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Dividend Kings are a select group of Wall Street companies that have increased their dividends for at least 50 consecutive years.
In this article, we’ll take a closer look at the criteria for deeming a company a Dividend King, how it compares to Dividend Aristocrats, and why it’s worth considering in your investment portfolio.
What is a Dividend King?
Dividend Kings are the pinnacle of dividend-paying companies. These companies have consistently increased their dividends every year for at least half a century and have demonstrated financial strength and durability in the face of economic downturns and market challenges. In 2024, there were 53 companies that achieved the status of Dividend Kings.
The criteria for becoming a Dividend King
The main factor in being classified as a Dividend King is a track record of consistently increasing dividends for at least 50 consecutive years, which not only demonstrates a company’s commitment to delivering shareholder value, but also demonstrates the company’s ability to adapt and thrive over the long term.
Dividend Kings vs. Dividend Aristocrats
Dividend Kings and Dividend Aristocrats are both coveted groups of companies known for consistently increasing their dividends over the years, but there are notable differences.
Dividend Aristocrats must meet certain criteria, such as increasing dividends for at least 25 years and being a component of the S&P 500 index, while Dividend Kings must have increased dividends for 50 consecutive years and there are no requirements regarding being an S&P 500 component or market capitalization.
While both categories offer investors a certain degree of reliability and the potential for steady income, Dividend Kings may give investors the impression of even greater stability because of their longer track records.
Dividend Kings 2024 List
There are just 53 Dividend Kings for 2024. Many of the company names may be unfamiliar to you, despite having long histories of attractive dividends.
Here are the Dividend Kings stocks with the top 10 dividend yields as of June 2024.
- Altria Group (MO): 8.4%
- Universal Corporation (UVV): 6.8 percent
- Canadian Utilities (CDUAF): 6 percent
- Northwest Natural Gas Holdings (NWN): 5.5%
- Black Hills Corporation (BKH): 4.9%
- United Bankshares (UBSI): 4.7 percent
- Fortis (FTS): 4.5%
- Federal Real Estate Investment Trust (FRT): 4.4 percent
- Kenview (KVUE): 4.3 percent
- Stanley Black & Decker (SWK): 4 percent
These companies represent a wide range of industries, demonstrating that consistent dividend growth can be achieved across a variety of sectors.
Changes to the Dividend Kings list for 2024
The 2024 Dividend Kings list includes several new entrants, including Archer Daniels Midland (ADM), Consolidated Edison (ED), Fortis (FTS), Kenview (KVUE), and United Bankshares (UBSI). But the list also includes two former dividend kings, Leggett & Platt and 3M, who were forced to cut their dividends.
How to invest in dividend stocks
Dividend yields are attractive, but successful stock investing requires thorough research. You need to analyze a variety of factors, including the industry, the company’s competitive position, and financial condition.
Investors can choose dividend stocks that will provide a steady income now, or they can focus on companies with a track record of growing dividends over the long term. These growth-oriented stocks may offer lower yields initially, but over the long term, dividends can grow significantly — sometimes by 9 to 10 percent over a number of years.
Dividend stocks are also considered one of the best compounding investments. Not only do the underlying assets continue to grow in value while paying dividends, but you can also expect compound growth if you reinvest the dividends.
Many companies pay dividends quarterly. The board of directors announces the dividend through a press release or filing with the SEC. The dividend is then deposited directly into your brokerage account.
On the ex-dividend date, the stock price typically falls by the amount of the dividend to reflect that new buyers will not receive the dividend. The dividend itself is deposited into your account on a separate payment date, which may be days or weeks later.
Dividends you receive are generally taxable income, even if you reinvest them in the same investment. However, if you hold the investment in a tax-advantaged account, such as an IRA or 401(k), the dividends grow tax-deferred.
Should you invest in Dividend Kings stocks?
Dividend kings can form an important part of a diversified investment portfolio. Dividend stocks are generally considered to be one of the best long-term investments. Dividend kings are particularly mature, relatively stable companies with long histories of consistently growing dividends and strong business models that have stood the test of time.
But like any investment, Dividend Kings are not without risk.
Although these companies have strong track records, future performance is not guaranteed. After all, economic downturns or changing industry trends could affect a company’s ability to maintain dividend growth. Investors should always conduct their own due diligence before making any investment decisions.
Ultimately, Dividend Kings should be balanced with other investments in a diversified portfolio to mitigate risk.
Conclusion
The Dividend Kings are an elite group of companies known for their impressive track record of dividend growth over 50 years. These stocks provide a steady stream of income and serve as building blocks for a balanced investment portfolio. Remember, past performance is no guarantee of future results and all investments involve risk. However, with a well-informed and balanced approach, the Dividend Kings can be a beneficial addition to your investment portfolio.
Editorial Disclaimer: All investors are advised to conduct their own independent research into any investment strategy before making any investment decision, and please note that past performance of any investment product is no guarantee of future price appreciation.
