What Are Dividend Kings and Why Should You Own Them?

If you thought this was going to be a Game of Thrones rant about the night king, sorry but it’s not. Let’s talk dividend kings.

Dividend investing is an investing strategy that many individuals use to exponentially grow their investing accounts over time. While there are numerous publicly traded companies offer dividends to their shareholders, only a short list are considered elite dividend paying stocks, they are called “Dividend Kings.”

A dividend is the distribution of a portion of a Company’s earnings to its shareholders on a monthly, quarterly or annual basis.

Investors see dividend investing as a beneficial way to invest, because on top of earning money for the increase in stock price, you also receive money throughout the year just for owning stock. Not bad! 

This is an effective way of investing because of compounding.

When you purchase a dividend paying stock and reinvest the dividends, you take the dividend you receive and purchase more shares with the dividend money. That will increase your base in the stock, which will then earn more dividends. 

It’s what we can the “Snowball Effect” and it can lead to massive gains.

Look at the price below of $O stock price from before 2000-2016. The blue line shows the overall price change in the stock, but the orange line is the total change in your investment after reinvesting dividends.

$O over the last 20+ years. By reinvesting dividends, you would have earned nearly 3,000% more on your investment than if you opted not to reinvest.

Almost a 3,000% increase! 

That’s the power of dividend investing.

Now let’s talk a little bit about what are dividend kings and why you should own them.

Dividend Kings

As we spoke about above, dividend paying stocks can be incredibly valuable for investors to own when it comes to long term growth. 

One of the biggest issues with this strategy is that often Companies cut their dividends.

Right now in 2020, we’re going through quite the whirlwind with COVID-19, which has led to Companies cutting their dividend payments to shareholders. Unfortunately, there isn’t much we can do about it as shareholders.

One thing we can do is buy Dividend Kings.

Dividend Kings are Companies that have increased their dividend payout for the last 50 years. 

In a world where Companies are cutting dividends left and right to save their businesses, knowing that a Company truly values paying out dividends to shareholders is irreplaceable. 

50 straight years. 

Insane!

Think about the events that have occured over the last 50 years…

  • Seven recessions since 1967 (8 if you consider 2020)
  • The Vietnam War
  • The oil crisis of the 1970’s
  • Double digit interest rates in the 1980’s
  • 9/11 in 2001
  • The Dot-Com Bubble in 2000
  • The Great Recession and housing bubble in 2007-2008
  • COVID-19

There are a total of 28 stocks that make up the Dividend Kings list. Through all of those historically terrible events, they have stayed strong and paid dividends to their shareholders. 

You can’t beat that.

Dividend Aristocrats

Before we get into the Dividend Kings list, Dividend Aristocrats are Companies that have increased dividends over the last 25 years. Also a prestigious list of stocks, but for the purpose of this post, let’s get back to the Kings.

The Kings

Company NameTickerSectorYears Dividend Increased
ABM Industries Inc.ABMIndustrials52
American States WaterAWRUtilities 65
Commerce BancsharesCBSHFinancials51
Cincinnati FinancialCINFFinancials59
Colgate-Palmolive Co.CLConsumer Staples57
California Water ServiceCWTUtilities 52
Dover Corp.DOVIndustrials64
Emerson ElectricEMRIndustrials63
Farmers & Merchants BancorpFMCBFinancials55
Federal Realty Inv. TrustFRTReal Estate52
H.B. Fuller CompanyFULMaterials50
Genuine Parts Co.GPCConsumer Discretionary63
Hormel Foods Corp.HRLConsumer Staples54
Johnson & JohnsonJNJHealth Care57
Coca-Cola CompanyKOConsumer Staples57
Lancaster Colony CorpLANCConsumer Staples57
Lowe’s CompaniesLOWConsumer Discretionary57
3M CompanyMMMIndustrials61
Altria Group Inc.MOConsumer Staples50
Nordson CorpNDSNIndustrials56
Northwest Natural GasNWNUtilities 64
Procter & Gamble Co.PGConsumer Staples63
Parker-Hannifin CorpPHIndustrials63
Stepan CompanySCLMaterials52
SJW CorpSJWUtilities 51
Stanley Black & DeckerSWKIndustrials52
Sysco Corp.SYYConsumer Staples50
Tootsie Roll IndustriesTRConsumer Staples53

There they are! The Kings.

Don’t Blindly Buy

I want to mention, just because these stocks have paid a reliable dividend over the last 50 years, it does not mean go buy them. 

They might not fit in with your investing personality and may not be a right fit for your portfolio.

Make sure to do your research on these Kings if you are interested in buying them.

New to Investing?

If you are new to investing and want to know the benefits of starting today, read our recent blog post.

Starting early will put you out ahead of the competition in the long run.

Good luck, King.

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