Sluggish global growth, rising recession risks and a stock market that hasn't gone anywhere over the past 52 weeks has some market strategists banging the drum for quality stocks.
"A focus on quality stocks can allow investors to stay in the market to benefit from potential upturns, but with a measure of prudence built in to buffer downturns," says
And nothing says quality more than stocks that haven't missed a dividend hike in decades. "When a company is reliably able to boost its dividend for years or even decades, this may suggest it has a certain amount of financial strength and discipline," says Tianyin Cheng, director of Strategy and Volatility Indices at S&P Dow Jones Indices.
Investors can find such dividend machines within the ranks of the Dividend Kings. You've surely heard of the Dividend Aristocrats -- companies in
Here, then, are the current 15 Dividend Kings. These have been among the best of the best dividend stocks for income growth since at least the late 1960s. Any company with that kind of track record clearly makes its dividend a top priority -- and one that investors can count on through thick and thin.
Cincinnati Financial
Market value: $18.7 billion
Dividend yield: 1.9%
Consecutive annual dividend increases: 59
Analysts' opinion: 2 strong buy, 1 buy, 5 hold, 0 sell, 1 strong sell
As
Income investors can expect more where that came from.
The analyst community as a whole expects
Hormel
Market value: $23.3 billion
Dividend yield: 1.9%
Consecutive annual dividend increases: 53
Analysts' opinion: 0 strong buy, 1 buy, 7 hold, 3 sell, 0 strong sell
Indeed, if past is prologue,
Stanley Black & Decker
Market value: $21.1 billion
Dividend yield: 1.9%
Consecutive annual dividend increases: 52
Analysts' opinion: 7 strong buy, 4 buy, 8 hold, 1 sell, 0 strong sell
Power and hand toolmaker
But this isn't just some sleepy income stock. Analysts expect SWK to generate average annual earnings growth of 8.6% a year over the next three to five years, thanks not just to cost cuts, but a strategy of growth through mergers & acquisitions (M&A).
Sysco
Market value: $40.7 billion
Dividend yield: 2.0%
Consecutive annual dividend increases: 50
Analysts' opinion: 4 strong buy, 3 buy, 7 hold, 1 sell, 2 strong sell
Sysco (SYY, $79.36), a food services and restaurant supply company, also is generating growth via acquisitions. And like the other Dividend Kings on this list, SYY is a dividend-raising machine. The company already has five decades of payout increases under its belt, and it's likely to notch its 51st straight year of dividend hikes in November.
As for M&A: In
However, Sysco has been able to generate plenty of growth on its own, too. A combination of organic and M&A-based growth has produced a steady ramp-up in revenues for years.
Looking forward, the pros expect profits to swell by 10.7% annually over the next half-decade. That should allow Sysco to keep up its streak of dividend growth.
Dover
Market value: $14.0 billion
Dividend yield: 2.0%
Consecutive annual dividend increases: 64
Analysts' opinion: 4 strong buy, 2 buy, 11 hold, 0 sell, 0 strong sell
Industrial conglomerate Dover (DOV, $96.27) just logged its 64th consecutive year of dividend increases with a modest hike. In August, DOV upped the ante by 2.1%, to 49 cents per share.
The company, which has its hands in all sorts of industries -- from Dover-branded pumps, lifts and productivity tools for the energy business, to Anthony-branded commercial refrigerator and freezer doors -- has always made the dividend No. 1. Its annual streak of dividend growth is the third-longest among publicly traded companies.
Dover doesn't have the most exciting business, though it did garner some headlines in 2018. Under pressure from activist investor
As for Dover, analysts project average annual earnings growth of more than 10% during the next three to five years.
Lowe's
Market value: $84.5 billion
Dividend yield: 2.0%
Consecutive annual dividend increases: 57
Analysts' opinion: 18 strong buy, 4 buy, 10 hold, 1 sell, 0 strong sell
When it comes to home improvement chains, Dow Jones Industrial Average component Home Depot (HD) gets all the glory.
But No. 2 rival
Numerous analysts have been busy reiterating their Buy calls on
The pros expect
Colgate-Palmolive
Market value: $61.5 billion
Dividend yield: 2.3%
Consecutive annual dividend increases: 56
Analysts' opinion: 5 strong buy, 1 buy, 16 hold, 1 sell, 0 strong sell
The company derives the vast majority of its sales outside the
Colgate also is turning to M&A to improve its fates, announcing in July that it would acquire French skin brand Laboratories Filorga Cosmétiques for $1.69 billion -- its biggest M&A move since purchasing Kolynos in 1995.
Despite its issues, CL stock has outperformed the S&P 500 through the first nine months of 2019.
And then there's the dividend. Colgate's payout dates back more than a century, to 1895, and has increased annually for 56 years. CL last raised its quarterly dole in March, when it added a penny to bring the payout to 43 cents a share. The dividend should keep going up. After all, the company has been through tougher times than this.
Procter & Gamble
Market value: $310.0 billion
Dividend yield: 2.4%
Consecutive annual dividend increases: 63
Analysts' opinion: 8 strong buy, 4 buy, 11 hold, 2 sell, 0 strong sell
With major brands such as Tide detergent, Pampers diapers and Gillette razors,
That hardly makes P&G completely recession-proof, but it has helped fuel reliable dividend payments for more than a century. The Dow component has paid shareholders since 1890, and has raised its cash distribution annually for 63 years in a row. P&G last increased its quarterly payout in April, by 4% to 74.59 cents per share.
In addition to the generous dividend, analysts expect PG to generate average annual earnings growth of 7.2% for the next three to five years. Morgan Stanley's
Illinois Tool Works
Market value: $49.4 billion
Dividend yield: 2.7%
Consecutive annual dividend increases: 56
Analysts' opinion: 3 strong buy, 0 buy, 12 hold, 3 sell, 4 strong sell
Founded in 1912,
While ITW sells many products under the namesake brand, it also operates businesses including Foster Refrigerators, ACME Packaging Systems and the
Like many companies of a bygone era, ITW is serious about dividend growth, aiming to disburse 50% of its free cash flow as dividends. In August,
Just note that
Johnson & Johnson
Market value: $343.1 billion
Dividend yield: 2.9%
Consecutive annual dividend increases: 57
Analysts' opinion: 4 strong buy, 5 buy, 9 hold, 1 sell, 1 strong sell
The Dow component is embroiled not only in high-profile litigation over allegations that its iconic talcum powder is linked to cancer, but now cases tied to its Janssen unit related to the opioid crisis. And numerous analysts believe these problems will hold back
"We believe J&J shares are likely to continue to trade at a discount to its sum-of-the-parts valuation due to the litigation overhang," writes Barclays analyst
But however that turns out, it shouldn't affect those who count on JNJ's steady dividends over the long term. The company has contended with serious litigation and worse calamities in its long history and kept its payout intact.
Indeed, the health-care giant hiked its quarterly payout 5.6% in April, to 95 cents a share. That extended its streak of consecutive annual dividend increases to 57, keeping it among the ranks of the Dividend Kings. The streak should continue, too, if JNJ can keep growing its earnings; analysts expect it to, at a clip of 6.9% annually on average over the next half-decade.
Coca-Cola
Market value: $233.7 billion
Dividend yield: 2.9%
Consecutive annual dividend increases: 57
Analysts' opinion: 8 strong buy, 4 buy, 12 hold, 1 sell, 0 strong sell
Coca-Cola (KO, $54.65) has long been known for quenching consumers' thirst, but it's equally effective at quenching investors' thirst for income. The company has paid a quarterly dividend since 1920, and that dividend has increased annually for the past 57 years.
KO last lifted its dividend in April, to 40 cents a share from 39 cents a share. The relentlessly rising dividend is one reason Coca-Cola finds itself among the best stocks of all time.
With the U.S. market for carbonated beverages on the decline for more than a decade, according to market research, Coca-Cola has responded by adding bottled water, fruit juices and teas to its product lineup to keep the cash flowing. In addition to the namesake Coca-Cola brand, KO also sports names such as Minute Maid, Powerade, Simply Orange and Vitaminwater.
Coca-Cola added another big name to its roster recently: In
Emerson Electric
Market value: $40.1 billion
Dividend yield: 2.9%
Consecutive annual dividend increases: 62
Analysts' opinion: 7 strong buy, 4 buy, 13 hold, 0 sell, 0 strong sell
The prolonged downturn in oil prices weighed on Emerson for a couple years as energy companies continued to cut back on spending. Happily, analysts now say it's well-positioned to take advantage of the recovery in the energy sector. Earnings are forecast to increase at an average annual rate of 7.7% for the next three to five years.
However, not all investors are so patient. Reuters recently reported that hedge fund
Emerson has paid dividends since 1956 and has boosted its annual payout for 62 consecutive years, including its last increase in
Federal Realty Investment Trust
Market value: $10.1 billion
Dividend yield: 3.1%
Consecutive annual dividend increases: 52
Analysts' opinion: 9 strong buy, 4 buy, 6 hold, 0 sell, 0 strong sell
Real estate investment trusts (REITs) such as
Few have been steadier than FRT.
Better still, FRT might be a dividends-and-growth prospect. "We think a trade for growth and quality is in order and see FRT as a 2020 growth leader among Strip Centers," writes
Genuine Parts
Market value: $14.2 billion
Dividend yield: 3.1%
Consecutive annual dividend increases: 63
Analysts' opinion: 2 strong buy, 0 buy, 12 hold, 0 sell, 0 strong sell
Automotive and industrial replacement parts maker
To that end, the company had a busy summer. In June,
Still, all along,
Market value: $91.1 billion
Dividend yield: 3.5%
Consecutive annual dividend increases: 61
Analysts' opinion: 1 strong buy, 2 buy, 12 hold, 2 sell, 1 strong sell
Industrial conglomerate 3M (MMM, $158.38), which makes everything from adhesives to electric circuits to tape, is the highest-yielding of the Dividend Kings. It also is one of the longest-tenured payers, boasting a quarterly dividend that has existed for more than a century. And 3M has increased that cash distribution annually for 61 consecutive years.
The company last raised its dividend in February, when it lifted the quarterly disbursement by 6% to $1.44 a share. "The strength of our business model enables 3M to consistently generate premium margins and strong cash flow, and to build on the company's long history of returning cash to our shareholders,"
The steady stream of cash has helped 3M earn the distinction of being one of the 50 best stocks of all time -- even if shares have lagged the market by a wide margin this year. The
Nonetheless, 3M expects its dividend to grow, even in the face of short-term profit weakness. "If I go back to other times in our history where we've had an earnings decline, we still have some small increases in our dividend," CFO
Whatever the shorter-term holds for 3M's share price, investors can bank on the conglomerate's steady payouts over the long haul.
Dan Burrows is a Contributing Writer for Kiplinger.