Updated on January 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 by clicking on the link below:
There are currently 28 Dividend Kings, including two additions in 2019, Altria Group (MO) and H.B. Fuller (FUL). 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 6 Best Dividend Kings Today
#6: Parker Hannifin (PH)
#5: Lowe’s Companies (LOW)
#4: Johnson & Johnson (JNJ)
#3: Altria Group (MO)
#2: Federal Realty Investment Trust (FRT)
#1: Farmers & Merchants Bancorp (FMCB)
- Analysis Reports On All 28 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 6 Best Dividend Kings Today
The following 6 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 #6: Parker Hannifin (PH)
- 5-Year Annual Expected Returns: 6.5%
Parker-Hannifin is a diversified industrial manufacturer specializing in motion and control technologies. The company was founded in 1917 and has grown to a market capitalization of $27 billion with annual revenues of $14 billion. Parker Hannifin has paid a dividend for 69 years and has increased that dividend for a remarkable 63 consecutive years.
In late October, Parker Hannifin reported (10/31/19) financial results for the first quarter of fiscal 2020. Sales and organic sales decreased -4% and -3%, respectively, due to soft demand in North America and international markets. The company posted an almost record adjusted operating margin of 17.3% and record operating cash flows of $449 million but its adjusted earnings-per-share fell from $2.84 in last year’s quarter to $2.76.
We remain positive on the company’s long-term growth potential. Acquisitions are a major growth catalyst for Parker Hannifin. On October 29th, Parker Hannifin completed the acquisition of LORD, a leading manufacturer of advanced adhesives and coatings, for $3.675 billion in cash. On September 16th, Parker Hannifin completed the acquisition of Exotic Metals Forming Company LLC for $1.725 billion in cash. These two acquisitions are expected to add $1.5 billion in annual revenues.
That said, near-term challenges persist. Management lowered guidance for this fiscal year’s adjusted earnings-per-share from $11.50-$12.30 to $10.10-$10.90. This guidance is in sharp contrast to its guidance until six months ago for at least 10% annual earnings-per-share growth until 2023.
We expect the challenges presented by the company’s global exposure to be short term in nature. Parker Hannifin is a time-tested company with a leadership position in its core industry. Therefore, we expect 7.5% annual earnings-per-share growth over the next five years, comprised of revenue growth, margin expansion, and share repurchases. The stock also has a 1.8% dividend yield.
However, we view the stock as overvalued with a 2019 price-to-earnings ratio of 19.7 (our fair value estimate is a P/E ratio of 15.0. Contraction of the P/E multiple will be a negative headwind for the stock in the range of 5.3% per year, but we still expect positive total returns of 4% per year over the next five years.
Dividend King #5: Lowe’s Companies (LOW)
- 5-Year Annual Expected Returns: 7.4%
Lowe’s is the second-largest home improvement retailer in the U.S. (after Home Depot). Lowe’s operates over 2,000 home improvement and hardware stores in the U.S. and Canada.
Lowe’s reported third quarter results on November 20th, and recorded net earnings of $1.0 billion, compared to $629 million in the same period a year ago. Adjusted diluted earnings per share increased 36% year-over-year, from $1.04 to $1.41. The company generated revenues of $17.4 billion, a minor 0.2% decrease from last year. Consolidated comparable sales increased by 2.2%, while comparable sales specifically in the U.S. increased by 3.0%.
Source: Earnings Infographic
The company spent $53 million this quarter to perform a strategic review of its Canadian operations, which led to announcing the closure of 34 underperforming stores in Canada. Lowe’s earnings growth is fueled in part by sales growth, but also by aggressive share repurchases. Lowe’s repurchased $835 million worth of stock, and paid $428 million in dividends for the quarter. Diluted common shares outstanding are down 4.6% from one year ago.
Due to improved execution and strong earnings per share growth, management upgraded full-year guidance. Adjusted EPS for 2019 is expected at $5.63 to $5.70, up from $5.45 to $5.65. Revenue and comparable sales growth are expected to be 2% and 3%, unchanged from the prior outlook.
Earnings-per-share growth is driven by comparable store sales growth, expanding margins, and share repurchases, which have lowered the share count meaningfully. Significant buybacks mean that the company’s net earnings are split over a lower number of shares, which accelerates growth in per-share net income. We expect ~8.2% annual EPS growth over the next five years.
Lowe’s has a current dividend yield of 1.8%. In addition to EPS growth, this is likely to offset a negative return of ~2.6% from a lower valuation multiple, as we view Lowe’s stock as slightly overvalued. Still, the stock is expected to generate respectable annual returns of 7.4% over the next five years.
Dividend King #4: Johnson & Johnson (JNJ)
- 5-Year Annual Expected Returns: 7.5%
Johnson & Johnson is a diversified health care conglomerate. And, the company has increased its dividend for 57 consecutive years, including a 5.6% increase in April 2019. J&J’s long track record of steady dividend increases is due to the company’s massive global business and consistent growth over the past several decades.
Through 2018, J& J grew its adjusted earnings for 35 consecutive years. This period includes multiple recessions, and yet J&J managed to continue growing its earnings like clockwork. The biggest reason for its steady growth is its large and diversified business model, and its top-tier brands.
Source: Investor Fact Sheet
J&J has large businesses across the full spectrum of health care, including pharmaceuticals, medical devices, and consumer products. In fact, last year J&J had 26 individual platforms or products generate at least $1 billion in annual sales. Of these, 12 generated over $2 billion in revenue for the year.
Pharmaceuticals are J&J’s biggest business, representing $40 billion in 2018 revenue, and it is also the fastest-growing segment for the company. Pharmaceutical sales increased 12% last year on an operational basis, which includes currency impacts and the effects of divestitures. Medical devices represented $27 billion of 2018 sales and grew operational sales by 2.6%. Consumer products, which accounted for $14 billion of sales last year, grew by 3.2%.
J&J has multiple competitive advantages, including its global presence and category-leading brands. Approximately 75% of the company’s sales last year were derived from products which held the #1 or #2 global market share position. This provides steady demand, even during recessions. J&J invested over $10 billion in research and development last year, which will help the company maintain its leadership position.
The short-term environment is challenging for J&J, due to multiple lawsuits involving its talc powder. Johnson & Johnson continues to face more than 12,000 other lawsuits related its talc products. However, we do not see this as a long-term threat.
We expect annual returns of 7.5% per year, consisting of 6% annual earnings-per-share growth, the 2.6% dividend yield, and a small ~1.1% annual reduction from a declining P/E multiple.
Dividend King #3: Altria Group (MO)
- 5-Year Annual Expected Returns: 10.2%
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 October, Altria reported strong third-quarter earnings. Revenue (net of excise taxes) increased 2.3% year-over-year to $5.4 billion. Adjusted earnings-per-share came in at $1.19 increased 10% over the year-ago period. Revenue and earnings-per-share both beat analyst expectations.
Altria said it was on track to achieve $575 million in annual cost savings this year as it combats lower smoking rates in its markets. Separately, Altria took a non-cash impairment charge of $4.5 billion related to its investment in Juul.
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
Separately, Altria invested nearly $13 billion in e-vapor manufacturer JUUL Labs for a 35% equity stake in the company, valuing JUUL at $38 billion. These two investments give Altria access to two huge growth opportunities, marijuana and vaping.
Altria reaffirmed its guidance for 2019 full-year adjusted diluted EPS to be in a range of $4.19 to $4.27, which would be 5% to 7% growth from 2018. The company also expects 5%-8% 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 has increased significantly from our last report. While this has elevated the stock valuation, we still expect strong total returns going forward. Through a combination of EPS growth (4%) and dividends (6.7%), partially offset by negative returns of -0.5% per year from a declining P/E multiple, we expect total annual returns of 10.2% through 2025.
Dividend King #2: Federal Realty Investment Trust (FRT)
- 5-Year Annual Expected Returns: 11.1%
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 $9.9 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 stock has a 3.3% dividend yield. In addition to a ~2.3% annualized boost from an expanding P/FFO multiple, and 5.5% annual FFO growth, we expect 11.1% annualized returns over the next five years.
Dividend King #1: Farmers & Merchants Bancorp (FMCB)
- 5-Year Annual Expected Returns: 13.3%
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 quarter. For the period, net income increased to $22.8 million, or $172.51 per diluted share, an increase of 9.3% from $157.82 per diluted share in the year ago period. Net interest income for the 2019 third quarter rose 3.6% to $63.1 million, from $60.9 million in the 2018 third quarter. This was a highly impressive performance as many banks are reporting flat or declining net interest income, due to the unfavorable environment of falling interest rates.
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 13.3% per year through 2025, through EPS growth (5%), dividends (1.9%), and expansion of the P/E ratio to fair value (6.4%).
Analysis Reports On All 28 Dividend Kings
All 28 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]
- 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) – [10/19/19 Sure Analysis report]
- ABM Industries (ABM) – [9/29/19 Sure Analysis report]
- Dover Corporation (DOV) – [10/18/19 Sure Analysis report]
- Emerson Electric (EMR) – [11/15/19 Sure Analysis report]
- 3M Company (MMM) – [10/24/19 Sure Analysis report]
- Nordson (NDSN) – [12/12/19 Sure Analysis report]
- Parker Hannifin (PH) – [11/12/19 Sure Analysis report]
- Stanley Black & Decker (SWK) – [10/24/19 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) – [9/25/19 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 December 2019 on a relative basis. Return data for December 2019 is shown below:
- Dividend Kings December 2019 total return: +1.9%
- SPY November 2019 total return: +2.9%
Total return performance for 2019 is below:
- Dividend Kings: +22.1%
- SPY: +31.2%
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: 8
- 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)
- 11 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 28 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