Updated on February 7th, 2020 by Bob Ciura
Spreadsheet data updated daily
The Dividend Kings are the best-of-the-best in dividend longevity.
What is a Dividend King? A stock with 50 or more consecutive years of dividend increases.
The downloadable Dividend Kings Spreadsheet List below contains the following for each stock in the index, among other important investing metrics:
- Payout ratio
- Dividend yield
- Price-to-earnings ratio
You can see the full downloadable spreadsheet of all Dividend Kings (along with relevant financial metrics that matter) by clicking on the link below:
There are currently 30 Dividend Kings, including one new addition in 2020, Sysco (SYY). Each Dividend King satisfies the primary requirement to be a Dividend Aristocrat (25 years of consecutive dividend increases) twice over.
Note that not all Dividend Kings are Dividend Aristocrats. This unexpected result is because the ‘only’ requirement to be a Dividend Kings is 50+ years of rising dividends, whereas Dividend Aristocrats must have 25+ years of rising dividends, be a member of the S&P 500 Index, and meet certain minimum size and liquidity requirements.
Table of Contents
- How To Use The Dividend Kings List To Find Dividend Stock Ideas
- The 5 Best Dividend Kings Today
#5: H.B. Fuller (FUL)
#4: 3M Company (MMM)
#3: Federal Realty Investment Trust (FRT)
#2: Altria Group (MO)
#1: Farmers & Merchants Bancorp (FMCB)
- Analysis Reports On All 30 Dividend Kings
- Performance Of The Dividend Kings
- Sector & Market Capitalization Overview
- Final Thoughts
How To Use The Dividend Kings List to Find Dividend Stock Ideas
The Dividend Kings list is a great place to find dividend stock ideas.
However, not all the stocks in the Dividend Kings list make a great investment at any given time.
Some stocks might be overvalued. Conversely, some might be undervalued – making great long-term holdings for dividend growth investors.
For those unfamiliar with Microsoft Excel, the following walk-through shows how to filter the Dividend Kings list for the stocks with the most attractive valuation based on the price-to-earnings ratio.
Step 2: Follow the steps in the instructional video below. Note that we screen for price-to-earnings ratios of 15 or below in the video. You can choose any threshold that best defines ‘value’ for you.
Alternatively, following the instructions above and filtering for higher dividend yield Dividend Kings (yields of 2% or 3% or higher) will show stocks with 50+ years of rising dividends and above-average dividend yields.
Looking for businesses that have a long history of dividend increases isn’t a perfect way to identify stocks that will increase their dividends every year in the future, but there is considerable consistency in the Dividend Kings.
The 5 Best Dividend Kings Today
The following 5 stocks are our top-ranked Dividend Kings today, based on expected annual returns through 2025. Stocks are ranked in order of lowest to highest expected annual returns.
Total returns include a combination of future earnings-per-share growth, dividends, and any changes in the P/E multiple.
Dividend King #5: H.B. Fuller (FUL)
- 5-Year Annual Expected Returns: 7.7%
H.B. Fuller is a leading global manufacturer of adhesives, sealants, and other specialty chemical products. The category of industrial adhesives is the core product offering of the company. H.B. Fuller grew to its current size largely thanks to the $1.6 billion acquisition of Royal Adhesives & Sealants. The company now has a market capitalization of $2.5 billion.
Acquisitions have paved the way for much of H.B. Fuller’s growth in recent years. The Royal Adhesives & Sealants deal was the largest in the history of the company. The acquisition boosted its annual sales by $735 million (32% growth) and enhanced its reach to more highly specialized adhesive segments.
H.B. Fuller also acquired Adecol in late 2017 to improve its growth prospects in Brazil. Thanks to these acquisitions, H.B. Fuller expects to grow its EBITDA by approximately 50%, from about $300 million in 2017 to $440-$460 million in 2020.
In late January, H.B. Fuller reported (1/22/20) financial results for the fourth quarter of fiscal 2019. Revenues decreased -3.8% and organic revenues decreased -0.9% due to poor trends in construction adhesives and the economic slowdown in Europe, Middle East and Africa.
Source: Earnings Slides
Gross margin fell from 27.8% to 27.6% due to lower revenues while adjusted earnings-per-share fell from $0.90 to $0.88 and missed the analysts’ consensus by $0.04. H.B. Fuller has missed the analysts’ earnings-per-share consensus in 7 of the last 10 quarters.
On the bright side, management provided positive guidance for this year. It expects $20 million of cost savings thanks to increased synergies from recent acquisitions, organic revenue growth of 1%-2% and adjusted earnings-per-share of $3.15-$3.35, implying 9.8% growth at the mid-point.
One negative aspect of its various acquisitions is a higher level of debt. Due to the acquisition of Royal Adhesives & Sealants, interest coverage has plunged to an almost decade low of 2.2x. However, management has repeatedly confirmed that it will be using a major portion of free cash flows to reduce debt. The company reduced its debt by $268 million last year and expects to reduce it by another $200 million this year. As a result, its interest coverage is likely to revert towards its historical values in the upcoming years.
Investors should note that the company is fairly vulnerable to recessions. As the customers of H.B. Fuller are manufacturers of a wide range of products, the performance of H.B. Fuller is closely tied to underlying economic conditions. During the Great Recession, its earnings-per-share plunged -79%, from $1.68 in 2007 to $0.36 in 2008, and the stock lost two-thirds of its market cap in less than six months. As a recession has not occurred for a whole decade, investors should account for this risk factor, especially given the company’s increased leverage.
Still, the company continues to grow its profits and dividends. We expect 6.5% annual EPS growth through 2025, assuming no recession in the United States. Shares currently yield 1.3%. The stock trades for a 2020 P/E multiple of 15.1, almost on-par with our fair value estimate of 15. We essentially view the stock as fairly valued, meaning total expected returns of ~7.7% will consist primarily of EPS growth and dividends.
Dividend King #4: 3M Company (MMM)
- 5-Year Annual Expected Returns: 7.9%
3M Company sells more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world. It has more than 90,000 employees and serves customers in more than 200 countries. As of the second quarter of 2019, 3M is now composed of four separate divisions.
3M’s Safety & Industrial division produces tapes, abrasives, adhesives and supply chain management software as well as manufactures personal protective gear and security products. The Healthcare segment supplies medical and surgical products as well as drug delivery systems. Transportation & Electronics division produces fibers and circuits with a goal of using renewable energy sources while reducing costs. The Consumer division sells office supplies, home improvement products, protective materials and stationary supplies.
3M released fourth quarter and full-year results on 1/28/2020. The company earned $1.95 per share in the fourth quarter, $0.15 below estimates and a decline of 16% year-over-year. Revenue increased 2% to $8.1 billion, though this was $10 million lower than expected. For the year, adjusted earnings-per-share declined 13% to $9.10, while sales were lower by 1.9% to $32 billion. Organic sales declined 2.6% in local currency for the quarter.
Source: Earnings Slides
Sales declines were led by the U.S. and Japan, which reported declines of 2.9% and 6.9% respectively. Brazil had growth of 5.8%, Canada grew 2.6% and China/Hong Kong inched up 0.8%. Every remaining region declined year-over-year.
That said, free cash flow for the quarter grew 10% to an all-time record $5.4 billion. To boost profits in 2020, 3M announced that it would lay off 1,500 employees across its businesses and geographies. The company took a $134 million restructuring charge in the fourth quarter and expects pre-tax savings of at least $110 million annually.
For 2020, 3M expects organic local currency growth of flat to 2% and guided towards earnings-per-share in a range of $9.30 to $9.75 for 2020. At the midpoint, the stock trades for a P/E ratio of 17.1, which is slightly above our fair value P/E of 16.5. Declines in the P/E multiple could reduce annual returns by 0.7% per year through 2025.
However, expected EPS growth of 5% per year and the 3.6% dividend yield lead to total expected returns of 7.9% per year through 2025.
Dividend King #3: Federal Realty Investment Trust (FRT)
- 5-Year Annual Expected Returns: 10.5%
Federal Realty is a Real Estate Investment Trust, or REIT. It concentrates in high-income, densely-populated coastal markets in the US, allowing it to charge more per square foot than its competition. Federal Realty trades with a market capitalization of $9.7 billion today on $950 million in annual revenue.
Federal Realty’s business model is to own real estate properties that it rents to various tenants in the retail industry. This is a difficult time for retailers, as competition is heating up from e-commerce players such as Amazon (AMZN) and many others. Mall traffic is declining, which has put pressure on many brick-and-mortar retailers.
Federal Realty’s competitive advantages include its superior development pipeline, its focus on high-income, high-density areas and its decades of experience in running a world-class REIT. These qualities allow it to perform admirably, and continue growing even in a recession.
Source: Investor Presentation
In the most recent quarter, adjusted FFO-per-share increased 0.6% year-over-year excluding a charge related to the buyout of a Kmart lease. Federal Realty’s portfolio was 94.2% leased at the end of the quarter. During the third quarter 2019, Federal Realty signed 103 leases for 491,414 square feet of retail space.
Federal Realty’s FFO did not decline on a year-over-year basis at any point in the past decade, a tremendously impressive feat given that the U.S. economy dealt with the Great Recession. And it should also be noted that the company operates in the highly cyclical real estate sector. The simple fact that it has such a consistent track record of steady FFO growth makes it one of the most desirable REITs in the market. We are forecasting 5.5% annualized FFO growth for the next five years.
Federal Realty trades for a 2019 P/FFO multiple of 20.2, slightly below our fair value estimate of 22. Federal Realty stock has a 3.3% dividend yield. In addition to a ~1.7% annualized boost from an expanding P/FFO multiple, and 5.5% expected annual FFO growth, we expect 10.5% annualized returns over the next five years.
Dividend King #2: Altria Group (MO)
- 5-Year Annual Expected Returns: 13.1%
Altria Group is a consumer staples manufacturer. Its core tobacco business holds the flagship Marlboro cigarette brand. Altria also has non-smokable brands Skoal and Copenhagen chewing tobacco, Ste. Michelle wine, and owns a 10% investment stake in global beer giant Anheuser Busch Inbev (BUD).
In late January, Altria reported strong fourth-quarter earnings. Revenue (net of excise taxes) increased 0.3% for the fourth quarter, and 0.9% for 2019 as price increases more than offset volume declines. Adjusted earnings-per-share increased 7.4% for the fourth quarter. For 2019, adjusted earnings-per-share increased 5.8% to $4.22, due to cost controls and share repurchases. Altria exceeded its target of $575 million in cost reductions. Separately, Altria took a non-cash impairment charge of $4.1 billion related to its investment in Juul, bringing total charges to $8.6 billion for 2019.
Fortunately, Altria has a plan to continue generating growth over the long term, even in an environment of declining smoking rates. Altria recently announced a $1.8 billion investment in Canadian marijuana producer Cronos Group, in which it purchased a 45% equity stake in the company, as well as a warrant to acquire an additional 10% ownership interest in Cronos Group at a price of C$19.00 per share, exercisable over four years from the closing date.
Source: Investor Presentation
These investments give Altria access to two huge growth opportunities, marijuana and vaping. Altria reaffirmed its guidance for 2020 full-year adjusted diluted EPS to be in a range of $4.39 to $4.51, which would be 4% to 7% growth from 2019. The company also expects 4% to 7% annual adjusted EPS growth from 2020-2022.
Altria’s dividend is highly secure. The company has a target payout ratio of 80% of annual adjusted EPS. This provides a compelling shareholder payout while leaving sufficient room to invest in growth.
Altria is also highly resistant to recessions. Cigarette and alcohol sales fare very well during recessions, which keeps Altria’s strong profitability and dividend growth intact. With a target dividend payout of 80%, Altria’s dividend is secure.
Altria stock trades for a 2020 price-to-earnings ratio of 10.5, based on expected adjusted EPS of $4.45. Our fair value estimate is a P/E ratio of 11.5, which could result in a 1.8% annual increase to shareholder returns through 2025. Through a combination of valuation changes (1.8%), EPS growth (4%), and dividends (7.3%), we expect total annual returns of 13.1% through 2025.
Dividend King #1: Farmers & Merchants Bancorp (FMCB)
- 5-Year Annual Expected Returns: 14.8%
Famers & Merchants Bancorp is a small regional bank, with 32 locations in California. Due to its small market cap (~$603 million) and its low liquidity, it passes under the radar of most investors. Nevertheless, F&M Bank has raised its dividend for 55 consecutive years and thus it is a Dividend King.
The company is conservatively managed and, until three years ago, had not made an acquisition since 1985. However, in the last three years, it has begun to pursue growth more aggressively. It acquired Delta National Bancorp in 2016 and increased its locations by 4. Moreover, in October-2018, it completed its acquisition of Bank of Rio Vista, which has helped F&M Bank to further expand in the San Francisco East Bay Area.
F&M recently reported a very strong fourth quarter and full year. For 2019, the company reported record net income of $56.0 million or $71.18 per share an increase of 23% from 2018. Total revenue increased 15.0% to $170.9 million in 2019, while net interest income increased 12.0% for the year. The bank ended 2019 with total assets of $3.72 billion, up 8.4% from 2018.
F&M performed particularly well, considering the difficult interest rate environment. The Federal Reserve continued to cut the Fed Funds rate in 2019, but F&M still expanded its net interest margin rom 4.25% in 2018 to 4.34% in 2019.
F&M Bank is a prudently managed bank, which has always targeted a conservative capital ratio. The bank currently qualifies as the highest regulatory classification of “well capitalized” due to its strong capital ratios. Moreover, its credit quality remains exceptionally strong, as there are no non-performing loans and leases in its portfolio. The conservative management results in lower leverage and thus slower growth than leveraged banks during boom times. On the other hand, this strategy protects the company from economic downturns.
The merits of this strategy were on display during the Great Recession. While most banks saw their earnings collapse, F&M Bank incurred a modest 9% decrease in its earnings-per-share, from $28.69 in 2008 to $25.57 in 2009, and kept raising its dividend while so many large financial institutions cut their dividends. F&M Bank currently pays a semi-annual dividend. Its most recent two declared payouts equal $14.20 per share, good for a 1.8% yield based on its recent share price.
We expect total annual returns of 14.8% per year through 2025, through EPS growth (5%), dividends (1.8%), and expansion of the P/E ratio to fair value (8%).
Analysis Reports On All 30 Dividend Kings
All 30 Dividend Kings are listed below by sector. You can access detailed coverage of each by clicking on the name of each Dividend King. Additionally, you can download our newest Sure Analysis Research Database report for each Dividend King as well.
- Genuine Parts Company (GPC) – [10/20/19 Sure Analysis report]
- Lowe’s Companies (LOW) – [11/27/19 Sure Analysis report]
- The Colgate-Palmolive Company (CL) – [11/13/19 Sure Analysis report]
- Hormel Foods Corporation (HRL) – [12/7/19 Sure Analysis report]
- The Coca-Cola Company (KO) – [10/20/19 Sure Analysis report]
- Lancaster Colony (LANC) – [11/14/19 Sure Analysis report]
- Altria Group (MO) – [11/20/19 Sure Analysis report]
- Procter & Gamble (PG) – [11/22/19 Sure Analysis report]
- Sysco Corporation (SYY) – [11/21/19 Sure Analysis report]
- Target Corporation (TGT) – [12/2/19 Sure Analysis report]
- Tootsie Roll Industries (TR) – [12/16/19 Sure Analysis report]
- Cincinnati Financial (CINF) – [11/24/19 Sure Analysis report]
- Farmers & Merchants Bancorp (FMCB) – [11/11/19 Sure Analysis report]
- Commerce Bancshares (CBSH) – [1/28/20 Sure Analysis report]
- ABM Industries (ABM) – [1/19/20 Sure Analysis report]
- Dover Corporation (DOV) – [2/3/20 Sure Analysis report]
- Emerson Electric (EMR) – [11/15/19 Sure Analysis report]
- Illinois Tool Works (ITW) – [2/4/20 Sure Analysis report]
- 3M Company (MMM) – [1/29/20 Sure Analysis report]
- Nordson (NDSN) – [12/12/19 Sure Analysis report]
- Parker Hannifin (PH) – [11/12/19 Sure Analysis report]
- Stanley Black & Decker (SWK) – [1/29/20 Sure Analysis report]
- American States Water (AWR) – [11/27/19 Sure Analysis report]
- California Water Service (CWT) – [11/9/19 Sure Analysis report]
- Northwest Natural Gas (NWN) – [1/10/20 Sure Analysis report]
- SJW Group (SJW) – [11/1/19 Sure Analysis report]
Additionally, you can see the Dividend Kings analyzed in the video below.
Performance Of The Dividend Kings
The Dividend Kings slightly underperformed the S&P 500 ETF (SPY) in January 2020 on a relative basis. Return data for January 2020 is shown below:
- Dividend Kings January 2020 total return: -1.8%
- SPY January 2020 total return: -.04%
The Dividend Kings also underperformed the broader market last year. In 2019, the Dividend Kings as a basket underperformed the S&P 500 ETF SPY by a fairly wide margin. Stable dividend growers like the Dividend Kings tend to underperform in bull markets, and outperform on a relative basis during bear markets, which helps explain its 2019 underperformance.
The Dividend Kings are not officially regulated and monitored by any one company. There’s no Dividend King ETF.
This means that tracking the historical performance of the Dividend Kings can be difficult. More specifically, performance tracking of the Dividend Kings often introduces significant survivorship bias. Survivorship bias occurs when one looks at only the companies that ‘survived’ the time period in question. In the case of Dividend Kings, this means that the performance study does not include ex-Kings that reduced their dividend, were acquired, etc.
But with that said, there is something to be gained from investigating the historical performance of the Dividend Kings. Specifically, the performance of the Dividend Kings shows that ‘boring’ established blue-chip stocks that increase their dividend year-after-year can significantly outperform over long periods of time.
Notes: S&P 500 performance is measured using the S&P 500 ETF (SPY). The Dividend Kings performance is calculated using an equal weighted portfolio of today’s Dividend Kings, rebalanced annually. Due to insufficient data, Farmers & Merchants Bancorp (FMCB) returns are from 2000 onwards. Performance excludes previous Dividend Kings that ended their streak of dividend increases which creates notable lookback/survivorship bias. The data for this study is from Ycharts.
Sector & Market Capitalization Overview
The sector and market capitalization characteristics of the Dividend Kings are very different from the characteristics of the broader stock market. The following bullet points show the number of Dividend Kings in each sector of the stock market.
- Industrial: 7
- Consumer Defensive: 9
- Utilities: 4
- Consumer Cyclical: 2
- Financial Services: 3
- Basic Materials: 2
- Real Estate: 1
- Healthcare: 1
The Dividend Kings are overweight in the Industrials, Consumer Defensive, and Utilities sectors. Interestingly, The Dividend Kings have no exposure to the Technology sector, which is the largest component of the S&P 500 index.
The Dividend Kings also have some interesting characteristics with respect to market capitalization. These trends are illustrated below.
- 3 Mega caps ($200 billion+ market cap; JNJ, PG, & KO are the 3)
- 12 Large caps ($10 billion to $200 billion market cap)
- 12 Medium caps ($2 billion to $10 billion)
- 2 Small caps ($300 million to $2 billion; TR & FMCB are the 2)
Interestingly, 16 out of the 30 Dividend Kings have market capitalizations below $20 billion. This shows that corporate longevity doesn’t have to be accompanied by massive corporate size.
Screening to find the best Dividend Kings is not the only way to find high quality dividend growth stock ideas.
Sure Dividend maintains similar databases on the following useful universes of stocks:
- The Dividend Aristocrats: S&P 500 stocks with 25+ years of consecutive dividend increases.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Complete List of High Dividend Stocks: Stocks with 5%+ dividend yields.
- The Complete List of Monthly Dividend Stocks: our database currently contains more than 30 stocks that pay dividends every month.
- The Sure Dividend Blue Chip Stocks List: our list of “blue chip stocks” is a combination of our Dividend Kings, Dividend Aristocrats, and Dividend Achievers lists.
There is nothing magical about investing in the Dividend Kings. They are simply a group of high-quality businesses with shareholder-friendly management teams that have strong competitive advantages.
Purchasing businesses with these characteristics at fair or better prices and holding them for long periods of time will likely result in strong long-term investment performance.
The most appealing part of investing is that you have unlimited choice. You can buy into mediocre businesses, or just the excellent companies. As Warren Buffett says:
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
– Warren Buffett