What are Dividend Kings? Here are My Three Favorites

In years past, a dividend cut by a company was an act of last resort brought about by declining earnings or growing debt. Companies and their boards are all too aware of the impact that a dividend cut can have on shareholder confidence and share prices.

Of course, there are times when companies may have trimmed dividends to hoard cash in anticipation of strategic acquisitions or a strategic pivot, but the lion’s share of cuts are attributable to shoring up balance sheets.

But when COVID invaded the world, investors who relied on their steady dividends got a huge shock, as the pandemic spurred dividend cuts of $1.26 trillion in 2020—a 12.2% decline.

The good news, according to Bloomberg, is that half of the 36 members of the S&P 500 Index that suspended payouts in 2020 have now restored them, as you can see in the following graph.

Zero Yielders

Sources: FactSet; Bloomberg

You’ll notice that one company—Nordstrom (JWN)—is in bold type in the chart. That’s because the department store reinstated its dividend in March, paying $0.19 per share on March 25. The rest of the companies have not yet done so.

2022 Dividends are on the Rise

The other good news is that dividends—on the whole—are on the rise. According to S&P Dow Jones Indices, during the first quarter of 2022, 963 companies boosted their dividends, a 6.3% rise over last year. Total dividends increases were $27.7 billion for the period, up from $20.3 billion for Q1 2021.

You’ve probably heard of the Dividend Aristocrats—those companies in the S&P 500 Index that have boosted their dividends for the past 25 years. But do you know there are also 39 companies in that index that have increased their dividends for the past 50 (or more) years? They’re called dividend kings. Here’s the list:

2022 Dividend Kings

Sources: Company Press Releases; Yahoo! Finance

For investors who depend on their dividends for cash flow, that is indeed promising! As you can see, most of these companies are fairly conservative, steadily grow their earnings, and share the wealth with their stockholders.

I ran each of these dividend kings through my analysis, and found three of them that look very promising.

Two of these companies operate in the Energy and Utilities sectors, which are two of the sectors that have shown the best performance so far this year, up 40% and down 1.7%, respectively.

As always, these are just ideas, to get you started on your own research. But if you are looking for some steady and growing cash flow, these stocks may just help you reach your goals.

Do you own any dividend kings? Any Dividend Aristocrats? Tell us about how they’ve performed in the comments below.