Wealthy Living has given permission to republish this great post on Dividend Kings. It’s a great complement to the other posts we’ve published on dividend investing and Dividend Aristocrats.
It makes it possible to accomplish the double compounding of reinvesting dividends in addition to the capital growth that strong dividend stocks often offer over time. Such an approach can go a long way to creating a strong portfolio.
Some of the best dividend stocks can outperform even during bearish markets.
When implementing this strategy, however, it is crucial to find the best dividend stocks that can create lasting value.
The Dividend Kings are at the top of the rankings regarding dividend longevity.
They are companies that have increased their dividend payments for at least 50 years straight.
This post will list the top six Dividend Kings currently on the market.
Why Dividend Kings?
Dividend Kings are the top stocks in the world regarding dividend longevity and safety.
They are companies that have maintained dividend increases for at least 50 years and have survived threats from rival businesses, downturns, technological advancements, and more.
While they may not be the highest dividend stocks, they are consistent. A ‘second tier’ selection of dividend paying stocks are Dividend Aristocrats, these are companies which have paid and increased their dividends every year for the past 25 years.
The Top 6 Dividend Kings
1. Stanley Black & Decker (NYSE: SWK)
Stanley Black & Decker is a global leader in hand tools, power tools, and related items. The company is at the top of the world in terms of tools and storage sales.
In terms of designed fastening and commercial electronic security, Stanley Black & Decker is ranked second in the globe.
Stanley Black & Decker released first-quarter results on April 28, 2022. Although revenue increased by 20% to $4.4 billion, it was $220 million less than anticipated.
Despite being $0.40 better than expected, adjusted earnings-per-share of $2.10 compared unfavorably to $3.13 in the previous year. Organic growth decreased by 1%.
For 2022, Stanley Black & Decker provided updated guidance. The company has reduced its prior estimates for adjusted earnings-per-share to $9.50 to $10.50 from $12.00 to $12.50 due to inflationary pressures.
The predicted organic revenue ranges from 7% to 8%.
2. 3M (NYSE: MMM)
Adjusted earnings-per-share of $2.65 was $0.34 more than expectations while being down from $2.77 in the previous year. For the quarter, organic growth was 2%.
3M increased its projection for 2022, predicting adjusted earnings per share of between $10.75 and $11.25. Over the following five years, total returns should average 18.4% yearly.
3. Lowe’s Companies (NYSE: LOW)
Lowe’s Companies is the second-largest home improvement retail store in the US. More than 2,200 hardware and home improvement stores are run or serviced by Lowe’s in the United States and Canada.
On May 18, Lowe’s released their first quarter 2022 financial results. Total revenues were $23.7 billion for the first quarter compared to $24.4 billion last year (first quarter).
Comparable sales dropped by 4%, while similar sales for home improvements in the US fell by 3.8%.
For a total of $4.1 billion, the business bought back 19 million shares in the first quarter. They also distributed $537 million in dividends.
The company still has $3.4 billion in cash and cash equivalents, which puts it in a healthy liquidity position.
The company presented a fiscal 2022 estimate and expected that on total sales of about $98 billion, they could reach diluted EPS in the range of $13.10 to $13.60.
In 2022, Lowe’s plans to buy back common shares worth $12 billion.
The total expected gains from the multiple expansion, the anticipated EPS increase of 6%, and the dividend yield of 2.4 % is 15.8% annually.
4. Parker Hannifin (NYSE: PH)
Parker-Hannifin is a diversified industrial manufacturer specializing in motion and control technologies. It came into existence in 1917; the business now generates over $14 billion yearly revenue.
Parker-Hannifin stands out from the other Dividend Kings since for a remarkable 65 years straight, the firm has grown its dividend and paid a dividend for 71 years.
Parker-Hannifin released financial data for the third quarter of fiscal 2022 at the beginning of May.
Sales increased by 9% compared to the same quarter last year, and adjusted earnings-per-share increased by 17%, from $4.12 to $4.83, due to robust demand in almost all markets that offset the adverse effects of cost inflation.
Parker-Hannifin reported record sales and earnings-per-share while outperforming analysts’ expectations by $0.18.
Additionally, it increased the dividend by 29% while reducing its projection for adjusted earnings-per-share in fiscal 2022 from $17.80 to $18.30 to $18.00-$18.30.
Total gains are likely to be 15.2% annually, powered by 9% EPS growth, a dividend yield of 2.1%, and a boost of 4.1% annually from an increasing P/E ratio.
5. Target Corporation (NYSE: TGT)
Target is a giant discount retailer. About 1,850 big box stores make up its business; they sell food and general products and act as distribution centers for the company’s growing e-commerce operation.
This year, Target anticipates generating a total of $110 billion in revenue.
The first-quarter financial results from a margin standpoint were significantly worse than anticipated. At $2.19, adjusted earnings-per-share fell short of expectations by 87 cents.
Revenue increased by 4% yearly to $25.2 billion, surpassing projections by $690 million.
The company has set its annual EPS growth at 8%. The stock also offers a 3% dividend yield over the next five years, and its expanding valuation is poised to increase by 4.1% annually. Total returns are likely to reach 15.1% per year.
6. Tenant Company (NYSE: TNC)
Another stock on the Dividend Kings list is Tenant Company. The first designs, manufactures, and sells floor cleaning equipment worldwide.
Tennant offers financing, rental, and lease options in addition to a vast selection of cleaning equipment to meet different demands.
Tennant, established in 1870, has joined the group of companies known as the Dividend Kings after achieving its 50th consecutive dividend rise.
Tennant is likely to generate annual earnings-per-share growth of 8%.
With this year’s payout ratio of 21%, the company offers both exceptional dividend safety and room for future development.
The present yield, which is 1.6%, is slightly lower than conventional high-yield dividend equities but still superior to the overall market.
Although the company is currently trading for a decade-low valuation, we expect excellent long-term capital appreciation potential for stock owners.
Final Word: Dividend Kings
When searching for an outstanding stock to buy, we believe it is prudent to start the search with the Dividend Kings.
When it comes to dividend safety and sustainability, they are the best in the business, and many of them offer either high current yields, like 3M, or high rates of dividend growth, like Lowe’s.
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Disclosure: The author is not a licensed or registered investment adviser or broker/dealer. They are not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.
Tim Thomas has no positions in the stocks, ETFs, cryptocurrencies, or commodities mentioned.
Featured image credit: Shutterstock.