The longer the market remains noisy, the more attractive companies appear.
This is especially true when those companies have increased their dividends for more than 50 consecutive years, a consistency rare in any market. Rarer still are those that also generate strong payouts, healthy revenue growth, and outstanding long-term profits. Those are the names I wanted to focus on here today: three notable dividend kings.
Using Barchart’s Stock Screener, I selected the following filters to get my list:
% Annual Dividend Yield (FWD): It was left blank so it could be sorted later from largest to smallest.
5-year percentage change: Greater than 50%. I look for stocks with more than 50% increase in the last 5 years.
5-year dividend growth (%): Above 20%. Companies with dividend increases from “High” to “Very High”.
5-year revenue growth (%): Above 30%. I am looking for companies with “Very High” income in the last 5 years.
Current Analyst Rating: “Moderate” to “strong” buy.
Number of analysts: 12 or higher. The more the better.
Dividend investing ideas: Dividend kings.
I ran the screen and got exactly three results, and I’ll cover each one, starting with AbbVie, which has the highest annual forward dividend yield.
AbbVie Inc. is a biopharmaceutical company that develops medicines for complex and long-term health conditions in immunology, oncology, neuroscience and aesthetics. It is also advancing in oncology: recent phase 2 data from ELAHERE show encouraging results in platinum-sensitive ovarian cancer.
In its most recent quarterly financial statements, the company reported that sales increased 10% year over year to $16.6 billion. Net income also rose more than 8.3% to $1.8 billion, after recovering from a net loss last year. Revenue also increased by 33.53% in the last 5 years.
Additionally, AbbVie pays a dividend of $6.92 per year per share, which translates to a yield of around 3.3%, the highest on this list. It also has five-year dividend growth of 40%, while the stock gained 87% over the same period.
With that, a consensus among 31 analysts rates the stock as a “Moderate Buy.” Finally, a high price target suggests there is upside potential of up to 43% over the next year.
The next dividend king on my list is Nucor Corp, one of North America’s largest steel producers, supplying steel and steel products used in construction, infrastructure, manufacturing and energy. That reach remains important as energy security attracts more attention, with Nucor providing steel for projects such as oil pipelines and other energy-related construction.
The company’s latest quarterly financial results reported that sales increased 8.6% year-over-year to $7.7 billion, while net income grew 32% to $378 million. It also boasts 61% five-year revenue growth, which has helped Nucor increase its dividend for 53 consecutive years. For investors, it means a payout of $2.24 per share per year, with a current yield of about 1.2%. Its dividends have also increased 37% over the past five years, while the stock has risen 146% over the same period.
Wall Street seems to like Nucor’s track record, as a consensus among 15 analysts rates the stock a “Strong Buy.” Based on mid-to-high price targets, that points to roughly 1% to 17% upside potential. It’s also worth noting that the price target has increased from $210 to $225 in recent days.
The last dividend king on my list is Parker-Hannifin Corp, a global manufacturer of motion and control technologies used in the industrial, aerospace and transportation markets. Its products help manage the movement of fluids, gases and mechanical systems, and that aerospace presence was recently reflected in a new EASA approval for improved rotor bearings used in several Airbus helicopter models.
In its recent quarterly financial results, the company reported that sales increased 9.1% to 5.2 billion. However, net income declined 11% to $845 million, primarily because the prior-year quarter included a one-time after-tax gain on divestitures, making this year’s comparison look weaker. Still, Parker’s revenue has increased 45% over the past five years.
This continued growth is reflected in its dividends, which have increased for 69 consecutive years. The company pays $7.20 per share per year, with a yield of about 0.73%. This dividend rate has grown 90% over the last five years, while the stock has risen 200% over the same period.
Additionally, a consensus of 25 analysts rates the stock as a “Strong Buy,” while mid-to-high price targets imply 8% to 22% upside potential over the next year.
These three dividend kings prove that a boring long-term dividend investing strategy can be rewarding for those with patience. Companies with a strong history of high percentage growth, dividend growth, and revenue growth are often pointed in the right direction.
And while that doesn’t guarantee success, these stocks, which survived a brutal screen, could be among the best additions to an income-focused investor’s portfolio and may be better positioned to weather market headwinds, including those we’re experiencing today.
As of the date of publication, Rick Orford had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
