To become a Dividend King, it takes fifty years of consecutive dividend increases - which is hard to pull off, regardless of company size, sector, or market share. So, there are less than seventy of them today. That’s why joining this elite rank is an achievement—and who doesn’t get excited about stocks that are about to achieve something great?
How I Came Up With The Following Stocks
As a dividend investor, I like to keep tabs on dividend-growth stocks, so I have a watchlist of Dividend Aristocrats (MidCap & S&P 500). After accessing this list, I screened them using the following criteria:
- Annual Dividend Yield: Left blank.
- Current Analyst Rating: 4 (Moderate Buy) to 5 (Strong Buy).
After hitting “See Results,” I got four hits and arranged the results from highest to lowest dividend yields.
Now that I have my list, let’s look at why these companies should be on your radar, starting with the top one.
McDonald's Corporation (MCD)
McDonald's Corporation is a multinational fast-food company and one of the largest restaurant chains in the world, with thousands of locations across over 100 countries. Its business model relies heavily on franchising, where individual operators run McDonald’s restaurants under the brand, contributing to its global presence and profitability.
McDonald’s is still the world's top reigning QSR (quick-service restaurant) based on revenue. And I mean to be honest, even if you don’t like its food, you have to admit the company’s global presence and substantial market share makes it an excellent investment choice.
But its market share isn’t all that McDonald's has going for it. The company also holds the title of Dividend Aristocrat, with a record of 48 consecutive years of increases. The company pays $1.77 per share quarterly, which translates to $7.08 annually and a 2.40% yield.
Chairman and CEO Chris Kempczinski underlines what makes the company thriving despite increasing global competition. “We will stay laser-focused,” he says, “on providing an unparalleled experience with simple, everyday value and affordability that our
consumers can count on as they continue to be mindful about their spending.”
Pentair Ltd (PNR)
Pentair Ltd. specializes in water treatment and sustainable solutions. It offers a wide range of products and services to help manage, filter, purify, and conserve water.
Pentair’s offerings include residential water filtration systems, pool and spa equipment, industrial water treatment solutions, and commercial filtration systems. The company also focuses on sustainable solutions for water preservation.
The company’s latest quarterly dividend was 23 cents per share. This translates to a 92-cent annual rate and an admittedly less-than-stellar 0.89% yield. Still, the company has a lot of headroom for dividend increases due to its significantly low 21.83% dividend payout ratio. The company is also expected to hike payments in its next quarter, which will mark its 49th year of consecutive dividend increases.
Some people who were aware of Pentair in the late 2010s might wonder how the company had kept its Dividend Aristocrat status when quarterly dividends were 30 cents or more. This is because Pentair spun off its electrical business into nVent Electric plc, which has also increased its dividends since its inception.
Carlisle Companies Inc (CSL)
Carlisle Companies Inc. is a manufacturing company based in the United States. It is known for providing construction materials and weatherproofing technology focusing on energy efficiency. It used to provide more diversified products and solutions like fluid tech and break and friction systems but has pivoted into a pure-play building products manufacturer in 2018.
The transformation was well-managed and well-received, with the company’s financials and stock performance seeing significant growth afterward.
It’s common for dividend companies to lose their status after such massive operational changes. We saw it with 3M Company (when it spun off Solventum and slashed its dividend) and Telephone and Data Systems (when it cut its dividends to support its 5G business venture).
However, Carlisle Companies continued to increase its dividends despite these changes. The company recently increased payouts from 85 cents to $1.00 per share quarterly, representing a 0.89% annual yield based on current prices. This is its 48th year of consecutive increases.
Final Thoughts
Reaching Dividend King status is challenging. The companies on this list have demonstrated that they have what it takes to compete on the global stage, and their exceptional commitment to shareholder value makes them top choices for income investors all around. As usual, be sure to do your research before making any investment decisions.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
