Dividend Kings are a prestigious group of companies that have consistently raised their dividends for at least 50 consecutive years.

In this article, we’ll explore the criteria that define a Dividend King, how they differ from Dividend Aristocrats, and why they could be valuable additions to your investment portfolio.

What are Dividend Kings?

Dividend Kings represent the elite of dividend-paying companies, having consistently raised their dividend payouts for at least 50 years. This impressive track record highlights their financial strength and resilience during economic downturns and market challenges. In 2024, 53 companies achieved the prestigious status of Dividend King.

Criteria to become a Dividend King

The main criterion for becoming a Dividend King is a consistent history of increasing dividends for at least 50 consecutive years. This not only demonstrates a company’s commitment to shareholder value but also reflects its ability to adapt and succeed over time.

Dividend Kings vs. Dividend Aristocrats

Dividend Kings and Dividend Aristocrats are both prestigious groups known for their long histories of consistently increasing dividends, but there are key differences between them.

Dividend Aristocrats must have raised their dividends for at least 25 years and be part of the S&P 500 index, while Dividend Kings require a minimum of 50 consecutive years of dividend increases, with no restrictions on S&P 500 membership or market capitalization.

Both groups provide investors with reliability and potential for steady income, but Dividend Kings, due to their longer track records, may offer an even stronger sense of stability to investors.

2024 Dividend Kings list

As of 2024, there are only 53 companies recognized as Dividend Kings, and you may not be familiar with all their names despite their long-standing history of attractive payouts.

Here are the top 10 Dividend King stocks ranked by dividend yield as of June 2024:

  • Altria Group Inc. (MO): 8.4%
  • Universal Corp. (UVV): 6.8%
  • Canadian Utilities (CDUAF): 6%
  • Northwest Natural Gas Holding Co. (NWN): 5.5%
  • Black Hills Corporation (BKH): 4.9%
  • United Bankshares (UBSI): 4.7%
  • Fortis (FTS): 4.5%
  • Federal Realty Investment Trust (FRT): 4.4%
  • Kenvue (KVUE): 4.3%
  • Stanley Black & Decker (SWK): 4%

These companies span a variety of industries, illustrating that consistent dividend growth can be achieved across different sectors.

Changes in the Dividend Kings list in 2024

The 2024 Dividend Kings list welcomed several new companies, including Archer Daniels Midland (ADM), Consolidated Edison (ED), Fortis (FTS), Kenvue (KVUE), and United Bankshares (UBSI). However, the list also saw the exit of two former Dividend Kings, Leggett & Platt and 3M, due to cuts in their payouts.

How to invest in dividend stocks

While the allure of dividend yield can be compelling, successful stock investing demands thorough research. This includes analyzing industry dynamics, assessing the company’s competitive position, and evaluating its financial health, among other factors.

Investors often face a choice between dividend stocks that offer immediate income and those with a track record of increasing dividends over time. Growth-oriented stocks may initially yield less but can potentially deliver substantial dividend growth, sometimes at rates of 9 or 10 percent annually over extended periods.

Dividend stocks are valued for their compounding potential. Not only do they provide ongoing income, but reinvesting dividends can amplify returns over time through compounding.

Dividends are typically paid quarterly, announced by the board of directors through press releases or SEC filings, and deposited into your brokerage account accordingly. On the ex-dividend date, the stock price typically adjusts downward by the dividend amount, reflecting that new buyers won’t receive the upcoming payout. The dividend itself arrives in your account on a separate payment date, usually days or weeks later.

It’s important to note that dividends are generally taxable income, even if reinvested. Holding investments in tax-advantaged accounts such as IRAs or 401(k)s allows dividends to grow tax-deferred, potentially enhancing long-term returns.

Should you invest in Dividend King stocks?

Dividend Kings can play a crucial role in a diversified investment portfolio. Generally, dividend stocks are considered some of the best long-term investments, and Dividend Kings, with their consistent history of increasing dividends, represent mature and stable companies with resilient business models.

However, like any investment, Dividend Kings come with risks. Despite their strong track record, future performance is not guaranteed. Economic downturns or shifts in industry trends can affect a company’s ability to sustain dividend growth. It’s essential for investors to conduct thorough due diligence before making decisions.

In the end, Dividend Kings should be part of a well-rounded investment strategy, balanced with other assets to help mitigate risks.

In Conclusion

Dividend Kings are a distinguished group of companies recognized for their remarkable history of dividend growth, maintaining this streak for 50 years or more. These stocks can provide a reliable income stream and contribute to a diversified investment portfolio. While past performance is not indicative of future results and all investments carry risks, a thoughtful and balanced strategy can make Dividend Kings a valuable addition to your investment holdings.