When investors are looking for dependable dividend stocks to buy, a crucial first step is to target companies with an established history of success. A look within the prestigious group of stocks known as Dividend Kings offers an excellent starting point. For over half a century (50-plus years), these companies unfailingly increased their dividends annually, navigating various economic downturns and market cycles with incredible resilience.
As the cornerstone of many income-oriented portfolios, Dividend Kings are known both for their financial soundness and management’s commitment to long-term shareholder value creation. Having proven they can evolve successfully through the times and be held in portfolios for decades, many investors refer to Dividend Kings as “forever stocks.”
To a certain degree, I am skeptical about this statement, as investors must remain flexible in adjusting their portfolios according to the market’s ever-changing conditions. However, I do believe that the following three Dividend Kings are positioned to keep rewarding shareholders with growing dividends for many decades ahead.
American States Water (AWR)
American States Water (NYSE:AWR) isn’t just a Dividend King – it’s the company with the longest annual dividend growth track record in the world. Boasting 69 years of uninterrupted dividend increases, American States Water is the king of Dividend Kings.
The company’s superior track record of dividend growth owes much to its highly essential business model. The company enjoys remarkable predictability as a water utility providing a critical commodity for residential, commercial, and military needs. By leveraging this indispensable demand for water, American States Water expanded its distribution network and client base over the decades with minimal risks involved.
It’s safe to say that this trend is set to be sustained for decades to come. In fact, due to the company’s predictable water consumption patterns, rate increases, and population growth in the areas it serves, consensus estimates over the next five years anticipate earnings per share (EPS) growth of 8% per annum. This should further bolster investor confidence in the stock regarding maintaining its dividend growth track record.
AWR provides a dividend yield 0f 2.2%.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) is another Dividend King with a long track record of dividend increases – 68 consecutive years. The consumer staple giant features a diverse portfolio comprising approximately 80 household-name personal care brands. Among its wide lineup are some of the most well-known names in the market such as Tide, Pampers, Gillette, Crest, Pantene, and Olay, among others.
Because of their consumable nature, P&G’s products consistently draw steady consumer demand. Further, due to the enduring strength of its brands, the company enjoys robust pricing power even in challenging market conditions. Visit your local supermarket and you’ll notice that P&G’s brands command notably higher prices compared to pre-pandemic levels, surpassing even the above-average inflation rates during this period.
P&G’s latest dividend hike in April was by 7%, increasing the yield to 2.4% and marking a notable acceleration compared to previous years. Additionally, FY2024 is poised to be a year of double-digit adjusted EPS growth, supporting the company’s trend of consistently improving financials. Thus, I see PG stock as a top choice among dividend stocks to buy for a reliable and growing income.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) is a relatively young Dividend King. Boasting 52 years of successive annual dividend increases, PepsiCo joined this elite group of stocks just two years ago. Yet, PepsiCo already appears positioned to expand its track record for more decades to come. Despite its maturity, its extended portfolio of beverages, snacks, and other food products continues to fuel strong organic growth both domestically and internationally.
With brands such as Pepsi, Lay’s, Doritos, and Quaker enjoying timeless appeal, PepsiCo built strong brand loyalty over the years. Thus, as is the case with P&G, PepsiCo tends to raise its prices at a pace that matches or exceeds inflation levels, scoring robust earnings and dividend growth.
In fact, PepsiCo has raised its DPS at a 10-year compound annual growth rate (CAGR) of 8.2%, a testament to its ability to thrive even with an established brand portfolio. Moving forward, PepsiCo appears to have multiple growth catalysts, particularly in international markets, where its products gain market share by the quarter. Therefore, I find PEP stock and its 3% yield one of the best dividend stocks to buy for reliable income generation prospects.
On the date of publication, Nikolaos Sismanis did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.