If you've read my articles before, there's a good chance you've read my work about the Dividend Kings: companies that have paid increasing dividends for 50 years or more. However, when you give it more than a passing thought, you’ll realize that consistency in something for over 50 years is not easy. Can you imagine a business plowing through recessions, wars, and other crises, all while keeping itself afloat and thriving and paying investors ever-increasing payouts? It's definitely no easy feat.
That’s why Dividend Kings are top candidates for stocks you’d want to buy and hold forever. But there are more than sixty Kings today, so which one should you pick?
How I Came Up With The Following Stocks
To start off the analysis, I went to Barchart’s Watchlist feature to pull up my Dividend Kings list. Once there, I screened the list using the following filters:
- Current Analyst Ratings: 4.5 to 5 (Strong Buy). Considering analysts’ opinions is a good way to start looking for Dividend Kings to buy and hold forever. So, I’m only looking for the cream of the crop.
- Dividend Payout Ratio: 40% or less. The payout ratio shows how much the company takes from its earnings to pay its shareholders. The lower, the better here, so I set a hard cap at 40%.
- Annual Dividend Yield: Left blank so it will appear on the list.
I got four Dividend Kings that fit the criteria I set out, and then I rearranged them from highest to lowest based on yield. And so, we start with the top one:
Becton Dickinson and Company (BDX)
Becton, Dickinson, and Company, or BD, is a global medical technology company specializing in developing, manufacturing, and selling medical devices, instrument systems, and reagents. The company operates in the following segments:
- BD Medical: Produces devices for medication delivery, diabetes care, and surgical procedures.
- BD Life Sciences: Provides diagnostic systems, including instruments and reagents for clinical laboratories and research.
- BD Biosciences: Offers tools for cell analysis and research applications.
BDX tops this list with a $3.80 annual dividend, reflecting a 1.59% yield based on the stock's current trading price. It also has a low 29.26% payout ratio, giving it much room for dividend growth and thus making it a very attractive long-term buy for income investors. If BDX increases its dividends this coming November (which I have no reason to doubt), it will be its 53rd year of consistent increases.
It also has a 4.71 strong buy average score based on 17 analysts and a high target price of $312. That’s a 31% upside.
Tennant Company (TNC)
Tennant Company primarily manufactures cleaning equipment and solutions for its commercial and industrial floor care products. It has an extensive global sales, operations, and field service network, directly selling in 15 countries and distributing products in 100 more. Tennant Company is also known for its innovative approach to product development; it is now enhancing its AI-driven robot cleaners through a partnership with autonomous tech company Brain Corp.
TNC stock has a strong buy rating, an average score of 4.50, and a high target price of $150. Based on the stock's current trading price, that’s an impressive 66% potential upside.
As for dividends, the company pays $1.12 annually, reflecting a 1.24% yield. It also has the lowest dividend payout ratio on this list, at 15.83%, meaning there's lots of room for dividend growth. Tennant Company also has a solid 80-year streak of paying dividends, of which the last 52 consistently increased.
Parker-Hannifin Corp (PH)
Parker-Hannifin, better known as Parker, is a global leader in motion and control technologies. It specializes in designing, manufacturing, and distributing engineered components and systems. The company's products cover various industries, including hydraulic and pneumatic systems, filtration systems, sealing and shielding technologies, and electromechanical systems.
PH stock is tied for first place, with BDX, for the highest analyst score on this list, at 4.71. The strong buy recommendation has a 31% upside potential based on its high target price of $820.
Parker-Hannifin also has the longest dividend increase streak on this list, at 68 years. Its current quarterly payout is $1.63, or $6.52 annually. Based on PH stock's current trading prices, it translates to a 1.04% yield.
Final Thoughts
Dividend Kings can be the foundation of your long-term or retirement portfolio. The only thing left is choosing the right ones, and I hope these three companies can help you start on the path to a fruitful, income-driven investment experience.
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.
