What are Dividend Kings and how can you invest in them?

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Published on June 28, 2024 | 4 min read

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Dividend Kings are a select group of companies on Wall Street that have consistently increased their dividends for at least 50 consecutive years.

In this article, we’ll dive into the criteria that make a company a Dividend King, how they compare to Dividend Aristocrats and why they might be worth considering for your investment portfolio.

What are Dividend Kings?

Dividend Kings are the crème de la crème of dividend-paying companies. These companies have consistently increased their dividend payouts every year for at least half a century, showcasing their financial strength and durability even in the face of economic downturns and market challenges. In 2024, there were 53 companies that achieved the status of being a Dividend King.

Criteria to become a Dividend King

The primary factor to be classified as a Dividend King is a consistent track record of dividend increases for at least 50 consecutive years. This not only illustrates a company’s commitment to delivering shareholder value but also signifies the company’s ability to adapt and thrive over time.

Dividend Kings vs. Dividend Aristocrats

Dividend Kings and Dividend Aristocrats are both coveted groups of companies known for their long history of consistently increasing dividends. However, there are noticeable differences.

While Dividend Aristocrats must have increased their dividends for at least 25 years and meet certain criteria such as being a member of the S&P 500 index, Dividend Kings have a requirement of 50 years of uninterrupted dividend increases, with no stipulations regarding S&P 500 membership or market capitalization.

Both categories offer investors a level of reliability and potential for steady income, though Dividend Kings, due to their longer track record, may offer an even greater perception of stability to investors.

2024 Dividend Kings list

Only 53 companies comprise the Dividend Kings in 2024. You might not recognize many of the company names, despite their long history of attractive payouts.

Here are the top 10 Dividend King stocks by their dividend yield, as of June 2024.

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

These companies represent a wide range of industries, demonstrating that consistent dividend growth can be achieved across different sectors.

Changes in the Dividend Kings list in 2024

The 2024 Dividend Kings list saw the inclusion of several new companies that joined the ranks. These include Archer Daniels Midland (ADM), Consolidated Edison (ED), Fortis (FTS), Kenvue (KVUE) and United Bankshares (UBSI). However, the list also saw the departure of two former Dividend Kings that had to cut their payouts: Leggett & Platt and 3M.

How to invest in dividend stocks

While dividend yield can be attractive, successful stock investing requires in-depth research. You’ll need to analyze the industry, the company’s competitive edge and its financial health, just to name a few factors.

Investors can choose between dividend stocks that provide a steady stream of income right now or focus on companies with a history of increasing their dividend payouts over time. These growth-oriented stocks may offer lower yields initially, but they have the potential for significant dividend growth in the long term, sometimes by 9 or 10 percent over many years.

Dividend stocks are also considered one of the best compound interest investments. Not only can the underlying asset keep growing in value while paying out dividends, but this investment can also earn compound growth if the payouts are reinvested.

Many companies pay dividends quarterly. The board of directors announces them through press releases or SEC filings. The money is then deposited directly into your brokerage account.

On the ex-dividend date, the stock price typically drops by the amount of the dividend to reflect that new buyers won’t receive it. The dividend itself arrives in your account on a separate payment date, which can be days or weeks later.

Dividends you receive are generally taxable income, even if you reinvest them back into the same investment. However, if you hold the investment in a tax-advantaged account like an IRA or 401(k), your dividends grow tax-deferred.

Should you invest in Dividend King stocks?

Dividend Kings can form a pivotal part of a diversified investment portfolio. Dividend stocks in general are considered one of the best long-term investments. With their long history of consistent dividend increases, Dividend Kings specifically represent mature, relatively stable companies with resilient business models that have stood the test of time.

However, as with any investment, Dividend Kings are not without risk.

While these companies have a strong track record, future performance is not guaranteed. After all, economic downturns or changes in industry trends can impact a company’s ability to maintain dividend growth. Investors should always conduct their own due diligence before making investment decisions.

Ultimately, Dividend Kings should be balanced with other investments in a diversified portfolio to mitigate risks.

Bottom line

Dividend Kings represent an elite group of companies known for their impressive track record of dividend growth spanning 50 years or more. These stocks can offer a consistent income flow and serve as a component of a well-rounded investment portfolio. Remember, past performance does not guarantee future results, and all investing involves risk. But with a well-informed and balanced approach, Dividend Kings can be a beneficial addition to your investment portfolio.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.