Dividend investing is one of the easiest ways to add passive income to your life. It’s essentially making money in your sleep. A dividend is a payment made by a company to its shareholders from its profits. Dividends can be paid out in different ways like cash or stocks. Investing in dividend-paying stocks is a way to add a regular source of income to your portfolio.
And while there are plenty of companies and funds that reward their shareholders with dividends, there’s an elite list of 37 companies, known as Dividend Kings, that have the longest history of doing so. As part of a diversified portfolio, these stocks with established track records can help you generate income while investing.
”[Dividend Kings] are companies that endured through financial storms and difficult markets while still finding a way to increase their dividends each year. They’re companies that investors can rely on,” said Chance Burroughs, a financial advisor at Manske Wealth.
Keep reading to learn more about Dividend Kings and whether you should include them in your portfolio.
What Are Dividend Kings?
A Dividend King is a publicly traded company that has increased its shareholder dividends every year for at least the past 50 years. These companies have a proven track record of rewarding shareholders with regular dividends. Think of these as companies like Coca-Cola and Johnson and Johnson.
“Dividend Kings are companies that have a long history of financial success,” Burroughs said.
List of Dividend Kings for 2022
To become a Dividend King, a company must have at least 50 consecutive years of dividend increases. Because of that high standard, it likely doesn’t come as a surprise that only an exclusive list of firms make the list. In 2021, there were 31 Dividend Kings but in 2022, there are 37:
|Company||Consecutive Years of Dividend Increases|
|American States Water Co.||66|
|Genuine Parts Co.||65|
|Northwest Natural Holding Co.||65|
|Procter & Gamble Co.||65|
|Emerson Electric Co.||64|
|Cincinnati Financial Corp.||61|
|Lowe’s Cos., Inc.||59|
|Johnson & Johnson||59|
|Lancaster Colony Corp.||59|
|Farmers & Merchants Bancorp||56|
|Hormel Foods Corp.||55|
|ABM Industries Inc.||54|
|Commerce Bancshares, Inc.||53|
|California Water Service Group||54|
|Federal Realty Investment Trust||54|
|Stanley Black & Decker Inc||54|
|Tootsie Roll Industries, Inc.||52|
|H.B. Fuller Company||52|
|Altria Group Inc.||52|
|National Fuel Gas Co.||51|
|Black Hills Corporation||51|
|Becton, Dickinson And Co.||66|
|PPG Industries, Inc.||50|
Dividend Kings vs. Aristocrats
A Dividend Aristocrat is a company that’s a part of the S&P 500 that has increased its dividends for at least 25 consecutive years. Similar to Dividend Kings, the Aristocrats have a long history of financial success. In fact, plenty of companies make the list of both Dividend Kings and dividend aristocrats. But there are a few critical differences.
First, to be considered a Dividend Aristocrat, a company must be a part of the S&P 500. In other words, they must be one of the 500 largest companies listed on stock exchanges. That’s not necessarily the case for Dividend Kings.
The other big difference between Dividend Kings and Dividend Aristocrats is their history of increasing dividends. While Dividend Kings must have increased their dividends for at least 50 consecutive years, Dividend Aristocrats must only have increased them for the past 25 years.
No matter which standard you use, both Dividend Kings and Dividend Aristocrats have a history of financial success and of rewarding their shareholders by passing on profits in the form of dividends.
Dividend Kings ETF
An exchange-traded fund (ETF) is a fund that tracks the performance of many underlying assets, often from a particular market or sector. ETFs have the benefits of mutual funds in that they help you diversify your portfolio and invest in many securities at once. They also share benefits with individual stocks in that they can be traded throughout the day on exchanges.
An ETF is a way that investors can gain exposure to Dividend Kings and other dividend-paying stocks in their portfolios without investing in individual stocks, which are riskier.
“If you’re only invested in Microsoft, you’re putting all your eggs in the Microsoft basket. If you have Microsoft as part of your basket in an ETF, it lowers your risk,” said Julian Morris, a Certified Financial Planner and the founder of Concierge Wealth Management.
The ProShares S&P 500 Dividend Aristocrats ETF, for example, is a low-cost ETF that tracks the full Aristocrat Dividend list.
The only real downside of investing in a dividend ETF as opposed to individual stocks is that you can expect to pay a small management fee. But this fee can be well worth it for the diversification you get in return.
Should You Invest in Dividend King Companies?
Investing in Dividend Kings — or any dividend-paying stock, for that matter — is a way to create a regular source of passive income, which some investors are looking for. Even if you aren’t interested in passive income right now, they can still be an effective part of your overall investing strategy.
“Dividend investing is an important part of a balanced portfolio,” Morris said. “Dividends can offset losses if the market is declining and help with inflation.”
Investing decisions shouldn’t be made lightly, and it’s important to do your research upfront. Consider your current investment strategy, your short and long-term goals, and what you’re hoping to accomplish with a new investment.
While Dividend Kings and other dividend-paying stocks can be a great part of any portfolio, they are best paired with other strategies, like investing in index funds. Dividend Kings generally aren’t considered growth stocks, meaning they aren’t growing as rapidly as others on the market and may not provide the same capital gain.
“In general, any investment that you make, you should always do your research and due diligence,” says Morris. “Make sure the dividend strategy fits in with your overall portfolio.”