In the vast realm of dividend stocks, investors who buy stocks for income have likely heard of the Dividend Aristocrats. This is a select group of companies in the S&P 500 that have raised their dividend payouts for the past 25 years.
The Dividend Aristocrats typically have strong brands, and generate steady profits each year.
But what if I told you there was an even more exclusive group of stocks, which have raised their dividends twice as long? Meet the Dividend Kings. These are companies that have increased their dividends for the past 50 consecutive years or more.
The following three stocks are Dividend Kings, with above-average dividend yields. Each of these Dividend Kings is likely to continue raising dividends each year for a long time to come, making them excellent additions to an income-oriented portfolio.
The Coca-Cola Co. (NYSE: KO)
Coca-Cola needs no introduction. It is a consumer products giant. Coca-Cola has a huge product portfolio. Most of its sales come from its sparkling beverages like Coca-Cola, Diet Coke and Sprite.
But the company has also made moves in recent years to expand its product offerings beyond soda. Coca-Cola now has a large portfolio of stills beverages, like water, juices, and teas. In all, the company has 20 brands that generate at least $1 billion in revenue each year.
This is the perfect time to adopt this strategy, since U.S. soda consumption has fallen each year for the past decade.
Fortunately, Coca-Cola’s growth investments are paying off. Coca-Cola’s currency-neutral revenue grew 3% in 2016. Its earnings-per-share, adjusted for non-recurring items, increased 5% in 2016.
Coca-Cola holds the fourth-most valuable brand in the world, which leads to great consistency over time and makes it one of the most visible Dividend Kings. The stock has a 3.5% dividend yield, and the company recently increased its dividend by 6%, marking the 55th consecutive annual hike.
Johnson & Johnson (NYSE: JNJ)
J&J is a global health-care giant. Its huge, diversified business is spread across pharmaceuticals, medical devices and consumer health products. The company has operations in more than 60 countries and employs more than 125,000 people worldwide.
This has led to remarkable stability: J&J has racked up 32 consecutive years of adjusted earnings growth. In 2016, J&J’s total operating revenue increased 2.3%, due to 2.6% domestic growth and 1.9% growth in the international markets. Adjusted earnings per share increased 8.5% last year.
J&J has many large, durable brands. For example, its consumer health-care business includes the Band-Aid, Listerine and Neutrogena brands. In all, the company has 11 individual consumer health-care businesses that generate $1 billion or more in annual revenue.
The company has a long runway of growth up ahead, thanks largely to aging populations in developed markets like the U.S., which will likely result in higher demand for health care going forward. And, J&J has a very strong balance sheet. It is actually one of only two U.S. companies to have a ‘AAA’ credit rating from Standard & Poor’s.
J&J has increased its dividend each year for the past 54 years, making it one of the Dividend Kings. The stock currently offers a solid 2.6% dividend yield.
Genuine Parts Co. (NYSE: GPC)
Investors may not immediately recognize Genuine Parts by name, but it is very likely you have heard of its key brands. Genuine Parts is an automotive replacement parts company. Its biggest segment is the NAPA brand, which is the largest automotive parts network in North America.
Genuine Parts has three other businesses, which are industrial parts, office products, and electronics materials. It has either the No. 1 or No. 2 industry position across all of its core categories.
The company recently increased its dividend by 3%. Even more impressive, Genuine Parts has increased its dividend for 61 years in a row, making it one of our Dividend Kings. There should be plenty of growth opportunities for the company going forward, thanks to shifts in consumer habits.
Specifically, Americans are holding onto their cars for much longer than previous generations did. Instead of buying new cars every few years, consumers are using aftermarket parts to make minor repairs, and are driving far more miles.
In 2016, Genuine Parts’ revenue rose 0.4%. The company has increased its total sales in 64 out of the past 67 years.
For 2017, management expects 3% to 4% revenue growth. Diluted earnings per share are expected to be $4.70 to $4.80, which would represent 2.4% to 4.6% growth.
Genuine Parts stock has a 2.8% dividend yield.