Fifty years is a long time. For much of human history, it's been the average life expectancy. With modern technology and advanced medicine, we’ve increased those numbers significantly, though the fact remains that fifty years remains a big chunk of our lives.
Now, imagine you’re in your twenties, just starting out as an adult, concerned about your career and student debt. Or perhaps you're in your mid-50s, having never saved a dime for retirement. Regardless of your age, at some point, most of us are faced with choosing which investments we’d like to participate in. This is where Dividend Kings, quality companies who've paid consistent (and increasing) dividends, come in.
Dividend Kings are mature companies with reliable business models, strong revenue streams, significant market presence, and unquestionable dedication to providing shareholder value by increasing their dividends for at least the last 50 consecutive years.
Today, I'll look for the highest-yielding Dividend Kings poised to provide steady and increasing income for decades to come.
How I Came Up With The Following Stocks
For this analysis, I started and ended with Barchart’s Stock Screener functionality.
If an investor looks for the highest-yielding dividend kings today, they'll likely find Altria, Fortis, and Northwest Natural Gas being the answer. But that's so black and white.
How do we know if they are the most reliable? Is their dividend likely to be cut? And what do the analysts say? To answer these questions, we need to refine the search, and Barchart has you covered. In the screener, I added several filters to narrow down my search.
- Annual Dividend Yield: 3% or more. Usually, I like to keep this filter blank, but this time, I wanted to get higher-yielding Dividend Kings and balance it out with their payout ratios later.
- Current Analyst Rating: 3.5 (Moderate Buy) to 5 (Strong Buy).
- Dividend Payout Ratios: 60% or less. The payout ratio is the portion of a company’s after-tax earnings distributed as dividends to shareholders. Healthy payout ratios are typically around 50% to 60%, so I set mine to the upper limit.
- Watchlist: Dividend Kings. Barchart’s Stock Screener allows cross-functionality with its Watchlist feature, so I could pull up my Kings list with this filter. I could expand the search across any of my lists by clicking the check mark.
After running the screen, I found three stocks that fit the criteria.
I then arranged them from highest yield to lowest, and now I’ll discuss them in detail, starting with number one:
National Fuel Gas Company (NFG)
National Fuel Gas Company is a diversified energy company engaged in various sectors of the natural gas industry. The company operates through several business segments: Exploration and Production, Pipeline and Storage, Utility, and Energy Marketing. Its subsidiary, Seneca Resources, handles its exploration and production operations.
National Fuel Gas Company has increased its dividend for 54 years, which is impressive in itself. In addition, the company has been paying dividends for 122 years, marking it as a Dividend Zombie. Furthermore, NFG only has a 39.61% dividend payout ratio, meaning a) the company has a solid business model and financial management to keep the payout ratio while increasing dividends, and b) it has ample room for further increases. That’s the kind of reliability Dividend Kings bring.
National Fuel Gas' current annual dividend is $2.06, reflecting a 3.44% yield, while NFG stock has a moderate buy rating based on four analysts.
AbbVie Inc (ABBV)
It’s only fitting that AbbVie, one of the biggest pharmaceutical companies in the world, is on this list. Previously the research-based pharma manufacturing division of Abbott Laboratories, AbbVie was formed in 2013 and is now a powerhouse in developing, manufacturing, and marketing advanced therapies for complex and severe diseases.
AbbVie has increased dividends for 52 years (including when it was still part of Abbott) and has grown payouts by more than 285% since 2013. Its current annual payout is $6.20, reflecting a 3.19% yield, while its payout ratio is at a reasonable 56.47%.
ABBV stock has the highest analyst score on this list at 4.27, representing a moderate buy average rating based on 22 scores.
Johnson & Johnson (JNJ)
I’ve said before that an overwhelming number of people often have products made by Dividend Kings in their houses (or even in your room at the very moment you’re reading this article), and Johnson & Johnson is a perfect example of this.
J&J is one of the most diversified healthcare companies in the world, known for its commitment to improving health and well-being through a wide array of products and services. It operates in three main sectors: Pharmaceuticals, Medical Devices, and Consumer Health Products.
JNJ’s latest annual dividend is $4.96, which reflects a 3.1% yield and a dividend payout ratio of just 44.95%. With the 2024 dividend hike, the company has reached its 62nd consecutive increase.
Final Thoughts
Dividend Kings are prime candidates for long-term portfolios, though not all are created equal. So, maximize your tools and resources, look up important metrics like payout ratios, and keep an eye on Barchart.com so you don’t miss out on my next top three list.
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.
