Dividend Kings You Can Count on in 2023

Yield isn't everything when it comes to finding the best dividend stocks. Income investors know there's no substitute for regular dividend increases over the long haul, notes Dan Burrows, Kiplinger.com.

“The best dividend stocks are companies that raise their payouts like clockwork decade after decade – can produce superior total returns (price plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with.

That's because regular dividend increases lift the yield on an investor's original cost basis. Stick around long enough, and the modest yield you received on your initial investment can hit double digits one day.” Dividend Kings are a rare group of publicly traded companies that have increased their annual dividend payout for a minimum of 50 years.

These Dividend Kings are a great place to start if you're looking to add dividend battleships to your long-term portfolios, says Burrows.

Archer Daniels Midland

Consecutive annual dividend increases: 50

Archer Daniels Midland (ADM) processes ingredients for food and feed, including corn sweeteners, starches and emulsifiers such as lecithin. It also has a commodity trading business. It's a truly global agricultural powerhouse, too, boasting customers in 200 countries served by more than 800 facilities.

Archer Daniels Midland has paid out dividends on an uninterrupted basis for 89 years. The most recent hike came in January 2023, when ADM increased the quarterly payout by 12.5% to 45 cents a share. The move extended the dividend stock's streak of annual raises to 50 years.

S&P Global

Consecutive annual dividend increases: 50

Formerly known as McGraw Hill Financial, S&P Global (SPGI) is the company behind S&P Global Ratings, S&P Global Market Intelligence and S&P Global Platts. Although most investors probably know it for its majority stake in S&P Dow Jones Indices – which maintains the benchmark S&P 500 index and the blue-chip Dow Jones Industrial Average – it's also a central player in corporate and financial analytics, information and research.

S&P Global has paid a dividend each year since 1937 and has increased its disbursement annually for nearly half a century. Most recently, in January 2023, SPGI raised its quarterly payout by a healthy 5.9% to 90 cents a share. The company generated levered free cash flow of $3.9 billion for the 12 months ended Sept. 30, 2022. That was after paying out $935 million in dividends.

Nucor

Consecutive annual dividend increases: 50

Nucor (NUE) is the largest U.S. steelmaker, but it's perhaps even more well known for its almost unrivaled commitment to dividend growth. As one of the best dividend stocks, Nucor has increased its dividend for 50 straight years, or every year since it began paying dividends in 1973.

The most recent increase came in December 2022 when NUE lifted the quarterly disbursement by 2% to 51 cents per share. Nucor returns an average of about $480 million in cash to shareholders in dividends alone, year in and year out.

PepsiCo

Consecutive annual dividend increases: 51

Not too long ago, investors fretted over a long-term slide in sales of carbonated beverages, but that turned out not to be a secular trend after all. Indeed, Grand View Research forecasts the global market for fizzy drinks to produce a compound annual growth rate of 4.7% through 2028.

Besides, PepsiCo (PEP) has an ace up its sleeve with its snacks business. The company's Frito-Lay division is known for Doritos, Tostitos, Rold Gold pretzels, and numerous other brands. Meanwhile, demand for salty snacks remains solid. The bottom line? PEP's business remains fundamentally strong, and that should keep its dividend-growth streak intact.

The bottom line? PEP's business remains fundamentally strong, and that should keep its dividend-growth streak intact. PepsiCo declared its 51st straight annual increase in February 2023 with a 10% bump in the annnualized dividend to $5.06 per share.

Kimberly-Clark

Consecutive annual dividend increases: 51

Kimberly-Clark's (KMB) well-known brands include Huggies diapers, Scott paper towels and Kleenex tissues. Like other makers of consumer staples, Kimberly-Clark holds out the promise of delivering slow but steady growth along with a healthy dividend to drive total returns.

Kimberly-Clark has raised the annual payout for 51 consecutive years. In January 2023, the board of directors approved a 1.7% increase in the quarterly dividend to $1.18 a share. KMB generated $1.9 billion in levered free cash flow for the 12 months ended Dec. 31, 2022. That's after paying out a total of $1.6 billion in dividends.

The current dividend yield for Kimberly-Clark as of February 17, 2023 is 3.71%.

Abbott Laboratories

Consecutive annual dividend increases: 51

Abbott Laboratories (ABT) manufactures a wide variety of healthcare goods, Its portfolio includes branded generic drugs, medical devices, nutrition and diagnostic products. Some of its best-known products include Similac infant formulas, Glucerna diabetes management products and i-Stat diagnostics devices.

Abbott Labs dates all the way back to 1888. It first paid a dividend in 1924 and its dividend growth streak is long-lived too, at 50 years and counting. The last payout hike came in December 2022 – an 8.5% increase to 51 cents per share quarterly.

Becton Dickinson

Consecutive annual dividend increases: 51

Medical devices maker Becton Dickinson (BDX) has bulked up quite a bit over the past few years. In 2015, it acquired CareFusion, a complementary player in the same industry. Then in 2017, it struck a $24 billion deal for fellow Dividend Aristocrat C.R. Bard, another medical products company with a strong position in treatments for infectious diseases.

As a result of all that M&A, BDX boasts a highly diversified portfolio of products – and the ample free cash flow needed to support continued dividend growth. BDX last raised its payout in November 2022 with a 4.6% raise to the quarterly dividend to 91 cents a share.

AbbVie

Consecutive annual dividend increases: 51

AbbVie (ABBV) is one of the highest yielders on this list of the best payout-improving dividend stocks. The pharmaceutical company was spun off from fellow Dividend Aristocrat Abbott Laboratories in 2013.

Including its time as part of Abbott, AbbVie has upped its annual distribution for 51 consecutive years. The most recent hike – an 5% increase to the quarterly payment to $1.48 per share – was declared in October 2022. ABBV currently pays a dividend of $5.92, a 3.92% dividend yield.

The company's best-selling treatments include Humira: a rheumatoid arthritis drug that has been approved for numerous other ailments, and that appears is on pace to surpass Lipitor as the best-selling drug of all time. AbbVie also makes cancer drug Imbruvica, as well as testosterone replacement therapy AndroGel.

Illinois Tool Works

Consecutive annual dividend increases: 51

Founded in 1912, Illinois Tool Works (ITW) makes construction products, car parts, restaurant equipment and more. While ITW sells many products under its namesake brand, it also operates businesses including Foster Refrigerators, ACME Packaging Systems and the Wolf Range Company.

In August 2022, Illinois Tool Works raised its quarterly dividend by 7% to $1.31 cents a share, bringing its streak of annual increases to 51 years. However, the company notes that excluding a period of government controls in 1971, that streak would stretch to 58 years. Either way, ITW's dividend sports a 10-year compound annual growth rate of 13%.

On February 10, 2023, the Board of Directors of Illinois Tool Works Inc. declared a dividend on the company’s common stock of $1.31 per share for the first quarter of 2023. The dividend equates to $5.24 per share on a full-year basis. The dividend will be paid on April 13, 2023 to shareholders of record as of March 31, 2023.

PPG Industries

Consecutive annual dividend increases: 51

PPG Industries (PPG) makes coatings and paints for numerous industries, including aerospace, architecture, automotive and packaging. Its sprawling operations employ roughly 47,000 people in more than 50 countries.

PPG has paid a dividend since 1899 and has raised it annually for 51 years. A below-average payout ratio and solid outlook for long-term earnings growth should keep the dividend increases coming. PPG's last raise came in July 2022 with a 5.1% bump in the quarterly distribution to 62 cents per share.

Target

Consecutive annual dividend increases: 51

Target (TGT) might be the No. 2 discount retail chain after Walmart in terms of revenue, but it doesn't take a back seat to the behemoth from Bentonville when it comes to dividends.

Target paid its first dividend in 1967, seven years ahead of Walmart, and has raised its payout annually since 1972. The last hike came in June 2022, when the retailer raised its quarterly disbursement by a whopping 20% to $1.08 a share. Target’s annual dividend totals $4.32 per share, yielding 2.45%.

With its well-below-average payout ratio, income investors can count on Target to keep hitting the mark for dividend growth. That has certainly been the case historically. Over the past 10 years, the company's dividend boasts a compound annual growth rate of more than 14%.

W.W. Grainger

Consecutive annual dividend increases: 51

W.W. Grainger (GWW) – which not only sells industrial equipment and tools, but provides other services such as helping companies manage inventory – is expected to generate steady if not spectacular sales growth for the next few years. EPS growth, however, is forecast to increase at a double-digit percent rate.

Happily for the income-minded, Grainger has achieved annual dividend growth for a half century and maintains a below-average payout ratio. It renewed its Dividend Aristocrats membership card in April 2022 when it announced a 6.2% increase in the quarterly payout to $1.72 per share.

Sysco

Consecutive annual dividend increases: 53

Years of acquisitions have made Sysco (SYY) the food services and supply giant it is today. And the company's scale really came in handy during the pandemic, when it had to weather the closure of restaurants, bars and other food-service venues.

Happily for shareholders, the sudden and sharp downturn couldn't stop SYY from hiking its dividend for a 53rd consecutive year. The company last raised its payout in April 2022 with a 4.3% bump to 49 cents per share per quarter.

Federal Realty Investment Trust

Consecutive annual dividend increases: 55

Real estate investment trusts such as Federal Realty Investment Trust (FRT) are required to pay out at least 90% of their taxable earnings as dividends in exchange for certain tax benefits. Thus, REITs are well known as some of the best dividend stocks you can buy.

And few have been steadier than FRT, which owns retail and mixed-use real estate in several major metropolitan areas. Federal Realty Investment Trust has now hiked its payout every year for 55 years – the longest consecutive record in the REIT industry. Its latest increase – upping the quarterly dividend by a penny to $1.08 per share – was announced in August 2022.

Stanley Black & Decker

Consecutive annual dividend increases: 55

Power- and hand-toolmaker Stanley Black &; Decker (SWK) has improved its cash distribution annually for more than half a century, including a 1.3% increase to 80 cents per share quarterly in July 2022. SWK has bulked up through a series of deals over the past five years or so, including the acquisitions of Newell Tools, the Craftsman tool brand, IES Attachments, Nelson Fastener Systems and Consolidated Aerospace Manufacturing.

A low payout ratio and ample free cash flow should keep it SWK's dividend growth streak going.

Hormel Foods

Consecutive annual dividend increases: 57

Hormel Foods (HRL) is best known for Spam, but it's also responsible for its namesake meats and chili, Skippy peanut butter, Dinty Moore stews and House of Tsang sauces, among other brands.

But it shouldn't go unnoticed that the packaged food company is about as reliable as they come when it comes to income investing, having raised its payout every year for more than five decades.

Indeed, in November 2022, Hormel announced its 57th consecutive dividend increase – a 6% raise to 27.5 cents per share quarterly. The packaged foods company is rightly proud to note that it has paid a regular dividend without interruption since becoming a public company in 1928.

Johnson & Johnson

Consecutive annual dividend increases: 60

Johnson & Johnson (JNJ), founded in 1886 and public since 1944, operates in several different segments of the healthcare industry. In addition to pharmaceuticals, it also manufactures medical devices.

JNJ's diversification across multiple segments adds fortitude to this defensive dividend stock, and that helps income investors sleep better at night. The healthcare giant has increased its payout for three decades and counting. The most recent hike came in April 2022 when JNJ increased the quarterly dividend by 6.6% to $1.13 per share. JNJ pays an annual dividend of $4.52, representing a yield of 2.84%.

Colgate-Palmolive

Consecutive annual dividend increases: 60

Colgate-Palmolive (CL) sells a wide range of consumer staples brands including its namesake toothpaste and dish soap, as well as Speed Stick deodorant, Murphy cleaning products and Tom's of Maine personal-care products.

Demand for Colgate's products tends to remain stable in both good economic times and bad, and that drives the free cash flow need to maintain its dividend growth streak. And what a streak it is.

Colgate's dividend dates back more than a century, to 1895, and the company has increased it annually for 60 years. CL last raised its payment in March 2022, upping the quarterly distribution by 2 cents to 47 cents per share.

But CL didn't stop there in its efforts to return more cash to shareholders. In addition to increasing the dividend, the company announced a new $5 billon share repurchase program.

Coca-Cola

Consecutive annual dividend increases: 61

Coca-Cola (KO) has long been known for quenching consumers' thirst, but it's equally effective at quenching investors' thirst for income. The company's dividend history stretches back to 1920, and the payout has swelled for 61 consecutive years. The most recent hike, announced in February 2022, lifted the quarterly dividend by 4.8% to 44 cents per share.

KO disbursed $7.3 billion in dividends in 2021. Since Jan. 1, 2010, the company has paid a total of $69.2 billion in dividends to shareholders. The current dividend yield for Coca-Cola as of February 17, 2023 is 2.93%.

Coca-Cola has worked hard to expand its offerings beyond traditional carbonated beverages, adding bottled water, fruit juices, sports drinks 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.

Cincinnati Financial

Consecutive annual dividend increases: 63

Property and casualty insurer Cincinnati Financial's (CINF) offerings include life insurance, annuities, umbrella insurance and a wide range of business insurance products.

Shares took a beating during the worst of the pandemic, but went on to beat the broader market handily over the next couple of years. And even when CINF stock was bottoming out, investors knew they could count on their dividends. Indeed, at 63 consecutive years and counting, Cincinnati Financial boasts one of the longest dividend growth streaks of any Dividend Aristocrat.

The P&C insurer most recently lifted its quarterly payout in January 2023, by 8.7% to 75 cents per share.

3M

Consecutive annual dividend increases: 66

Shares in 3M (MMM), which makes everything from adhesives to electric circuits to N95 respirators, have been a long-time market laggard. But as much as this Dow stock has been a disappointment in terms of price appreciation, there's no questioning its value as a compounding source of income. Indeed, the conglomerate's dividend dates back more than a century. Even better, 3M has been delivering annual dividend increases to investors for 66 years. The most recent hike came in early February 2022 when the company bumped the quarterly payout by a penny to $1.49 per share.

The current dividend yield for 3M as of February 17, 2023 is 5.34%.

MMM notes that it has returned more than $14 billion to shareholders through dividends and share repurchase over the past three years.

Procter & Gamble

Consecutive annual dividend increases: 66

With major brands such as Tide detergent, Pampers diapers and Gillette razors, Procter & Gamble (PG) is among the world's largest consumer products companies.

Although the economy ebbs and flows, demand for products such as toilet paper, toothpaste and soap tends to remain stable. That hardly makes P&G completely recession-proof, but it does make the grade as one of the best dividend stocks because it's an equity income machine.

The Dow Jones Industrial Average component has paid shareholders a dividend since 1890, and has raised its payout for 66 years in a row. P&G's most recent raise came in April 2022 with a 5% bump to 91.33 cents per share quarterly

The current dividend yield for PG as of February 17, 2023 is 2.62%.

Genuine Parts

Consecutive annual dividend increases: 66

Automotive and industrial replacement parts maker Genuine Parts (GPC) is best-known for the Napa brand. However, it also has deep roots in Mexico, where it operates under the AutoTodo brand, as well as Canada, where it operates as UAP.

Founded in 1928, Genuine Parts has long made returning cash to shareholders a priority. The company has paid a cash dividend every year since going public in 1948 and increased the annual dividend for 66 consecutive years. The last hike – a 9.8% improvement to 89.5 cents per share quarterly – came in February 2022.

Emerson Electric

Consecutive annual dividend increases: 66

Emerson Electric (EMR) makes a wide variety of industrial products, ranging from control valves to electrical fittings. The company has paid dividends since 1956 and has boosted its annual payout for 66 consecutive years, including its last increase – a 1% bump to 52 cents per share quarterly – declared in October 2022. EMR's dividend sports a 20-year compound annual growth rate of 5%.

With a below-average payout ratio and plenty of free cash flow, investors can count on Emerson Electric to keep the dividend hikes coming.

Dover

Consecutive annual dividend increases: 67

Dividend growth has long been a top priority for Dover (DOV). Indeed, 67 consecutive years of annual dividend increases is proof positive of the company's commitment to returning cash to shareholders.

The industrial conglomerate has its hands in all sorts of businesses, from Dover-branded pumps, lifts and even productivity tools for the energy business, to Anthony-branded commercial refrigerator and freezer doors. It's not an exciting business, but it can be a remunerative one. Dover last raised its payout in August 2022, when it upped the quarterly outlay by 1% to 50.5 cents per share.

Editor’s Note: Dan Burrows is Kiplinger's senior investing writer. Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more, www.Kiplinger.com.