During the last half-century, certain companies that seemed irreplaceable were ultimately replaced by new and better things. These companies—Kodak, Blockbuster, Polaroid, PanAM, all veritable behemoths in their sectors—sank to the ground, with their names now object lessons on how not to run a business.
The point I’m trying to make is that it’s hard to keep up with change. It's no joke for a company to stay afloat through the biggest technological revolution in human history AND continuously reward its investors with ever-increasing dividend payouts. That’s exactly what Dividend Kings do; however, they come at a cost. These companies usually trade at premium prices. So, to maximize your yields and capital appreciation, let’s check out Dividend Kings trading near their 52-week lows.
How I Screened For The Following Stocks
For this analysis, I used Barchart’s Watchlist feature (which I pre-populated with the reigning Dividend Kings today). From there, I clicked on Screen and then added the following filters:
- Current Analyst Ratings: I set this to 4.5 and above, which translates to a strong buy recommendation from analysts. I want the best of the best here.
- Percent From Low: This filter is very versatile (much like the rest of Barchart’s Stock Screener Tool), as you can use it to screen for stocks from 5 days to 20 years of price data. In this example, I set the filter to look for Dividend Kings trading within 20% of their 52-week or 1-year low.
- Annual Dividend Yield: As usual, I left this blank so I can sort through the results with it.
After hitting “See results,” only three companies out of more than 50 fit the bill.
Now, I'll discuss what these three Dividend Kings have that entice analysts and investors alike, starting from the one with the highest yield:
Middlesex Water Company (MSEX)
Middlesex Water Company is a water utility company that provides services in New Jersey and Delaware. It collects, treats, distributes, and sells water for domestic, commercial, industrial, and fire protection purposes. It also provides technical and management services to government entities, real estate developers, and small water systems owners.
The company’s FY’23 report came in mixed. While revenue was up, $166.3 million compared to FY’22’s $162.4 million, higher operating expenses and interest charges took a big bite out of the growth. As a result, basic EPS dropped from $2.40 to $1.77 for the full year. Perhaps this is why the company saw a recent sell-off and is now trading 17.53% away from its 52-week low.
Still, MSEX stock tops my list for more than one reason. It is the highest-rated stock in the results, with a perfect 5 or strong buy rating. It is also the highest-yielding company on the list, with a $1.30 forward dividend, translating to a 2.43% yield. Not only that, Middlesex Water Co celebrated its 50th year of consecutive dividend increases in late July 2023. This year will mark its 51st.
Abbott Laboratories (ABT)
Abbott Laboratories is one of the biggest names in healthcare. The company develops, manufactures, and sells various products, including medical and diagnostic devices and nutritional products for children and adults.
As a Dividend King, Abbott Labs has a lot going for it: 52 years of consecutive increases, an unbroken chain of 399 quarterly dividend payouts, and a $2.20 forward annual dividend that translates to a 2.1% yield.
Like many healthcare companies, Abbott saw a slight decline in FY’23 revenue due to COVID-related sales tapering off. Yet, its underlying business sales still increased by 11.6% that year. Net earnings also decreased by 17.5%, so it's no surprise Abbot had a tough year. That said, ABT stock is currently trading at 15.08% from its 52-week low. Not only that, but it has an average 4.50 strong buy rating from 14 analysts.
Becton Dickinson And Company (BDX)
A top medical technology firm, Becton Dickinson And Company, closes out my list of top-rated Dividend Kings trading near their 1-year lows. The company sells medical devices, hospital equipment, and various chemical and reagents for laboratories.
BD has raised its dividends for 52 consecutive years, with its latest increase bringing the annual rate to $3.80, translating to a 1.65% yield. BD’s FY’23 revenue increased by 2.7%; however, its bottom line decreased by 16.2%. BDX stock recently sank, and today it trades only 2.34% away from its most recent 52-week low. This gives investors a chance to buy the stock at a massive discount. Analysts would seem to agree, rating it an average 4.56, or a strong buy.
Final Thoughts
Bottom-picking established companies like Dividend Kings is less risky than bottom-picking in emerging, high-growth sectors. If their business processes are intact and they’re not hemorrhaging money, it’s only a matter of time before they bounce back. The key is to be sure to be ready before the market follows suit.
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.
