In this article, we will take a look at some of the best dividend kings to invest in.
Investing in dividend stocks has been a focal point for investors for several years. The attractive income generated from these stocks motivates many to invest. Among these, dividend growth stocks stand out, as they offer the potential for increasing income over time, which is highly appealing. In the US, numerous companies have consistently raised their dividends for over five decades, earning them the prestigious title of Dividend Kings.
Analysts have long supported dividend stocks due to their historically robust performance. Kirsten Cabacungan, an investment strategist at Merrill and Bank of America Private Bank, has highlighted several reasons to consider investing in these stocks. She pointed out that the income generated by dividend stocks can assist investors in meeting their liquidity needs. In addition, dividend-focused investments have shown a tendency to reduce volatility and mitigate losses during market downturns. Cabacungan particularly emphasizes the value of dividend growth stocks in this context. Here are some comments from the analyst:
“Companies that have consistently increased their dividends tend to be more stable, higher-quality businesses, which historically have weathered downturns and are more likely to have the ability to pay dividends consistently.”
In 2024, dividend stocks lagged behind the broader market, but their future remains promising. Analysts are optimistic about a rebound, as cash flow remains a key priority for investors. Capital Group has advised looking for opportunities in overlooked dividend-paying companies, such as pharmaceutical firms overshadowed by the focus on weight loss treatments, as well as utilities and select banks. In addition, dividend growth stocks with substantial yields continue to attract interest. Companies offering dividends alongside strong balance sheets and appealing yields can deliver steady income, cushion against market downturns, and foster solid investment growth. A report from ProShares noted that the Dividend Aristocrats Index has historically outperformed the broader market with less volatility. For example, a $10,000 investment in May 2005 could have grown to more than $61,000 by March 2023.
Also read: 12 Most Reliable Dividend Stocks To Buy According to Hedge Funds
Investor preferences have led many US companies to increase and sustain their dividends in 2024. Financial experts anticipate continued dividend growth in 2025. Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, predicts an average dividend increase of around 8% for the current year. He expects another record payout in 2025, estimated at approximately $685 billion, compared to the projected $630 billion for 2024. Silverblatt attributes this growth to record earnings, anticipated future earnings, declining interest rates, strong employment, and overall economic growth.
In addition, the broader market’s dividend yield has recently hit a 20-year low, dipping below 1.19%, well below the long-term average of 4.3%. As interest rates rise on risk-free options like Treasuries, companies are increasingly aware of the competition for yield. In response, many are boosting their dividends or starting to offer them for the first time. Notably, several major tech firms began paying dividends in 2024, indicating their intention to position themselves as value investments within the traditionally high-growth tech sector. Given this, we will take a look at some of the best dividend kings to invest in.
Our Methodology:
For this list, we reviewed the Dividend Kings companies and selected the ten stocks that were most favored by hedge funds in the third quarter of 2024, using data from Insider Monkey’s database. The stocks are ranked by the number of hedge fund investments, starting with the lowest.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 49
Target Corporation (NYSE:TGT) is an American retail corporation that operates a chain of hypermarkets and discount department stores. In Q3 2024, the company reported revenues of $25.7 billion, reflecting a slight 1.06% increase compared to the same period in the previous year, though falling short of analysts’ forecasts by $231.8 million. Looking ahead to the fourth quarter, the company anticipates comparable sales to remain stable, with GAAP and adjusted earnings per share (EPS) projected between $1.85 and $2.45. For the entire year, Target expects GAAP and adjusted EPS to be in the range of $8.30 to $8.90.
Target Corporation (NYSE:TGT) has demonstrated steady growth in operating income over the past year and maintains a robust financial standing. Although its debt levels are relatively high, its cash, cash equivalents, and short-term investments are sufficient to cover its short-term obligations. The company’s growing cash reserves and an interest coverage ratio of 11.6 further reinforce its financial stability. Target’s liquidity is bolstered by a clean balance sheet, free of intangible assets, and a solid return on invested capital (ROIC) of 11.5%.
In addition to its strong financials, Target Corporation (NYSE:TGT) generated $4.07 billion in operating cash flow in the first nine months of 2024 and concluded the quarter with $3.4 billion in cash and cash equivalents. During this period, the company returned $516 million to shareholders through dividends. The company offers a quarterly dividend of $1.12 per share and has a dividend yield of 3.25%, as of January 13. With a 53-year streak of consistent dividend increases, TGT is one of the best dividend kings on our list.
At the end of Q3 2024, 49 hedge funds tracked by Insider Monkey reported having stakes in Target Corporation (NYSE:TGT), compared with 52 in the previous quarter. These stakes are valued at nearly $1.4 billion in total. Among these hedge funds, Diamond Hill Capital was the company’s leading stakeholder in Q3.
9. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 54
Colgate-Palmolive Company (NYSE:CL) is a New York-based manufacturing company that specializes in a wide range of consumer products. In the past 12 months, the stock has surged by over 8.5%, grabbing investors’ attention. The company is well-known in the consumer goods industry, providing products across Oral Care, Personal Care, Home Care, and Pet Nutrition. Lately, it has placed significant emphasis on sustainability and expanding its product range. Its commitment to making all packaging recyclable by 2025 underscores the growing environmental concerns of both consumers and regulators. By engaging in initiatives like renewable energy partnerships, the company is adapting its operations to meet future market demands and regulatory requirements.
In the third quarter of 2024, Colgate-Palmolive Company (NYSE:CL) reported revenues of $5.03 billion, a 2.4% rise from the same quarter the previous year, exceeding analysts’ projections by $27.2 million. The company has maintained its dominant position in the toothpaste market, with a global market share of 41.6% year-to-date. It also continues to lead in the manual toothbrush category, holding a 32.3% global market share during the same period.
Colgate-Palmolive Company (NYSE:CL)’s cash position also remained strong in 2024. In the first nine months of the year, the company generated an operating cash flow of nearly $3 billion. This cash position has enabled the company to increase its payouts for 62 years in a row. Its quarterly dividend comes in at $0.50 per share for a dividend yield of 2.29%, as of January 13.
As of the end of Q3 2024, 54 hedge funds tracked by Insider Monkey held stakes in Colgate-Palmolive Company (NYSE:CL), up from 52 in the previous quarter. These stakes are collectively valued at over $3.4 billion.
8. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 58
An American food, snack, and beverages company, PepsiCo, Inc. (NASDAQ:PEP) ranks eighth on our list of the best dividend kings. The company posted strong earnings in the third quarter of 2024, with revenues amounting to over $23.3 billion. Despite facing challenges such as weaker performance in North America, product recalls at Quaker Foods North America, and geopolitical issues in some international markets, the company showed resilience. By effectively managing costs, it maintained profitability while continuing to make strategic investments to strengthen its market position.
PepsiCo, Inc. (NASDAQ:PEP) has fallen by nearly 13% in the past 12 months. However, the company remained the investors’ favorite due to its strong market position. It owns Frito-Lay, the world’s largest salty snack producer, Pepsi, the second-largest nonalcoholic beverage brand, and Quaker Oats, a key player in the packaged food industry. With its extensive global brand presence, strong marketing and innovation capabilities, and solid financial foundation, the company is well-established as an industry leader and consolidator. For example, its recent acquisition of Siete Foods strengthens its foothold in the Mexican-American food market, covering salty snacks and packaged foods. Essentially, PepsiCo is a robust player in the consumer staples sector, known for its resilience during economic downturns.
PepsiCo, Inc. (NASDAQ:PEP) has adjusted its forecast for organic revenue growth, now anticipating a modest increase in the low single digits, compared to its previous estimate of around 4%. Despite this revision, the company remains committed to returning value to shareholders, with plans to distribute $8.2 billion through dividends and share buybacks in 2024. In addition, the company has a strong track record of increasing its payouts for 52 consecutive years. It offers a quarterly dividend of $1.355 per share and has a dividend yield of 3.75%, as of January 13.
As per Insider Monkey’s database of Q3 2024, 58 hedge funds in Insider Monkey’s database owned stakes in PepsiCo, Inc. (NASDAQ:PEP), compared with 65 in the previous quarter. The consolidated value of these stakes is over $4.44 billion. With over 7.8 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
7. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 60
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement retail company. It is one of the best dividend kings on our list as the company has been growing its payouts for 59 consecutive years. The company’s quarterly dividend currently sits at $1.15 per share and has a dividend yield of 1.85%, as of January 13.
Analysts suggest that the steady demand for construction, repair, and remodeling supplies provides a solid foundation for continued growth, provided Lowe’s Companies, Inc. (NYSE:LOW) remains focused on customer needs. However, the company is currently feeling the impact of a slow economy. In the latest quarter, it reported $20.17 billion in revenue, marking a nearly 2% decline from the same period last year. Despite this, earnings slightly surpassed expectations, even when excluding storm-related activities. The results were bolstered by growth in Pro sales, strong online performance, and smaller outdoor DIY projects.
Madison Investments also highlighted this in its Q3 2024 investor letter. Here is what the firm has to say:
“In the third quarter, the top five individual contributors to performance relative to the benchmark were Parker-Hannifin Corporation, Fiserv, Lowe’s Companies, Inc. (NYSE:LOW), Brookfield Corporation, and Progressive Corporation. Despite operating in very different sectors, Lowe’s Companies and Brookfield Corporation are both expected to benefit from the economic activity spurred on by declining interest rates. The Federal Reserve’s decision to lower interest rates sparked investor enthusiasm for both companies during the quarter, even as their sales and profits continue to moderate. For Lowe’s, sales remained weak in the latest quarter as most measures of the housing market remain sluggish. However, if interest rates come down and mortgages become more affordable, activity should return to the housing market which will boost Lowe’s business.”
Insider Monkey’s database of Q3 2024 indicated that 60 hedge funds owned stakes in Lowe’s Companies, Inc. (NYSE:LOW), compared with 62 in the preceding quarter. The overall value of these stakes is more than $2.2 billion.
6. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 68
AbbVie Inc. (NYSE:ABBV) is an American biopharmaceutical company that specializes in the development and commercialization of advanced therapies and treatments in various areas of healthcare.
Analysts are optimistic about the company’s future growth, with expectations that it will rely heavily on two blockbuster drugs, Skyrizi and Rinvoq, in the years ahead. These drugs generated over $4.8 billion in revenue during Q3 2024 and are projected to exceed $27 billion in annual sales by 2027, targeting conditions such as rheumatology, dermatology, psoriatic diseases, and inflammatory bowel disorders.
AbbVie Inc. (NYSE:ABBV) reported a total revenue of $14.46 billion for Q3 2024, a 4% increase compared to the previous year. Its Immunology Portfolio contributed more than $7 billion, also growing by 4%. Moreover, in August 2024, the company completed an $8.7 billion acquisition of Cerevel Therapeutics, a neuroscience company, which strengthened its pipeline with promising treatments, including emraclidine, a potential therapy for schizophrenia.
This was also highlighted by Polaris Capital Management in its Q3 2024 investor letter:
“U.S. biopharma/biotech companies topped the health care sector, with the majority of holdings posting returns in excess of 10%. AbbVie Inc. (NYSE:ABBV) showed positive top-line growth from its immunosuppressive drugs, Skyrizi and Rinvoq. Abbvie’s management continues to work through the loss of exclusivity from Humira, switching patients to Skyrizi or Rinvoq rather than Humira biosimilars.”
AbbVie Inc. (NYSE:ABBV) has a strong dividend history with 52 consecutive years of dividend growth under its belt. Moreover, the company has raised its payouts at an annual average rate of nearly 8% in the past five years. Currently, it pays a quarterly dividend of $1.64 per share and has a dividend yield of 3.71%, as of January 13.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 68 funds held stakes in AbbVie Inc. (NYSE:ABBV), up from 67 in the preceding quarter. These stakes have a total value of nearly $2.6 billion. With over 1.7 million shares, AQR Capital Management was the company’s leading stakeholder in Q3.
5. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE:PG) ranks fifth on our list of the best dividend kings. The American multinational consumer goods company has surged by over 6% in the past 12 months, mainly due to its strong operational performance. Despite facing inflationary challenges, the company has consistently produced strong results by successfully implementing substantial price increases. In fact, it achieved organic sales growth in every quarter of fiscal 2023.
In fiscal Q1 2025, The Procter & Gamble Company (NYSE:PG) reported revenue of $21.7 billion, reflecting a 1% decline from the same quarter the previous year. The company generated $4.3 billion in operating cash flow, with adjusted free cash flow productivity at 82%, aligning with expectations. P&G also continued to reward shareholders, distributing $4.4 billion through dividends and share repurchases.
The Procter & Gamble Company (NYSE:PG) has offered an optimistic forecast for fiscal 2025, expecting sales growth between 2% and 4%, and a 10% to 12% increase in diluted net EPS compared to $6.02 in fiscal 2024. If the company hits the midpoint of its projection, it will achieve a new record with a diluted EPS of $6.68 for fiscal 2025. The company also has a long history of delivering value to shareholders, having paid dividends for 134 years and achieving 68 consecutive years of dividend growth. It currently offers a quarterly dividend of $1.0065 per share for a dividend yield of 2.53%, as of January 13.
The number of hedge funds tracked by Insider Monkey owning stakes in The Procter & Gamble Company (NYSE:PG) grew to 68 in Q3 2024, from 64 in the previous quarter. These stakes are valued at over $8.8 billion in total. Fisher Asset Management owned the largest stake in the company in Q3.
4. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 69
Warren Buffett’s favorite, The Coca-Cola Company (NYSE:KO) is an American multinational beverage corporation. The company has been grabbing analysts’ attention due to its strong market position. Recently, Piper Sandler initiated its coverage of the stock with an Overweight rating. The firm highlighted the company for its strong global brands and effective execution, which could drive sustainable growth and increase market share. Piper Sandler’s analysis emphasized Coca-Cola’s substantial brand investments and anticipated pricing strength, particularly in emerging markets, as critical elements contributing to its positive outlook.
As a global organization, The Coca-Cola Company (NYSE:KO) encounters challenges in multiple regions rather than in just one area. Despite these obstacles, it has consistently managed to navigate regional issues while maintaining an unbroken streak of annual dividend increases, thereby boosting shareholder value. This showcases its remarkable resilience and commitment. Beyond its reputation for offering a dependable product, the company has also crafted outstanding marketing strategies that keep its brand highly visible and top of mind for consumers. The stock has surged by over 3% in the past 12 months.
The Coca-Cola Company (NYSE:KO), one of the best dividend kings, has been growing its payouts for 62 consecutive years. The company’s quarterly dividend comes in at $0.485 per share and has a dividend yield of 3.14%, as of January 13. Its dividend growth streak comes from the company’s cash generation. In the third quarter of 2024, the company reported an operating cash flow of $2.9 billion and its free cash flow amounted to $1.6 billion.
As of the close of Q3 2024, 69 hedge funds in Insider Monkey’s database owned stakes in The Coca-Cola Company (NYSE:KO), up from 68 in the previous quarter. These stakes have a consolidated value of roughly $35 billion.
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Johnson & Johnson (NYSE:JNJ) is a New Jersey-based pharmaceutical company that specializes in a wide range of biotech and medical products and offers related services to consumers. The company is gaining attention for its ongoing innovation and recent acquisitions. It recently announced plans to invest over $14 billion to expand its focus on treating central nervous system disorders through the acquisition of Intra-Cellular Therapies. The deal will be financed with a mix of cash reserves and debt, according to J&J, and is expected to be finalized later this year. This transaction marks the largest biotech deal in over a year, highlighting a resurgence in healthcare mergers and acquisitions following a slowdown in 2024 when major pharmaceutical companies paused to integrate previous post-pandemic acquisitions.
Johnson & Johnson (NYSE:JNJ) posted strong third-quarter 2024 earnings, reporting $22.4 billion in revenue, a 5.25% increase compared to the same period last year. The company generated $14 billion in free cash flow during the first nine months of the year, up from $11.9 billion in the previous year. It has revised its 2024 outlook, including adjusted operational earnings per share (EPS), to account for its improved performance and the recent acquisition of V-Wave. The company now anticipates adjusted operational sales growth of 5.7% to 6.2%, with a midpoint target of 6.0%.
Johnson & Johnson (NYSE:JNJ) is one of the best dividend kings on our list as the company has been rewarding shareholders with growing dividends for the past 62 years. It offers a quarterly dividend of $1.24 per share and has a dividend yield of 3.43%, as of January 13.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 81 funds held stakes in Johnson & Johnson (NYSE:JNJ), up from 80 in the previous quarter. The total value of these stakes is over $5.4 billion. With over 5.2 million shares, Marshall Wace LLP was one of the company’s leading stakeholders in Q3.
2. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 85
S&P Global Inc. (NYSE:SPGI) is an American capital market company that offers services in financial information and analytics. Beyond its other segments, the company has recently emphasized technological innovation by incorporating generative AI and introducing tools like ChatAI. It recently announced the acquisition of ProntoNLP, a prominent provider of Generative Artificial Intelligence (GenAI) solutions, which enables users to extract unique insights from both unstructured and structured data. ProntoNLP’s proprietary models and LLM-based signal tools will enhance S&P Global’s capabilities in textual data analytics.
In the third quarter of 2024, S&P Global Inc. (NYSE:SPGI) reported $3.6 billion in revenue, marking a 16% increase from the same quarter the previous year. The company continues to benefit from consistent cash flow from its data and analytics division, along with its ratings segment. In the first nine months of the year, it has generated almost $4 billion in operating cash flow, up from $2.4 billion during the same period last year.
Montaka Global Investments highlighted S&P Global Inc. (NYSE:SPGI) in its Q3 2024 investor letter. Here is what the firm has to say:
“Montaka owns several duopolists in the financial services industry, including Visa and Mastercard in payments; and S&P Global Inc. (NYSE:SPGI) in credit ratings and financial data services. These businesses have competitively protected and reliably growing core businesses. But they also have newer, high-probability adjacent opportunities. The market, however, is underappreciating this powerful combination, in our view.
For S&P Global, we are seeing a cyclical rebound in high-margin credit ratings. At the same the company’s software services businesses are rolling out an expansive pipeline of new AI-enabled product features, powered by S&P Global’s large and unique financial datasets.”
S&P Global Inc. (NYSE:SPGI) currently offers a quarterly dividend of $0.91 per share and has a dividend yield of 0.76%, as of January 13. It is one of the best dividend kings on our list as the company has raised its dividends for 52 consecutive years.
At the end of the third quarter of 2024, 85 hedge funds held stakes in S&P Global Inc. (NYSE:SPGI), compared with 90 in the previous quarter, as per Insider Monkey’s database. These stakes are collectively valued at over $9.8 billion.
1. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 88
Walmart Inc. (NYSE:WMT) is an American retail corporation that operates a chain of hypermarkets, discount stores, and grocery stores across the country. In the past 12 months, the stock has surged by nearly 70%, significantly outperforming the broader market.
Walmart Inc. (NYSE:WMT) experienced a 3% rise in customer traffic in the third quarter compared to the same period last year, a promising sign for any major retailer. It reported $168 billion in revenue, a 5.5% increase year-over-year, exceeding analysts’ expectations by $1.4 billion. Known for its strong dividend history, Walmart continues to hold a solid cash position, generating $22.9 billion in operating cash flow year-to-date, $3.9 billion more than the previous year. Its free cash flow also increased by $1.9 billion, reaching $6.2 billion. The company has raised its dividend for 51 consecutive years, which makes it one of the best dividend kings on our list.
Walmart Inc. (NYSE:WMT) offers a quarterly dividend of $0.2075 per share and has a dividend yield of 0.90%, as of January 13. The company leverages its competitive advantages to deliver substantial financial returns to investors. Its growing cash flow and profitability are driven not only by increased market share but also by the success of its e-commerce segment, bolstered by significant infrastructure investments. In addition, strategic actions such as price cuts and enhanced inventory management have contributed to these positive outcomes.
With a collective stake value of over $9.7 billion, 88 hedge funds held positions in Walmart Inc. (NYSE:WMT) in the third quarter of 2024, as per Insider Monkey’s database. Rajiv Jain’s GQG Partners was one of the company’s leading stakeholders in Q3.
Overall, Walmart Inc. (NYSE:WMT) ranks first on our list of the best dividend kings. While we acknowledge the potential for WMT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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