Firstly, we’ve heard of both Dividend Aristocrats and Dividend Kings. What’s the difference? Like dividend aristocrats, the kings are recognized for regularly paying out dividends over a long period of unbroken time. While a dividend aristocrat must be a member of the S&P 500 and have a rising dividend payout for at least 25 years, a dividend king needs only to fulfill one requirement: continuously paying an increasing dividend for at least 50 years — which is still a tall order.
The stock markets are a little shaky at the moment. These are also the periods when you’d like to invest some money. When your stocks aren’t performing well, dividend kings, in particular, might be a great source of passive income. Dividend kings are stocks that had not only grown their dividends every year for at least 50 years but did so during times when the stock market was at its lowest point. Considering the difficulty of maintaining that standard, there are currently just 31 stocks in the club.
Because it is less typical for firms to boost their dividends continuously for more than half a century, the number of dividend kings is smaller than that of their aristocratic relatives. You can be confident that these consistent dividend-paying stocks are not only safe to own at all times, but they can also help you develop significant wealth, so you should not hesitate to invest.
Let’s take a brief but detailed look at three Dividend Kings that the experts say are wise portfolio picks:
Procter & Gamble (PG)
The Procter & Gamble Company (PG) manufactures a wide range of branded consumer packaged products. William Procter and James Gamble started the firm in Cincinnati, OH, in 1837 — It is almost 180 years old. It offers its goods in over 180 countries. It includes 65 brands and ten major product categories. It has paid a dividend for 131 years in a row. And, in each of the last 65 years, it has boosted dividends. It increased its dividend by 10% in fiscal 2021, which ended on June 30, marking its highest quarterly dividend rise in more than a decade.
For the fiscal year 2022, PG forecasted revenue growth of 2% to 4% and EPS growth of 6% to 9%, which may indicate another hefty dividend hike next year. You might argue that the company, which is now trading around 52-week highs, isn’t cheap, but no price is too high for a dividend stock yielding 2.4% and backed by dividend growth of that magnitude. The median price target for PG among analysts that provide 12-month price projections is 159.00, with a high of 164.00 and a low of 139.00. The median estimate implies an increase of 14.22% from its current price. The consensus among economists is that it’s vital to buy shares in PG.
Johnson & Johnson (JNJ)
If you want to understand why dividends are so valuable and what a massive difference reinvested dividends can make to your total returns, look no further than Johnson & Johnson (JNJ). This healthcare and consumer giant has been an absolute beast when it comes to shareholder returns. Allow me to sum up some of the factors that have contributed to this stock’s success as a dividend king: JNJ is the largest healthcare corporation in the world. Twenty-eight of its product platforms generate annual revenues of more than $1 billion apiece. In 2020, it made $82.7 billion in revenue and earned $20.2 billion in free cash flow. 25% of its revenues originate from goods that were released during the last five years. And, it has grown its dividend every year for the past 59 years.
JNJ is devoted to increasing dividends and currently pays a respectable 2.6% yield, so don’t be concerned. The business boasts the distinction of developing the world’s first single-shot vaccine. Consider that the following vaccine from JNJ has been approved for emergency use in India and is expected to be widely available soon. JNJ will be the first to market vaccines in India if licensed, ahead of Pfizer (PFE) and Moderna (MRNA). The median price target for JNJ from analysts that provide 12-month price projections is 188.05, with a high of 215.00 and a low of 158.00. The median estimate implies an increase of 17.91% over its current price. The consensus among analysts gives JNJ a strong buy rating.
American States Water (AWR)
American States Water Co (AWR) is a holding corporation dealing in water acquisition, production, distribution, and sales. Water, Electric, and Contracted Services are the company’s three segments. The firm was established on December 1st, 1929, and is based in San Dimas, California. Among the other dividend kings, this leader is looking forward to a massive boom. Experts argue that no price is too high to invest in this firm for the long term.
AWR supplies over 1 million consumers in nine states across the US. Its subsidiary, American States Utility Services, has 50-year contracts to provide water services to 11 military sites. Its profits per share increased at a CAGR (Compound Annual Growth Rate) of 10.9% in the last decade. It has grown dividends at a rate of 9.8% during the previous ten years, including a 9% rise in 2021. It has raised its dividends every year for the past 67 years.
This stock boasts the longest dividend-paying streak of all the dividend kings and is dedicated to growth. The forecasts from analysts are all solid, in both the EPS (Earnings-per-share) and Revenue categories on an annual and quarterly basis. The consensus price target for AWR from analysts that provide 12-month price projections is 87.00, with a high of 101.00 and a low of 70.00. Considered to be one of the best of the Dividend Kings, AWR gets a solid buy rating from the experts.
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