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Dividend Kings List 2023: The Most Elite Group of Dividend-Paying Stocks

A publicly listed business that distributes its profits to shareholders in the form of dividends, usually on a quarterly basis, is known as a dividend stock. For investors seeking a long-term wealth-growth plan or a consistent income (even during a bad market), dividend-paying companies may be an alluring choice.

Generally speaking, stable dividend payers are well-established, continuously successful businesses. The dividend kings are the corporations that best represent these characteristics: a select set of equities with dividend increases spanning at least 50 years.

That’s a significant accomplishment given that these companies have raised and paid dividends during seven recessions, an oil embargo (1973–1974), double-digit interest rates during the 1980s, Black Monday (1987), 9/11, the dot-com bubble (1999–2000), the 2008 financial crisis, the 2020 coronavirus crash, and more in just the last 50 years alone.

What you need to know about dividend kings if you’re looking for long-term investments is provided here.

Dividend Kings List 2023

A select set of equities known as “dividend kings” have raised their dividends annually for at least 50 years running. It should come as no surprise that very few businesses ever meet this standard. In 2023, 50 out of the over 4,000 public firms in the U.S. are selected.

This is the list we created using data from a variety of sources, which includes the name, ticker symbol, market capitalization, dividend yield, and length of “winning” streak for each company:

Dividend kings’ return on investment

Historically, companies that have maintained a steady dividend growth rate have outperformed the overall market.

RMB Capital reported that from 1972 to 2018, dividend kings generated an average annual return of 9.62%, while non-dividend payers only generated a return of 2.40%. The equal-weighted S&P 500 index had an average return of 7.30% at the same period.

However, not every investor will find dividend kings to be a wise choice. At any given moment, certain dividend kings will be overpriced and others will be undervalued. Make sure the firm fits your criteria in terms of market size, price-to-earnings (P/E) ratio, earnings per share (EPS), dividend yield, and other investment characteristics before investing in a dividend king just because it’s on an exclusive list of companies.

How to invest in a dividend king

Dividend kings are publicly traded companies, so you can buy and sell them just like any other stock through your online broker, robo-advisor, or financial advisor:

  • Online brokers that allow customers to make their own purchasing and selling decisions, like TradeStation, J.P. Morgan, and Axos, are perfect for independent investors and traders. A wide range of investments, minimal charges and costs, and an easy-to-use interface for finding, making, and maintaining transactions are characteristics of the top online brokers.
  • Automated systems known as robo-advisors, like M1 Finance, employ computer algorithms to create an investing portfolio (often a collection of exchange-traded funds, or ETFs) according to your objectives, risk tolerance, and other preferences. A variety of investment alternatives and affordable portfolio management costs are features of the top robo-advisors.
  • Financial advisers help with a range of financial issues, such as budgeting, estate planning, retirement planning, investments, and more. Financial advisers are more expensive than robo-advisors since they are actual beings rather than machines. To assist you in achieving your entire financial objectives, many use a holistic strategy that addresses a variety of financial issues. You may locate and evaluate the best verified financial advisers in your region with the aid of SmartAdvisor by SmartAsset.

ETFs and mutual funds that carry some of the dividend kings are another way for you to indirectly invest in dividend kings. A few ETFs, including the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), concentrate on dividend aristocrats; however, no ETF is devoted to the dividend kings. Youtube Link

Sector & market capitalization distribution

Sixty-four per cent of dividend kings are in two sectors: consumer goods and industrials. Of them, fifteen make the coveted list. In addition, there is one company each for the energy, materials, and real estate sectors, seven utilities, four financials, and four healthcare stocks.

The total value of a company’s stock shares is referred to as its market capitalization, or market cap. It is computed by multiplying the market value of a stock by the total quantity of shares that are outstanding. A corporation with 10 million shares, for instance, selling for $100 each would have a $1 billion market capitalization. Three “sizes” are commonly used to categorize market caps:

  • A market cap of $10 billion or more is considered large-cap. These businesses usually have a track record of reliable dividend payments and growth.
  • A market valuation of $2 billion to $10 billion is referred to as mid-cap. These are often well-known businesses in sectors that are expanding quickly or are about to expand quickly.
  • Small-cap: having a market value between $2 billion and $300 million. These are usually startup businesses catering to developing sectors or niche markets.

Not unexpectedly, 29 corporations valued at $10 billion or more—nine of which are valued at or over $100 billion—make up more than half of the dividend kings. Six small-cap firms and fifteen mid-cap firms complete the list of the top 50 dividend kings for 2023.

What is survivorship bias?

Survivorship bias in finance occurs when you assess a portfolio’s performance by taking into account only the strong (or “surviving”) assets and leaving out any underperforming ones. The statistics can be distorted to exaggerate the return on a portfolio and draw too positive conclusions if the winners are the only ones examined and the losers are not.

Think about a hypothetical mutual fund business that manages four funds, for instance. Two funds shut with 5% losses, and two record 10% returns. The fund manager will display an average return of 10% if the performance of all four funds is shown. Nevertheless, the average return increases to 20%—an unnaturally high figure—if the management chooses to overlook the two losers.

By taking into account both the winners and the losers when assessing portfolios, you may steer clear of survivorship bias and wildly optimistic projections.

Dividend aristocrats vs. dividend kings

A corporation must have increased dividend distributions for at least 25 years (as opposed to 50 years for kings) and be included in the S&P 500, which is not a prerequisite for dividend kings, in order to be classified as an aristocrat. Dividend aristocrats also need to have a minimum $3 billion market capitalization and a minimum $5 million average daily trading value.

If dividend aristocrats experience 50 years of uninterrupted dividend increases, they may ultimately ascend to the status of dividend kings.

The performance of dividend aristocrats is monitored by the S&P 500 Dividend Aristocrats Index. Consumer staples (24%), industrials (22.8%), materials (12.2%), financials (10.7%), healthcare (10.5%), real estate (4.6%), utilities (4.6%), consumer discretionary (4.5%), information technology (3.3%), and energy (2.8%) are among the 66 firms that make up the index at the moment.

The index is rebalanced quarterly in January, April, July, and October. 

Durbeen Media: top-ranking dividend kings

Even among the best, there are distinctions. We reached out to several industry experts for further information. Here are seven of their favourite dividend kings right now (listed in alphabetical order).

1. AbbVie (ABBV)

With proven cures, pharmaceutical businesses enjoy highly stable revenues. The largest problem, according to Karl Farmer, CFA, V.P., portfolio manager at Rockland Trust, is creating new goods since existing ones lose their ability to command higher prices when their patents expire and generic versions are produced by other businesses. “AbbVie has done an outstanding job with this, and the dividend continues to grow.”

2. Colgate-Palmolive (CL)

According to Farmer, Colgate-Palmolive holds a dominant market share both domestically and internationally. “They have done a great job managing through the raw materials price swings of the past few years and are still growing sales through volumes and a bit of pricing.”

AskTraders.com stock market news writer and equities trader Sam Boughedda concurs. “Many of the everyday brands we use are owned by this multinational titan in consumer goods. In the past six months or so, investors have been interested in Hills Pet Nutrition, the company’s pet food division.

3. Johnson & Johnson (JNJ)

Several well-known trademarks in the globe are owned by Johnson & Johnson, including Aveeno, BAND-AID, Motrin, Neutrogena, Johnson’s Baby, and Tylenol. The firm has increased its dividend for more than 50 years. “Demand for the company’s diversified products is always strong, while it has an exemplary track record,” Boughedda states.

4. PepsiCo (PEP)

PepsiCo is a diverse, all-weather business, according to Jim Brown, CFA, MBA, senior portfolio manager, and research analyst at Buckingham Advisors. “The company boasts a snack food division that thrived during the challenging pandemic period that favoured at-home consumption—and a beverage unit that has benefited from increased fountain sales in dining and other establishments as consumers resumed away-from-home habits post-pandemic.”

Cornerstone Financial Services managing partner Daniel Milan is likewise optimistic about PepsiCo. “They have an attractive annual dividend yield of about 2.77% currently with a strong historical dividend growth rate of about 7.74%, which means the dividend doubles about every nine years,” Milan states. “In our opinion, dividend growth rate is as important as the dividend yield.”

5. S&P Global (SPGI)

S&P Global offers data, analytics, benchmarks, and independent ratings to global capital and commodity markets (S&P Dow Jones Indices, a part of S&P Global, maintains the S&P 500). The firm is one of just 25 S&P 500 companies that is a dividend king, having paid a dividend every year since 1937. Although S&P Global’s yield isn’t very high, according to Farmer, the business has outstanding margins and a stellar track record.

Boughedda has high hopes for S&P Global as well. “For fifty years running, the company that provides financial analytics and information has increased its dividend. In its industry, it has little competition and is a robust firm.”

6. Stanley Black & Decker (SWK)

Brands include Troy-Bilt, Black+Decker, Dewalt, Craftsman, and Stanley are well-known under the Stanley Black & Decker umbrella.

Farmer believes Stanley Black & Decker is now a solid investment. “The stock is off more than 50% in the last two years as it has fallen back to pre-pandemic levels.” According to the farmer, this year’s sales increase has been challenging since a lot of individuals chose to do DIY projects at home and spend more time there during the epidemic. “The current price weakness offers a nice entry point and a 3.6% yield.”

7. Walmart (WMT)

“Decades of offering low costs to its customers and, in turn, using volumes to negotiate prices with suppliers enabled this company to become what it is today,” Farmer explains. “Ninety per cent of everyone in the U.S. lives within 10 miles of a store, and its fulfilment and distribution network has enabled them to compete in an online world as well.”

Boughedda’s list of dividend kings to keep an eye on includes Walmart. “The company has a solid dividend track record that should continue to grow.”

Conclusion

Stocks of established businesses that have shown their value throughout time are known as dividend kings. A corporation must have provided growing dividends to its shareholders for at least 50 years in order to be granted that classification. Like any investment, though, you should make sure the firm you intend to invest in satisfies your requirements and has strong financials. If investing is not something you are interested in, have the time, or have expertise with, a robo-advisor or financial advisor can assist.

Frequently Asked Questions (FAQs)

Which dividend king pays the highest dividend?

Among the dividend kings in 2023, Altria has the highest dividend yield at 8.22%. The next four companies with the greatest dividend yields are Canadian Utilities (4.91%), 3M (5.84%), Universal (6.33%), and Leggett & Platt (5.80%).

When is the best time to invest in Dividend Kings?

Dividend stocks are an excellent choice in downturn markets since they are often less volatile than non-dividend payers. Still, if you have a well-diversified portfolio that aims to grow wealth, it might be prudent to include dividend equities at any time.

Do dividend kings always outperform the market?

Dividend kings tend to outperform the market over the long term. However, like most stocks, they can and do underperform the market.

What are the risks associated with investing in dividend kings?

Historically, dividend stocks have beaten the S&P 500 with lower volatility, which makes them a desirable choice for risk-averse investors, particularly those who are getting close to retirement. Dividend kings do carry some risk, just like any other investment.

For instance, corporations may decide to slash or stop paying dividends altogether from one quarter to the next. Moreover, dividend income is subject to taxation, which may push you into a higher tax band and raise your overall tax liability.

Dividend stocks may be impacted by interest rates. Treasury bills and CDs can make safer and better investments than equities during a period of high interest rates. However because dividend stocks usually yield higher returns than low-risk investments, they may be more alluring during periods of low interest rates. high-interest

How are dividends from dividend kings taxed?

Income from dividends is subject to taxation, with the tax rate varying based on whether the dividend is qualified or not. Nonqualified dividends are taxed like regular income, whereas qualified dividends are taxed at the lower long-term capital gains rate. You might not pay taxes on dividend income from dividend-paying stocks if they are in a retirement account or college savings plan since these accounts are either tax-free or tax-deferred.

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