken in recent years.
Source: Investor Presentation
The management team is constantly focused on delivering the most value to shareholders through portfolio transformation, and it has generally been successful. Today, Dover is a highly diversified industrial company with an attractive growth profile.
In addition, Dover is also likely to enhance its earnings per share via opportunistic share repurchases. We expect Dover to generate annual earnings-per-share growth of 8% over the next five years. Growth should be driven primarily by revenue increases, with an additional boost from margin expansion and share repurchases.
Competitive Advantages & Recession Performance
Dover is a manufacturer of industrial equipment, and some investors may think that the company has no moat in its business due to little room for differentiation. However, the company offers highly engineered products, which are critical to its customers. It is also uneconomical for its customers to switch to another supplier because the risk of lower performance is material.
Therefore, Dover essentially operates in niche markets, which offer a significant competitive advantage to the company. This competitive advantage helps explain Dover’s consistent long-term growth trajectory.
On the other hand, due to its reliance on industrial customers, Dover is vulnerable to recessions. In the Great Recession, its earnings per share were as follows:
- 2007 earnings-per-share of $3.22
- 2008 earnings-per-share of $3.67 (14% increase)
- 2009 earnings-per-share of $2.00 (45% decline)
- 2010 earnings-per-share of $3.48 (74% increase)
Dover got through the Great Recession with just one year of decline in its earnings per share and the company almost fully recovered from the recession in 2010. That performance was certainly impressive. Dover is also impacted by downturns in the oil industry during periods of weak oil prices.
To mitigate its exposure to oil prices, in 2018 Dover spun off its energy division Apergy. This company now trades as ChampionX Corporation (CHX).
Given the impact of recessions and falling oil prices, it is highly impressive that Dover has increased its dividend each year for over six decades. One reason for this is the company’s policy to keep its payout ratio around 30%. This policy provides a wide margin of safety during rough economic periods. The payout ratio expected to be around 23% of earnings-per-share for 2023, meaning the dividend is highly secure.
Dover should continue to raise its dividend for many years thanks to its low payout ratio, its resilience to recessions, and its healthy balance sheet.
Valuation & Expected Returns
Dover is expected to generate earnings-per-share of $8.93 for 2023. That means the stock trades for a price-to-earnings ratio of 16 times this year’s expected EPS, which is below fair value estimate of 17. That implies a ~1.2% annual boost to total returns from valuation expansion.
Adding 8% expected annual earnings-per-share growth, and the 1.4% dividend yield, total returns are expected to reach 10.6%. This puts Dover stock in the territory of a buy rating, particularly given its exemplary dividend history.
Dover has a long dividend growth record, with 67 consecutive years of dividend raises. This is an impressive achievement, particularly given the dependence of the company on industrial customers, who tend to struggle during recessions.
Dover has consistently grown its earnings per share over the years, primarily thanks to a series of bolt-on acquisitions. The stock has generated strong total returns to shareholders due to the company’s revenue and earnings growth.
Dover stock currently has a buy rating with its 10%+ projected total returns.
The following articles contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors:
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The High ROIC Stocks List: The top 10 stocks with high returns on invested capital.
- The High Beta Stocks List: The 100 stocks in the S&P 500 Index with the highest beta.
- The Low Beta Stocks List: The 100 stocks in the S&P 500 Index with the lowest beta
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks