11 Dividend Stocks With 55 or More Years of Payout Growth
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Long-term income investors know that finding dividend stocks with decades of interrupted payments is only part of the winning formula for income investing. Dividend growth matters, too - which is exactly why investors cherish the Dividend Aristocrats.
Dividend Aristocrats are companies in the Standard & Poor's 500-stock index that have hiked their dividends every year for at least 25 consecutive years. Rising dividends naturally make these stocks more attractive to new income investors, and steady payout hikes reward existing investors with increasingly higher yields on their shares' original buy-in cost.
Most importantly, regular dividend hikes fuel the magic of compounding. Indeed, many of the best stocks of all time have long histories of dividend growth.
Since reliable dividend stocks with growing payouts can provide some comfort amid market uncertainty, we took a look at the 11 Dividend Aristocrats with the longest histories of annual dividend increases. After all, when a dividend stock manages to raise its payout through good times and bad, decade after decade, you know management is making its income-reliant shareholders a top priority.
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Illinois Tool WorksGetty Images
Market value: $48.1 billion
Dividend yield: 2.8%
Consecutive annual dividend increases: 55
Analysts' opinion: 3 buy, 0 overweight, 14 hold, 2 underweight, 4 sell
Illinois Tool Works (ITW, $145.66) - which makes construction products, car parts, restaurant equipment and more - dates back to 1912. Its dividend isn't much younger; the company started delivering regular payouts in 1933.
ITW operates in 57 countries and boasts more than 17,000 granted and pending patents. Its brands include the namesake Illinois Tool Works, as well as Stero dishwashers, ACME Packaging Systems and Miller welding equipment.
The company's most recent dividend hike was a 28% raise in August, to 88 cents per share. And investors can expect more improvements in the future, considering ITW sports a healthy payout ratio of 46.8%, which means it's paying out less than half its profits as dividends. When it made the dividend announcement, it also authorized new stock buybacks worth up to $3 billion.
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Colgate-PalmoliveGetty Images
Market value: $56.7 billion
Dividend yield: 2.6%
Consecutive annual dividend increases: 56
Analysts' opinion: 6 buy, 1 overweight, 15 hold, 0 underweight, 3 sell
Colgate-Palmolive (CL, $65.11) is a consumer-staples mainstay whose brands include Colgate dental products, Palmolive dish detergent, Speed Stick deodorant, Irish Spring soap and Murphy wood cleaners, not to mention several other brands that are popular in international markets.
In fact, the company derives the vast majority of its sales outside the U.S., though that has been a problem of late. A stronger dollar, stagnant demand in key overseas markets and higher input costs have been weighing on Colgate's results. That's among the reasons Kiplinger listed Colgate among 5 stocks to sell in 2019.
Still, Colgate's dividend - which dates back to 1985 and has increased annually for 56 years - should survive. The hikes themselves haven't been very generous of late, however. The company's most recent dividend raise, announced in mid-March, was just 2.4% to 43 cents per share. That follows a 5% bump in 2018. Still, its recession-proof products and decent yield may make CL worth a look once the company navigates its way out of its current quagmire.
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Johnson & JohnsonGetty Images
Market value: $368.7 billion
Dividend yield: 2.6%
Consecutive annual dividend increases: 56
Analysts' opinion: 7 buy, 1 overweight, 9 hold, 1 underweight, 0 sell
Johnson & Johnson (JNJ, $137.29), founded in 1886 and public since 1944, operates in several different segments of the health-care industry. Johnson & Johnson is best-known for over-the-counter consumer products such as Band-Aids, Bengay, Rolaids, Mylanta, Listerine and Tylenol. However, it also has a medical-device business, as well as pharmaceutical products such as autoimmune drug Remicade and anticoagulant Xarelto.
The consumer-products division has J&J embroiled in high-profile litigation over allegations that its iconic talcum powder is linked to cancer. But no matter how that turns out, it shouldn't affect those who count on JNJ's steady dividends over the long term. The health-care giant hiked its payout by 7.1% in April 2018, extending its streak of consecutive annual dividend increases to 56.
That should continue. Johnson & Johnson's payout ratio of 63% still gives it room to keep expanding its dividend, especially if it keeps improving its earnings. Analysts expect that to be the case, modelling 6.6% average annual profit growth over the next half-decade.
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Lowe'sGetty Images
Market value: $84.9 billion
Dividend yield: 1.9%
Consecutive annual dividend increases: 56
Analysts' opinion: 19 buy, 4 overweight, 10 hold, 0 underweight, 0 sell
When it comes to home improvement chains, Home Depot (HD), a member of the Dow Jones Industrial Average, gets all the glory. However, No. 2 rival Lowe's (LOW, $103.59) is the superior payout grower between these two DIY dividend stocks.
Give the steadily rising dividend at least some of the credit. Lowe's has paid a dividend every quarter since going public in 1961, and that dividend has increased annually for more than half a century. Lowe's most recent hike was a 17% jump to 48 cents per share, announced in June 2018. (For the record, Home Depot also is a longtime dividend payer, but its string of annual dividend increases dates back only to 2010.)
Analysts expect Lowe's to deliver average annual earnings growth of 16% for the next five years, according to Refinitiv, and that's thanks in part to changes meant to help expand profit margins. Morgan Stanley's Simeon Gutman, who has an "Overweight" rating on the stock, wrote in March that he is "gaining confidence in Lowe's path to higher margins via improved execution, stronger sales, and cost reduction."
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Coca-ColaGetty Images
Market value: $194.8 billion
Dividend yield: 3.5%
Consecutive annual dividend increases: 57
Analysts' opinion: 9 buy, 4 overweight, 12 hold, 0 underweight, 0 sell
Coca-Cola (KO, $45.53) has long been known for quenching consumers' thirst, but it's equally effective at quenching investors' thirst for income. The company has paid a quarterly dividend since 1920, and those regular income checks have increased annually for the past 57 years.
Coca-Cola's core business has been challenged for some time; the U.S. market for carbonated beverages has been on the decline for more than a decade, and a few cities are trying to curb sugar consumption by implementing soda taxes. However, Coca-Cola has responded by adding bottled water, fruit juices and teas to its product lineup. In addition to the namesake Coca-Cola brand, KO also sports names such as Minute Maid, Powerade, Simply Orange and Vitaminwater.
And in January, Coca-Cola completed the acquisition of Costa Limited, which owns the popular Costa Coffee brand that operates in more than 30 countries.
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