A somewhat overused concept, in my humble opinion, albeit a strong investing strategy is the Dividend Kings as derived from Dividend Aristocrats. The list of Dividend Aristocrats is made of S&P 500 companies that have increased their dividends for 25 consecutive years. The list of Dividend Kings is composed of stocks that have increased their dividends for 50 consecutive years. Whether or not Dividend Kings must be part of the S&P500 is up for debate.
What is the point of Dividend Kings?
Well, you see sonny, back in my day…
No seriously, I just celebrated my 50th birthday. I was making investments when discount brokers were a new thing. Imagine the concept of not charging a huge commission on each trade. The horror! When I first started investing, there was no such thing as investing online, there was no such thing as the internet bubble, and there was certainly no such thing as buying fractional shares.
What is my point?
Well, back when those first three things were ramping up, there were people all over the internet telling you that you were a fool to listen to experts and that you should listen to them. As proof, they had portfolios that outranked those old school brick and mortar brokerages. They were so sure of themselves, in fact, that they unironically issued lists like the top ten best stocks to own forever. In pretty much every case, the explosion of the internet bubble and the reemergence of oil as a valuable commodity tore those best stocks forever lists to shreds.
Dividend Kings 2022
Dividend Kings are a more humble attempt at making a list of stocks to hold forever– or at least long periods of time– without having to worry that the list of great stocks to buy and never sell was written by a 23-year online investor about to be whacked by his first bubble and recession.
It turns out that with rare exceptions most companies who become Dividend Aristocrats drift inevitably toward Dividend King status. There is also some reason to not assume that the latter is greater than the former. In fact, many Dividend Aristocrats lose their status by being bumped from the S&P500 than they do by lowering their dividend.
First, we must name our 2022 Dividend Kings
Dividend Kings List 2022
There were 41 Dividend Kings in 2022
- Abbott Labs
- ABM Industries
- Commerce Bank
- Emerson Electric
- Farmers & Merchants Bancorp
- Federal Reality
- Genuine Parts
- H.B. Fuller
- Hormel Foods
- Illinois Tool Works
- Johnson & Johnson
- Lancaster Colony
- Leggett & Platt
- Middlesex Water
- MSA Safety
- National Fuel
- NW Natural
- Procter & Gamble
- SJW Group
- Stanley B&D
- Tootsie Roll
- Universal Corp
- W W Grainger
Lots of farm, food, and fuel on that list, as you might expect. If you are looking for major oil companies like Exxon-Mobile, you need to remember that the oil industry is often boom and bust, more so back before Saudi Arabia exercised unshakable discipline. A lot of those two-name oil companies used to be one-name oil companies before they had to join to avoid becoming no-name companies at all.
Dividend Kings 2023 List
The Dividend Kings list at the start of 2023 is no different than the 2022 list. It shouldn’t be too surprising that companies able to run cash-flow positive for 30 years can increase their dividend every year, if for no other reason than inflation. Compare these companies to today’s slick-hair executives boosting shareholder buybacks as a way to meet their own stock bonus metrics rather than the long-term strength of the company, and you will see why a lot of people like investing in Dividend Kings.
Does this mean you should buy these stocks and hold them forever? I wouldn’t tell you that about any stock. The time may come for some of these stocks as well whether by management misstep, or changes to the world. Remember what Danny Divito said in Other People’s Money
Investing in the Dividend Kings
Now that we have a list of Dividend Kings, we can take a look at investing in them. There is no official ETF of Dividend Kings, and no mutual fund manager is willing to chain themselves to such a tight list of stocks. That means to invest in the dividend kings, you are on your own. Fortunately, discount brokerages or even the microbrokers offer an easy way to invest in some or all of the dividend kings.
One of the latest offerings aimed at younger investors, or just those with smaller amounts of investable assets, are fractional shares. With a fractional share, your brokerage company owns (or hedges) a standard, whole share of stock. They will sell you parts– or fractions– of that share. Typically, you can buy fractional shares as either a fraction, or a dollar amount. So, you could invest $50 in Target, or buy 1/2 share of 3M, for example.
Not all stocks shares are offered as fractional shares. As the volume and interest decrease the less likely it is that the shares will be offered as fractions. If you think of it from the broker’s perspective, it makes sense. Fidelity, for example, isn’t in the business of holding other company’s stock. So, when Fidelity offers stock slices to you so you can buy a quarter share of PG, they don’t want to own the other three-quarters of a share. They want to have other customers holding those parts. With big, heavily traded companies, this is no problem. With low-volume, micro stocks, not so much.
Fortunately, the Dividend Kings are large stocks with plenty of volume, so you can slice and dice to your heart’s content. As always, the best long-term investing comes from a diversified portfolio tailored to your goals and risk tolerances. Some of the Dividend Kings might be just what you are looking for.
Dividend Kings also make for solid dividend-based investing, as the name implies. Just keep in mind that these stocks are not wired for fast growth. However, getting a solid dividend while keeping up with inflation can be a very good deal.