The best Dividend Kings to put in your portfolio, even better than the Dividend Aristocrats! Want higher paying dividends? Check out these 7 Highest Paying Stocks!
Most investors have heard of the Dividend Aristocrats and I’ll compare the Dividend Kings versus Aristocrats later but what makes a Dividend King, what are the requirements to make it on the list?
There’s only one criteria to become a Dividend King, at least 50 years of consecutive dividend increases . So while the Kings don’t require some of the other criteria we’ll see in the Aristocrats, increasing the dividend for 50-plus years is pretty impressive, especially considering how many companies were forced to cut their payouts in the Great Recession or during the pandemic.
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Why should you even bother with the list of Dividend Kings? Why do I like the Dividend Kings versus the Dividend Aristocrats and think every investor should add a few of these stocks?
Remember, the only criteria for a stock to be added to the Dividend Kings list is for 50 years’ of increasing dividend payments. While the requirement is only for 25 years of increasing payments to qualify as a Dividend Aristocrat, a company also has to be a member of the S&P 500 index which generally means at least a $3 billion market size. In fact, you can see the difference in size looking at the Aristocrats ETF, ticker NOBL. The average size of companies in the fund is over $90 billion! Compare that against the Dividend Kings with many between three- and five-billion but also companies like Middlesex Water at $1.5 billion and Gorman-Rupp at just $722 million market cap.
Both groups are a focus of mature companies with stable cash flows. That means more in Consumer Staples, Industrials and Financials rather than Tech stocks like you see here in the sector weights of the fund.
There’s always more Aristocrats than Kings just because of the shorter time requirement. There are 64 Dividend Aristocrats versus just 47 Dividend Kings right now. The Kings pay a slightly higher dividend yield, averaging 2.6% versus 2.4% for the Aristocrats but it’s in the smaller size companies in the Kings that I think gives it the advantage. Besides the dividend growth, you tend to get a little better price appreciation in the stocks of Dividend Kings…just enough to make it worth it to add a few to your portfolio.
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.