It’s not easy for companies to reach Dividend King status: they need to pay increasing dividends for 50 years. To get there, however, the company would have to survive the tumultuous global economy changes, survive numerous recessions, change with the times regarding consumer requirements, increase its cash flow sources, expand its market, and keep increasing dividends.
Even after that, not all Dividend Kings were created equal. Some pay exorbitant dividends that eventually outstrip their income, leading to cuts and inevitable sell-offs. However, some Dividend Kings offer above-average dividends while maintaining a healthy balance sheet. So, today, we’ll look at three of the highest-yielding, buy-rated Dividend Kings.
How I Came Up With The Following Stocks
I started with this analysis by setting up a “quick, but effective” screen with the following filters on my stock screener:
- Current Analyst Ratings: 4 (Moderate Buy) to 5 (Strong Buy).
- Dividend Payout Ratio: 50% or less. The dividend payout ratio indicates how much the company spends on dividends based on their after-tax and expense earnings. A good rule of thumb is to look for companies with 35% to 50% dividend payout ratios, as it gives them ample headroom for either dividend increases or capital expenditures.
- Annual Dividend Yield: Left blank.
- Watchlist: Kings. Barchart’s Stock Screener feature allows cross-functionality with its Watchlist, allowing me to access all my watchlists and filter for stocks based on any of them.
With these filters set up, I initiated the search and got 15 results:
As you can see, Dividend Kings don't typically have high yields - especially not those that are buy-rated. I arranged the stocks based on the highest to lowest dividend yields by clicking the Div Yield(a) header.
Now, I’ll take the top three and discuss why they’re worth your attention.
Target Corp (TGT)
Target Corporation is a major American retail company and one of the largest discount retailers in the country. The company offers various products, including groceries, home goods, electronics, health products, etc. Target is also known for its clothing line and frequent collaboration with fashion designers worldwide. While its products are slightly more expensive than Walmart’s, Target customers like the brand for its higher-quality offerings at reasonable prices.
TGT’s stock price dropped after the company missed Q3 2024 earnings expectations and a diminished outlook. As of the time of writing, the stock is down to sub-$130 levels from its prior trading range of around $150 to $160.
While understandable, such sell-offs present income investors with a great opportunity to snag TGT stocks at a discount—very much in the company's spirit. The company currently pays $1.12 per share quarterly or $4.48 annually, with a relatively healthy 45.27% dividend payout ratio. Based on TGT stock's last trading price, this translates to an above-average 3.68% yield, and the stock retains a consensus moderate buy rating from analysts.
Sysco Corp (SYY)
Sysco Corporation is a leading global distributor of food products and related services for the food and hospitality industries. Its product offerings include fresh and frozen foods such as meat, seafood, dairy, produce, beverages, and bakery items. In addition to food products, the company supplies non-food items like kitchen equipment, cleaning supplies, and tableware. It caters to restaurants, healthcare facilities, educational institutions, hotels, and other food service establishments.
SYY stock pays $2.04 dividends annually, translating to a 2.71% yield. It also maintains a decent 46.06% dividend payout ratio. Meanwhile, analysts rate it a consensus moderate buy rating with an average score of 4.38.
PPG Industries (PPG)
PPG Industries manufactures and supplies paint and specialty coating materials, such as architectural paints, automotive refinishes, industrial coatings, protective and marine coatings, and adhesives and sealants.
The company has been operating since 1883, and today, PPG serves various markets, including aerospace, automotive, construction, consumer goods, and industrial. Its product offerings include
With a solid reputation, product lineup, quality track record, and dependable growth, PPG stock is a long-term hold for many investors.
Like the other two companies on this list, PPG’s stock price has seen better days; it’s currently trading at the $120 level after reaching $150 last year. Still, analysts maintain a moderate buy rating for the stock. Meanwhile, PPG stock pays 68 cents per share quarterly or $2.72 annually. Based on the stock’s current trading prices, this translates to a 2.21% yield.
Final Thoughts
Dividend Kings are the bread and butter of income investors. If you’re interested in adding them to your portfolio, considering these buy-rated, high-yield selections can significantly boost your income over the next few years.
