Top 5 Dividend Kings Now

This is a guest post by Josh Arnold for Sure Dividend. I don’t normally accept guest posts, but I was happy to make an exception for Sure Dividend, as I used to do split work with them regarding dividend stock analysis there a few years old.

With stocks selling off, now is a good time to start scouring your watchlists to see what types of otherwise high-quality assets are selling. Josh presents a quick list of companies with at least 50 years of consecutive annual dividend growth that he considers to be long-term “buys” right now, which you can use for further research.

-lyn

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When it comes to compounding wealth, we believe that buying high-quality dividend-paying stocks and reinvesting dividends over time is the best route. This not only allows for the capital appreciation that large dividend stocks tend to provide over time, but the ability to achieve double capitalization of reinvested dividends. When executing this strategy, however, finding the best dividend-paying stocks that can stand the test of time is paramount.

The Dividend Kings are the best of the best when it comes to dividend longevity. This is a group of 44 companies that have paid growing dividends for at least 50 consecutive years. In this article, we will highlight why investors would find Dividend Kings attractive and note the top five Dividend Kings available in the market today.

The reason an investor would want to consider Dividend Kings is quite simple; they are the best stocks in the world in terms of longevity and dividend security. Companies that have been able to increase their dividends for at least 50 consecutive years have withstood competitive threats, recessions, technological changes, etc. This is why Dividend Kings are the benchmark for dividend investing, and although the yields offered by Dividend Kings are not always the highest available, investors can count on increased income over time. very reliably.

Below we will take a brief look at the top five Dividend Kings available in the market today.

Our first Dividend King is Stanley Black & Decker (SWK), the ubiquitous US-based tool and storage maker. Stanley manufactures a wide variety of tools and accessories under brands such as BLACK+DECKER, Stanley, Dewalt, Craftsman, Porter Cable, and more. The company was founded in 1843 and has chosen a growth strategy through acquisitions to increase its robust organic growth over time. We see the company delivering 8% annualized earnings per share growth in the coming years, which means it should have enough capital to continue to increase its dividend.

The current yield is 2.6%, which is very high by historical standards for this stock, and is about double that of the S&P 500. The sequence of dividend increases is 54 years and the payout rate is only about a third of earnings for this year, so there is huge avenue for future dividend growth, as well as a high level of security.

Our next stock is Tennant Company (TNC), which designs, manufactures and markets floor cleaning equipment worldwide. Tennant offers an extensive line of cleaning equipment to meet a variety of needs, along with financing, rental, and leasing programs. Tennant was founded in 1870 and recently became an addition to the Dividend Kings club with its 50and consecutive increase in the dividend.

We expect Tennant to be able to deliver annual earnings per share growth of 8%, so combined with its 21% payout ratio for this year, the stock presents exemplary dividend security as well as a growth potential. The current yield is 1.6%, which is higher than the broader market, but slightly lower than more traditional high-yield dividend stocks. However, the stock is currently trading at a sub-decade valuation, so we see strong potential for capital appreciation over time also for buyers of the stock today.

Our next stock is 3M Company (MMM), a diversified technology company that operates globally in a variety of industries. The company competes in the security and industrial, transportation and electronics, healthcare and consumer segments, spanning thousands of products and countless end markets. 3M has made a name for itself over the past 120 years for innovation and quality, and it is constantly revamping its product portfolio to position it well for years to come.

We expect 5% annual growth for 3M, and its current performance is outstanding at 4%. That’s high not only for 3M, but it’s also about three times that of the S&P 500. The payout ratio is just over half of earnings, but keep in mind that 3M earnings are typically very predictable, so it may have a higher payout ratio. . We like 3M for its outstanding performance, 64-year dividend-increasing streak, and predictable revenue streams.

Our fourth Dividend King is Lowe’s Companies (LOW), half of the home improvement duopoly in the United States. Lowe’s has approximately 2,000 Home Improvement Super Centers in the United States, offering tens of thousands of products to professionals and homeowners. Lowe’s has a 59-year streak of increasing its dividend, but despite that, the payout ratio is just 24% on this year’s earnings. This means that Lowe’s will continue to have enough capital to keep increasing the payout, especially in light of an estimated growth of 6% per year.

The yield is in the lower end at 1.6%, but this is still higher than the broader market. Lowe’s has achieved one of the best dividend growth rates in the market over the past decade, reaching over 17%.

Our ending stock is Parker-Hannifin (PH), a manufacturer of motion and control systems for mobile, industrial and aerospace markets worldwide. The company has over a century of brand recognition and expertise, which has helped it increase its dividend for 65 consecutive years. The yield is currently 1.9%, following some weakness in the stock. It also made the valuation attractive given that we expect annual earnings per share growth of 9% in the coming years. Parker-Hannifin’s payout ratio is just 22% for this year, meaning its expected growth and low payout ratio should provide plenty of fuel for higher dividends in the years to come. The company’s average annual dividend increase is just over 10% over the past decade, which places the stock as a rare company on that metric.

When looking for a good Dividend to buy, we think it’s prudent to start the search with the Dividend Kings. They are the class in the field when it comes to dividend security and longevity, and many offer either high current yields – like 3M – or high rates of dividend growth – like Lowe’s. We’ve highlighted five names that we believe rise to the very top of the very prestigious Dividend Kings, and we love them all as buy-listed stocks in today’s market.

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