In this article, we will take a look at some of the best dividend kings for safe dividend growth.
The importance of dividend stocks cannot be denied, even in today’s market environment, which is dominated by AI stocks. The S&P Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years, is down by over 4% since the start of 2025, compared with a much harsher decline of 13% in the broader market.
Dividend stocks become increasingly popular when companies grow their payouts regularly. Historically, dividend growth stocks have performed better than their peers and have shown less volatility. The dividend growth track records, backed by solid fundamentals, offer reliable investment options to income investors. According to a report by Nuveen, dividend growth stocks have outperformed other asset classes with less risk. The report revealed that companies with strong dividend growth streaks delivered an annual average return of over 10% between 1973 to 2024, as compared to a 4.2% return of non-dividend paying stocks. During this period, dividend cutters delivered a nearly -2% return.
Though dividend stocks also do not come with a promise and can also fluctuate, these stocks have made significant contributions to the market’s overall return over the decades. According to a report by Hartford Funds, dividends and reinvested dividends represented nearly 40% of the market’s return from 1930 to 2024, with capital appreciation making up the rest. The report also highlighted their significance when the economy was in the trenches. The data mentioned that during the 1940s, 1960s, and 1970s, the total returns were lower than 10%, however, dividends represented a larger portion of the market’s performance.
According to Jerome Powell, inflation in the US is likely to ramp up because of the President’s sweeping tariffs. Here are some comments from Powell:
“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”
While this presents an overall uncertain environment for an investment landscape, dividend investors are in the catbird seat, as dividend stocks have historically been successful in protecting capital against inflation. WisdomTree reported that from 1957 through 2023, dividends have grown by an average of 5.7%, compared with a 3.67% growth in inflation. The report also mentioned that over the past 68 years, dividend payouts have only decreased in six years, and in just one of those years, they dropped by more than 5%. In comparison, stock prices experienced declines in 18 years during the same period, with the worst drop exceeding 40% and an average decline of more than 11%. Stock prices have proven to be more than twice as volatile as the underlying dividend cash flows. This is because market sentiment often causes short-term fluctuations in stock prices, whereas dividend cash flows, which reflect the company’s long-term value, are less volatile. Given this, we will take a look at some of the best dividend kings for safe dividend growth.
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Our Methodology
For this article, we scanned the list of dividend kings, which are the companies that have raised their payouts for 50 years or more. From that list, we picked 12 companies with the highest 5-year annual average dividend growth rates. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.
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12. Hormel Foods Corporation (NYSE:HRL)
5-Year Average Annual Dividend Growth Rate: 5.69%
Hormel Foods Corporation (NYSE:HRL) is a Minnesota-based multinational food processing company. It is dealing with some challenges at the moment, partly due to the bird flu affecting the turkey market—a key segment of its operations. On top of that, the company’s over $3 billion purchase of Planters in 2021 has yet to deliver the kind of results investors were hoping for. As a result, both its gross and operating margins have slipped below the typical levels seen over the past two decades.
In fiscal Q1 2025, Hormel Foods Corporation (NYSE:HRL) reported mixed earnings, with revenues coming in at $2.99 billion. Though revenue declined by 1% on a YoY basis, it still surpassed analysts’ estimates by $42 million. The company’s operating income stood at $228 million, with an operating margin of 7.6%.
Despite facing headwinds, Hormel Foods Corporation (NYSE:HRL)’s cash position remained strong, which makes it a strong company for income investors. The company’s cash and cash equivalents grew to $840.4 million in the most recent quarter, from $741.8 million in the same period last year. It also returned $155 million to shareholders through dividends. Currently, it offers a quarterly dividend of $0.29 per share and has a dividend yield of 3.77%, as of April 4. The company has been raising its dividends for 51 consecutive years, which makes HRL one of the best dividend kings.
11. Lancaster Colony Corporation (NASDAQ:LANC)
5-Year Average Annual Dividend Growth Rate: 6.5%
Lancaster Colony Corporation (NASDAQ:LANC) is an Ohio-based food company that mainly focuses on manufacturing and marketing specialty food products for the retail and food service markets. The company’s growth has been fueled by its focus on innovation and technology. The company has effectively broadened its presence in the frozen foods and condiments space, aligning with changing consumer tastes that favor healthier and more sustainable products. Over the past three years, it has poured more than $250 million into automation and advanced manufacturing, which has helped improve efficiency and cut down on expenses. These proactive efforts have not only enhanced its market position and profitability but also set the stage for continued success in a competitive environment.
In fiscal Q2 2025, Lancaster Colony Corporation (NASDAQ:LANC) reported a revenue of $509.3 million, which showed a 4.8% growth from the same period last year. Retail net sales rose by 6.3% to reach $280.8 million, while Foodservice net sales saw a 3.0% increase, coming in at $228.5 million. Overall, consolidated gross profit climbed by $11.3 million, marking a 9.3% improvement and setting a new second-quarter record at $132.8 million.
Lancaster Colony Corporation (NASDAQ:LANC)’s cash position also remained stable, with cash and cash equivalents amounting to over $203 million at the end of December 2024, up from $163.4 million six months ago. The company offers a quarterly dividend of $0.95 per share, having raised it by 5.6% in November 2024. This was its 62nd consecutive year of dividend growth. The stock has a dividend yield of 2.11%, as of April 4. With a 5-year average dividend growth rate of 6.5%, LANC is one of the best dividend kings on our list.
10. California Water Service Group (NYSE:CWT)
5-Year Average Annual Dividend Growth Rate: 7.21%
California Water Service Group (NYSE:CWT) is an American public utility company, headquartered in California. The company offers drinking water and wastewater services. In Q4 2024, the company reported revenue exceeding $222 million, marking a 4% increase compared to the same period a year earlier. This growth was supported by higher rates, which added $24.2 million to the top line. A key highlight for the quarter was the submission of the 2024 California General Rate Case (GRC), outlining planned investments to support a reliable and sustainable water supply for customers.
Operating expenses rose to $189.9 million, up $10.6 million from $179.3 million in the prior-year quarter. The cost of water production increased by $3.4 million to $73.7 million, mainly due to higher wholesale rates and greater consumption.
California Water Service Group (NYSE:CWT) continues to demonstrate financial strength and a commitment to shareholder returns. On January 29, the company announced a 7.1% increase to its quarterly dividend, raising it to $0.30 per share. This was the company’s 58th consecutive year of dividend growth, which makes it one of the best dividend kings on our list. In the past five years, the company has raised its payouts at an annual average rate of 7.21%. As of April 4, the stock has a dividend yield of 2.48%.
9. Cincinnati Financial Corporation (NASDAQ:CINF)
5-Year Average Annual Dividend Growth Rate: 7.68%
Cincinnati Financial Corporation (NASDAQ:CINF) ranks ninth on our list of the best dividend kings for safe dividend growth. The American insurance company offers property and casualty insurance services to its consumers. The company reported disappointing earnings on some fronts in the fourth quarter of 2024. Its revenue for the quarter came in at $2.53 billion, which fell by 24% from the same period last year. Net income also dropped to $405 million, from $1.18 billion in the prior-year period. However, the company’s operating income of $497 million showed a 38% increase on a YoY basis. Its net written premiums also grew by 17% during the quarter.
In addition, underwriting profit for the quarter rose by 40% compared to the strong performance in 2023, bringing the full-year underwriting profit to $580 million. For the full year 2024, the combined ratio improved by 1.5 points to 93.4%, supported by disciplined underwriting practices and catastrophe losses remaining consistent with the previous year. Moreover, the core combined ratio for 2024, excluding catastrophe losses and on a current accident year basis, was 1.9 points better than that of the full year 2023.
Cincinnati Financial Corporation (NASDAQ:CINF)’s cash position also showed growth despite its poor earnings in some areas. The company ended the year with $983 million available in cash and cash equivalents, up from $907 million in December 2023. On January 31, it declared a 7.4% hike in its quarterly dividend to $0.87 per share. Through this increase, the company stretched its dividend growth streak to 64 years. The stock has a dividend yield of 2.64%, as of April 4.
8. Stepan Company (NYSE:SCL)
5-Year Average Annual Dividend Growth Rate: 7.69%
Stepan Company (NYSE:SCL) is an American chemical manufacturing company, based in Illinois. The company mainly specializes in specialty chemicals for consumer and industrial purposes. It reported strong earnings in FY24. Adjusted EBITDA for the full year rose by 4% compared to the previous year, despite being weighed down by a number of one-time items and pre-operating costs tied to the company’s new facility in Pasadena. The Surfactants and Specialty Products segments posted solid double-digit growth in Adjusted EBITDA, though this was partially offset by softer demand in the Polymers segment. On a broader scale, global sales volume increased by 1%, supported by a 2.5% rise in the Surfactant business. The company noted encouraging momentum in Surfactant growth across several of its key strategic end markets.
Stepan Company (NYSE:SCL) also has a strong balance sheet, supported by solid cash generation. The company’s operating cash flow for the fourth quarter came in at $68.3 million, and its free cash flow amounted to $32.1 million. This healthy cash position has enabled the company to raise its dividends for 57 consecutive years, which makes it one of the best dividend kings on our list. Currently, it offers a quarterly dividend of $0.385 per share for a dividend yield of 3.18%, as of April 4.
At the end of Q4 2024, 17 hedge funds in Insider Monkey’s database owned stakes in Stepan Company (NYSE:SCL), up from 13 in the previous quarter. The consolidated value of these stakes is more than $27 million. Among these hedge funds, Gotham Asset Management owned the largest stake in the company in Q4.
7. American States Water Company (NYSE:AWR)
5-Year Average Annual Dividend Growth Rate: 8.95%
American States Water Company (NYSE:AWR) deals in delivering safe, reliable, and sustainable services and products. Unlike companies in unregulated industries that can adjust prices when they see fit, businesses operating in regulated sectors must first obtain approval from public utility commissions before increasing customer rates. Though this limits its pricing flexibility, the company’s operations come with guaranteed rates of return, offering a level of financial stability. This predictability gives management clearer visibility into future cash flows, which aids in planning for long-term investments, including dividend payments.
In the fourth quarter of 2024, American States Water Company (NYSE:AWR) reported revenue of over $143 million, which showed a 14.3% growth from the same period last year. The company’s Water segment remained the winner with $92.6 million in revenue, up from $86.7 million in the prior-year period.
American States Water Company (NYSE:AWR) is popular among income investors because of its strong dividend history. The company has consistently paid common dividends every year since 1931 and has raised its dividend annually for 70 straight years. From 2019 through 2024, the company’s quarterly dividend has grown at a compound annual growth rate (CAGR) of 8.95%, and its calendar year dividend payments have posted a 10-year CAGR of 8.0% through 2024. AWR’s current long-term goal is to maintain a dividend growth rate of over 7% annually. Its quarterly dividend currently sits at $0.4655 per share for a dividend yield of 2.37%, as of April 4.
6. S&P Global Inc. (NYSE:SPGI)
5-Year Average Annual Dividend Growth Rate: 10.11%
S&P Global Inc. (NYSE:SPGI) is a New York-based company that offers services in financial information and analytics. The company relies heavily on a subscription-based revenue model, with over 75% of its income generated from recurring sources. This setup offers strong financial stability, even during times of market volatility—particularly in the debt issuance space, where its credit ratings division remains a core revenue driver. Additional contributions from its Market Intelligence unit, which provides financial data and analytics, along with its Indices and Commodity Insights segments, help support a steady stream of income.
In the fourth quarter of 2024, S&P Global Inc. (NYSE:SPGI) posted a 14% year-over-year increase in revenue, while adjusted earnings per share rose by 20% to $3.77. The company also bolstered investor confidence with an optimistic outlook for the year ahead and the announcement of a new share repurchase program. Revenue from its Ratings segment jumped 31% year-over-year, reflecting a broader push beyond traditional investment-grade and high-yield debt into other loan categories and structured finance products—further enhancing revenue diversification.
S&P Global Inc. (NYSE:SPGI) also reported a strong liquidity position. For the full year, operating cash flow climbed to $5.7 billion from $3.7 billion in 2023, while free cash flow surged to $5.27 billion from $3.2 billion the previous year. This solid cash performance enabled the company to return $1.1 billion to shareholders through dividends. It pays a quarterly dividend of $0.96 per share and offers a dividend yield of 0.85%, as of April 4. With 53 consecutive years of dividend increases, SPGI is one of the best dividend kings to invest in.
5. Abbott Laboratories (NYSE:ABT)
5-Year Average Annual Dividend Growth Rate: 11.16%
Abbott Laboratories (NYSE:ABT) ranks fifth on our list of the best dividend kings for safe dividend growth. The American medical device company offers services and products in diagnostics, nutrition, and established pharmaceuticals. What makes it a particularly stable and secure investment is the broad diversification of its operations. The stock has surged by nearly 10% since the start of 2025.
In the fourth quarter of 2024, Abbott Laboratories (NYSE:ABT) posted a revenue of $11 billion, marking a year-over-year increase of over 7%. However, the result came in slightly below Wall Street estimates, missing expectations by more than $57 million. Still, the company showed steady progress over the course of the year.
For the full year, Abbott Laboratories (NYSE:ABT) hit the upper end of its original January guidance for both organic sales growth and adjusted earnings per share. Backed by robust research and development, the company introduced over 15 new growth initiatives in 2024, which included newly approved products and expanded uses for existing treatments.
Abbott Laboratories (NYSE:ABT) offers a quarterly dividend of $0.59 per share for a dividend yield of 1.90%, as of April 4. The company has raised its payouts for 53 consecutive years, with a five-year average annual dividend growth rate of over 11%.
4. Target Corporation (NYSE:TGT)
5-Year Average Annual Dividend Growth Rate: 11.23%
An American retail company, Target Corporation (NYSE:TGT) operates a chain of hypermarkets and discount department stores. The company stands out for its wide-ranging product lineup, which includes apparel, electronics, and home goods. A key driver of its revenue comes from its owned and exclusive brands, which not only provide customers with distinctive offerings but also help boost profit margins.
Target Corporation (NYSE:TGT) has successfully implemented an omnichannel approach, delivering a consistent shopping experience across both physical stores and digital platforms. With over 96% of sales fulfilled through its retail locations, Target effectively utilizes its store network as fulfillment centers, giving it a strategic edge over online-only retailers.
Target Corporation (NYSE:TGT) also benefits from a solid cash position, setting it apart from many of its competitors. In the fiscal year 2024, the company reported $7.3 billion in operating cash flow. This financial strength enabled it to return $513 million to shareholders through dividends in the fourth quarter, slightly up from $508 million during the same period a year earlier. It offers a quarterly dividend of $1.12 per share, translating to a dividend yield of 4.68%, as of April 4. The company has been rewarding shareholders with growing dividends for the past 53 years, which makes it one of the best dividend kings on our list.
3. Parker-Hannifin Corporation (NYSE:PH)
5-Year Average Annual Dividend Growth Rate: 13.12%
Parker-Hannifin Corporation (NYSE:PH) is an Ohio-based manufacturing company that specializes in motion and control technologies. The company operates through two main segments: Diversified Industrial and Aerospace Systems. Its product range spans from basic industrial components to advanced aerospace technologies. It supplies these offerings to original equipment manufacturers as well as a broad base of customers around the globe.
Parker-Hannifin Corporation (NYSE:PH) is well-regarded for its robust dividend payouts and strong cash flow generation. For FY24, it reported a 20% increase in year-to-date operating cash flow, reaching a record $2.1 billion, or 14.6% of sales, compared to $1.8 billion in the previous year. It also saw significant improvements in adjusted segment operating margins, with the Aerospace Systems segment delivering particularly strong results. This strong financial performance has contributed to the record operating cash flow. Looking ahead, the company expects a 50% increase in free cash flow and plans to double its dividend over the next five years, providing shareholders with higher payouts annually, which is expected to positively impact the stock’s value.
Parker-Hannifin Corporation (NYSE:PH) pays a quarterly dividend of $1.63 per share and has a dividend yield of 1.26%, as of April 4. The company holds one of the longest dividend growth streaks in the market, spanning 68 years. Moreover, its five-year average annual dividend growth comes in at over 13%.
2. Nordson Corporation (NASDAQ:NDSN)
5-Year Average Annual Dividend Growth Rate: 15.18%
Nordson Corporation (NASDAQ:NDSN) is an American multinational manufacturing company that designs and produces dispensing equipment used for applying adhesives, sealants, coatings, and other materials. Founded in 1956 and based in Ohio, Nordson operates through two key segments: Industrial Precision Solutions (IPS) and Advanced Technology Solutions (ATS), providing precision technology products to its customers.
In fiscal Q1 2025, Nordson Corporation (NASDAQ:NDSN) reported mixed financial results. Quarterly revenue was $615.4 million, a 2.8% decline compared to the same period last year. While acquisitions contributed an 8% boost to sales, this was offset by a 9% drop in organic sales and a 2% negative impact from currency fluctuations. Net income for the quarter was $95 million, or $1.65 per diluted share, down from $110 million, or $1.90 per diluted share, in the prior year.
Nordson Corporation (NASDAQ:NDSN) currently pays a quarterly dividend of $0.78 per share and has a dividend yield of 1.77%, as of April 4. By the end of the quarter, the company had $130.4 million in cash and cash equivalents, up from $116 million a year ago. The company generated $160 million in operating cash flow for the quarter, with free cash flow totaling $137.7 million. Thanks to this solid cash position, the company increased its payouts for 61 years in a row.
1. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Average Annual Dividend Growth Rate: 16.39%
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement company, based in North Carolina. The company holds a dominant position in the North American home improvement retail market, offering a wide range of products and supported by an extensive store network. Its well-developed distribution system serves both do-it-yourself (DIY) homeowners and professional contractors, while the integration of digital and physical channels enhances the overall customer experience.
In the fourth quarter of 2024, Lowe’s Companies, Inc. (NYSE:LOW) reported steady earnings, with revenues reaching $18.55 billion. Although revenue declined slightly by 0.3% year-over-year, it exceeded earnings expectations by $260 million. Comparable sales grew by 0.2%, driven by strong performance in the Pro and digital segments, with a successful holiday season and recovery efforts post-hurricane also contributing to the growth.
At the end of 2024, Lowe’s Companies, Inc. (NYSE:LOW) cash and cash equivalents totaled $1.8 billion, up from $921 million the previous year. The company continued to generate strong cash flow, with operating cash flow for the fiscal year 2024 rising to $9.7 billion from $8.1 billion in 2023. Throughout the year, it returned $6.5 billion to shareholders through dividends and share repurchases.
Lowe’s Companies, Inc. (NYSE:LOW) pays a quarterly dividend of $1.15 per share and has a dividend yield of 2.06%, as of April 4. Its dividend growth streak spans 59 years, with a five-year average annual dividend growth rate of 16.39%.
Overall, Lowe’s Companies, Inc. (NYSE:LOW) ranks first on our list of the best dividend kings for safe dividend growth. While we acknowledge the potential of LOW as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than LOW but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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