In this article, we discuss 16 best consistent dividend stocks to buy. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Consistent Dividend Stocks to Buy.
Income-generating stocks are all the rage as the stock market suffered huge losses last year. According to a report by Reuters, Wall Street recorded its biggest annual drop in 2022 since the financial crisis of 2008, as the S&P 500 shed nearly $8 trillion in market cap. Growth stocks also recorded their worst performance in a decade, turning investors’ attention toward overlooked dividend equities.
Quality companies that have raised their payouts for a significant period are considered safe during fluctuating market conditions. Historical analysis of these stocks shows that they have outperformed their peers when turbulence in the market occurs. Over the past five decades, dividend growers have surpassed other asset classes when inflation ranged between 4% to 13% annually, as reported by Sterling Capital. Another reason why dividends make reliable investments is due to the compounding effects of dividend income and price appreciation. According to a report by Schroders, the average annual return across eight markets was 4.3% in the last 25 years, which increased to an average of 7.1% including reinvested dividends.
Analysts often advise investing in companies that have proven track records of dividend growth, as these companies are likely to continue growing their payouts in the long term. In addition to this, such companies are considered less risky as they have stable cash flows and histories of profitability. Exxon Mobil Corporation (NYSE:XOM), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG) are some major dividend companies with solid dividend growth streaks and strong balance sheets. In view of this, we will discuss the best consistent dividend stocks to buy in this article.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology:
For this list, we shortlisted dividend companies that have raised their payouts for at least 10 years. From that list, we selected companies that have a 5-year average dividend payout ratio of less than 50%, which shows the stability of their future dividends. We also measured hedge fund sentiment around each stock, according to Insider Monkey’s Q4 2022 data of 943 elite funds. The stocks are ranked in descending order of their consecutive years of dividend growth.
16 Best Consistent Dividend Stocks to Buy
16. Cummins Inc. (NYSE:CMI)
Consecutive Years of Dividend Growth: 13
5-Year Average Payout Ratio: 43.4%
Cummins Inc. (NYSE:CMI) is an Indiana-based company that manufactures and distributes power generation products. In the fourth quarter of 2022, the company posted revenue of $7.8 billion, which showed a 32.2% growth from the same period last year. In FY22, it returned over $1.3 billion to shareholders in dividends and share repurchases. It is among the best consistent dividend stocks on our list.
Cummins Inc. (NYSE:CMI) can be added to dividend portfolios alongside popular dividend stocks like Exxon Mobil Corporation (NYSE:XOM), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG).
On February 14, Cummins Inc. (NYSE:CMI) declared a quarterly dividend of $1.57 per share, which fell in line with its previous dividend. The company maintains a 13-year streak of consistent dividend growth and has a 5-year average payout ratio of 43.4%. The stock’s dividend yield on February 28 came in at 2.58%.
At the end of Q4 2022, 33 hedge funds tracked by Insider Monkey reported owning stakes in Cummins Inc. (NYSE:CMI), up from 32 in the previous quarter. The collective value of these stakes is over $465.3 million. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q4.
15. Williams-Sonoma, Inc. (NYSE:WSM)
Consecutive Years of Dividend Growth: 16
5-Year Average Payout Ratio: 34.3%
Williams-Sonoma, Inc. (NYSE:WSM) is an American consumer retail company that specializes in kitchenware and other home improvement products. In February, Barclays initiated its coverage of the stock with an Equal Weight rating and a $135 price target, expressing concerns over slowing industry demand.
Williams-Sonoma, Inc. (NYSE:WSM) is one of the best consistent dividend stocks on our list as the company has been raising its payouts for the past 16 years. It has a 5-year average payout ratio of 34.3%. The company currently offers a quarterly dividend of $0.78 per share for a dividend yield of 2.46%, as of February 28.
At the end of December 2022, 29 hedge funds tracked by Insider Monkey owned investments in Williams-Sonoma, Inc. (NYSE:WSM), worth over $305.3 million collectively.
Voss Capital mentioned Williams-Sonoma, Inc. (NYSE:WSM) in its Q1 2022 investor letter. Here is what the firm has to say:
“We believe shorting furniture retailers has arguably become a consensus view on the back of widely known tough comps from early 2021 (+26% and +40% SSS Comps for WSM in calendar Q1/Q2 ‘21) and fear of pull forward of demand, which seems to be corroborated by weak credit card data in the category the last few weeks and a poor outlook from furniture e-Commerce giant Wayfair, not to mention a panic-inducing, rambling conference call from the oft colorful CEO of Restoration Hardware. Lazy thematic macro analysis that stops there, however, paints an incomplete picture of what has transpired at many individual companies like WSM that have been deemed COVID beneficiaries that are now at all-time low valuations.
WSM is a furniture and home décor retailer that owns several well-known brands: William Sonoma, Pottery Barn, Rejuvenation, Mark & Graham, and most importantly, west elm. While perhaps thought of as a dying mall-based brick & mortar retailer, WSM derives the vast majority (66%+) of its revenue from e-Commerce and has been a remarkably steady performer, remaining free cash flow positive every year since at least 2007 and achieving positive same store sales comps since 2010, including +17% in 2020, +22% in 2021 with guidance for a further mid-to-high single digit growth again this year. Within the overall positive sales trends, west elm’s consistent growth has been even more impressive, with a 16% average annual same-store sales growth rate since 2012. To little fanfare, by our calculation, WSM has become the single highest quality retailer in public markets with a 58% return on invested capital (ROIC) in 2021 and a 39% ROIC on average over the past 3 years…” (Click here to see the full text)
14. ITT Inc. (NYSE:ITT)
Consecutive Years of Dividend Growth: 17
5-Year Average Payout Ratio: 34.5%
ITT Inc. (NYSE:ITT) is a New York-based manufacturing company that produces components for aerospace, energy, and industrial markets. In the fourth quarter of 2022, the company posted revenue of $774.6 million, which showed a 13% growth from the prior-year period. The company’s operating cash flow for the quarter came in at $163 million and its free cash flow amounted to $132 million, up 36% and 58% from the same period last year, respectively.
ITT Inc. (NYSE:ITT), one of the best consistent dividend stocks, announced a 10% hike in its quarterly dividend to $0.29 per share on February 9. This was the company’s 17th consecutive year of dividend growth. The stock has a dividend yield of 1.28%, as of February 28. Its 5-year average payout ratio stands at 34.5%.
DA Davidson raised its price target on ITT Inc. (NYSE:ITT) to $105 in February with a Buy rating on the shares after the company’s recent quarterly beat. The firm expects the company’s order rates to remain strong this year.
As of the close of Q4 2022, 21 hedge funds in Insider Monkey’s database owned stakes in ITT Inc. (NYSE:ITT), compared with 24 in the previous quarter. These stakes have a total value of over $385.3 million. With over 1.3 million shares, Select Equity Group was the company’s leading stakeholder in Q4.
13. Republic Services, Inc. (NYSE:RSG)
Consecutive Years of Dividend Growth: 18
5-Year Average Payout Ratio: 44.3%
Republic Services, Inc. (NYSE:RSG) is an American solid waste disposal company, based in Arizona. Baird raised its price target on the stock to $142 in February with a Neutral rating on the shares, following the company’s recent quarterly earnings. The firm also expects the company to show another strong year of fundamental performance.
In Q4 2022, Republic Services, Inc. (NYSE:RSG) reported a 19.7% year-over-year growth in its revenue at $3.53 billion. The company’s operating cash flow for the quarter came in at $3.2 billion and its adjusted free cash flow came in at $1.7 billion. It returned over $796 million to shareholders in FY22.
Republic Services, Inc. (NYSE:RSG) pays a quarterly dividend of $0.495 per share and has a dividend yield of 1.53%, as of February 28. The company has raised its payouts for 18 years in a row, which makes it one of the best consistent dividend stocks on our list. Moreover, it has a solid 5-year average payout ratio of 44.3%.
As per Insider Monkey’s Q4 2022 database, 41 hedge funds owned stakes in Republic Services, Inc. (NYSE:RSG), the same as in the previous quarter. These stakes have a total value of over $1.48 billion.
12. Assurant, Inc. (NYSE:AIZ)
Consecutive Years of Dividend Growth: 18
5-Year Average Payout Ratio: 37.2%
Assurant, Inc. (NYSE:AIZ) is a New York-based insurance company that provides related services to its consumers around the world. In 2022, the company raised its quarterly dividend for the 18th consecutive year, which makes it one of the best consistent dividend stocks on our list. It currently pays a quarterly dividend of $0.70 per share and has a dividend yield of 2.20%, as of February 28.
In the fourth quarter of 2022, Assurant, Inc. (NYSE:AIZ) declared a quarterly dividend of $2.65 billion, which showed a 3.1% growth from the same period last year. At the end of December 2022, the company had over $9 billion available in cash and cash equivalents and its total assets amounted to over $33 billion.
At the end of Q4 2022, 18 hedge funds tracked by Insider Monkey reported owning stakes in Assurant, Inc. (NYSE:AIZ), worth over $265 million. Among these hedge funds, Lyrical Asset Management was the company’s leading stakeholder in Q4.
11. Northrop Grumman Corporation (NYSE:NOC)
Consecutive Years of Dividend Growth: 19
5-Year Average Payout Ratio: 27.3%
Northrop Grumman Corporation (NYSE:NOC) is an American aerospace and defense company that also provides military technology to institutions. In January, BofA maintained a Buy rating on the stock with a $655 price target, highlighting the company’s better-than-expected outlook for 2023.
On February 16, Northrop Grumman Corporation (NYSE:NOC) declared a quarterly dividend of $1.73 per share, which was consistent with its previous dividend. The company maintains a 19-year streak of dividend growth and has a 5-year average payout ratio of 27.3%. The stock’s dividend yield on February 28 came in at 1.47%.
The number of hedge funds tracked by Insider Monkey owning stakes in Northrop Grumman Corporation (NYSE:NOC) grew to 49 in Q4 2022, from 46 in the previous quarter. The stakes owned by these hedge funds have a total value of over $1.5 billion.
LRT Capital Management, an investment management firm, mentioned Northrop Grumman Corporation (NYSE:NOC) in its fourth-quarter 2022 investor letter. Here’s what the firm said:
“Based in Virginia, Northrop Grumman Corporation (NYSE:NOC) is one of the world’s largest defense contractors with annual revenue more than $30 billion. The company operates in a cozy oligopoly, that after decades of consolidation the US defense market is now controlled by five large companies: The Boeing Company (BA), General Dynamics Corporation (GD), Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC), and Raytheon Technologies Corporation (RTX).
Industry barriers to entry are immense, government procurement cycles are extremely long, and the consolidated industry structure reflects this. This industry structure has allowed Northrop to earn stable mid-teens returns on invested capital (ROIC) and grow earnings per share at a rate of over 13% per year in the past decade, despite a topline that has grown only in-line with inflation. Even after the recent run-up in the stock price, it trades at approximate 15x, next year’s earnings estimates, far below the S&P 500 index, despite being an above average company. While nominally, there are five major defense contractors, the true industry concentration is even higher because not all companies compete in all possible business segments. General Dynamics’ division submarine division, Electric Boat, is the sole supplier of nuclear power submarines in the United States. Lockheed Martin is the sole supplier of the F-35 and F-22. Northrop was the sole bidder on the contract to develop the next generation of intercontinental ballistic missiles; and so on…” (Click here to read the full text)
10. Waste Management, Inc. (NYSE:WM)
Consecutive Years of Dividend Growth: 20
5-Year Average Payout Ratio: 49.2%
Waste Management, Inc. (NYSE:WM) is a Texas-based company that offers environmental services to its consumers. On February 6, the company declared a 7.7% hike in its quarterly dividend to $0.70 per share. Through this increase, the company took its dividend growth streak to 20 years, which makes it one of the best consistent dividend stocks on our list. The stock has a dividend yield of 1.85%, as of February 28.
Following the company’s Q4 earnings, Citigroup maintained a Buy rating on Waste Management, Inc. (NYSE:WM) in February, with a $180 price target. The firm also expects an improvement in the company’s free cash flow.
At the end of Q4 2022, 44 hedge funds owned investments in Waste Management, Inc. (NYSE:WM), up from 41 in the previous quarter. These investments are worth over $6.3 billion collectively.
Diamond Hill Capital mentioned Waste Management, Inc. (NYSE:WM) in its Q1 2022 investor letter. Here is what the firm has to say:
“We also initiated a position in Waste Management (NYSE:WM), one of the largest providers of waste collection services in the US. We believe it is a high-quality business with ownership of key landfill assets that provide pricing power over the long term. Its stock was trading at a discount to our estimate of intrinsic value due to short-term market concerns over an increase in growth investments—we expect these investments to be value-creating over the long term.”
9. Perrigo Company plc (NYSE:PRGO)
Consecutive Years of Dividend Growth: 20
5-Year Average Payout Ratio: 29.9%
Perrigo Company plc (NYSE:PRGO) is an Ireland-based pharmaceutical company that manufactures dermatological products for its consumers. In Q4 2022, the company reported revenue of $1.2 billion, which showed a 4.6% growth from the same period last year. The company’s operating cash flow for FY22 came in at $307 million, up from $156 million in the prior-year period.
Perrigo Company plc (NYSE:PRGO), one of the best consistent dividend stocks, has a 5-year average payout ratio of 29.9%. On February 21, the company declared a 5% raise in its quarterly dividend to $0.273 per share. This was the company’s 20th consecutive year of dividend growth. The stock’s dividend yield on February 28 came in at 3.00%.
At the end of December 2022, Perrigo Company plc (NYSE:PRGO) was a part of 21 hedge fund public portfolios, according to Insider Monkey’s data. The stakes owned by these hedge funds have a total value of over $421.7 million.
Sound Shore Management mentioned Perrigo Company plc (NYSE:PRGO) in its Q2 2022 investor letter. Here is what the firm has to say:
“On the positive side, a number of our health care names outperformed, including health product supplier Perrigo (NASDAQ:PRGO). Perrigo is the leading private label and branded drug manufacturer with a market share of approximately 70%. Consumers may not realize it, but the store brand Tylenol, Allegra, Prilosec, etc. that they purchase is likely produced by Perrigo. Having navigated through supply chain disruptions during the pandemic, management is aimed at growth and margin improvement and we see significant upside potential from here.”
8. L3Harris Technologies, Inc. (NYSE:LHX)
Consecutive Years of Dividend Growth: 22
5-Year Average Payout Ratio: 44.6%
L3Harris Technologies, Inc. (NYSE:LHX) is a Florida-based aerospace and defense company that offers related tech services. On February 24, the company announced a quarterly dividend of $1.14 per share, having raised it by 1.8%. This marked the company’s 22nd consecutive year of dividend growth, which makes it one of the best consistent dividend stocks to buy. As of February 28, the stock has a dividend yield of 2.16%.
In February, Wells Fargo lifted its price target on L3Harris Technologies, Inc. (NYSE:LHX) to $230 with an Equal Weight rating on the shares, appreciating the company’s position this year.
In the fourth quarter of 2022, L3Harris Technologies, Inc. (NYSE:LHX) reported an operating cash flow of $782 million, and its adjusted free cash flow came in at $748 million. The company’s revenue for the quarter came in at $4.58 billion, up 5.24% from the same period last year.
L3Harris Technologies, Inc. (NYSE:LHX) was a popular stock among hedge funds in Q4 2022, as 45 funds in Insider Monkey’s database owned stakes in the company, up from 39 in the previous quarter. The collective value of these stakes is over roughly $1.3 billion.
7. FactSet Research Systems Inc. (NYSE:FDS)
Consecutive Years of Dividend Growth: 23
5-Year Average Payout Ratio: 31.9%
FactSet Research Systems Inc. (NYSE:FDS) is an American financial data and software company that specializes in providing business data. Credit Suisse upgraded the stock to Outperform in January and also raised its price target on the stock to $500. The firm appreciated the company’s data differentiation strategy and its related investments.
FactSet Research Systems Inc. (NYSE:FDS) currently offers a quarterly dividend of $0.89 per share and has a dividend yield of 0.85%, as of February 28. The company is one of the best consistent dividend stocks on our list as it has raised its payouts for 23 years in a row. Its 5-year average dividend payout ratio came in at a healthy 31.9%.
As of the close of Q4 2022, 38 hedge funds tracked by Insider Monkey reported having stakes in FactSet Research Systems Inc. (NYSE:FDS), growing from 31 a quarter earlier. The collective value of these stakes is over $451 million.
Baron Funds mentioned FactSet Research Systems Inc. (NYSE:FDS) in its Q4 2022 investor letter. Here is what the firm has to say:
“Despite growing warnings of a recession, the businesses in which we have invested have generally continued to report strong financial results. We have investments in several businesses that reported financial results in December and, therefore, offer recent publicly available data points. Market data vendor FactSet Research Systems Inc. (NYSE:FDS) generated earnings growth of 22.8% for its most recent quarter, which represents an acceleration from 8.7% in the prior quarter and approximately 20% during the prior year. FactSet is reaping the benefits of a multi-year investment cycle and unwavering focus on customer service to bring new products to market, consolidate spending from competitors, and realize price increases. FactSet’s new CFO has imbued the company with a vigorous expense discipline, which is favorably impacting margins.”
6. Casey’s General Stores, Inc. (NASDAQ:CASY)
Consecutive Years of Dividend Growth: 23
5-Year Average Payout Ratio: 16.1%
Casey’s General Stores, Inc. (NASDAQ:CASY) is an Iowa-based chain of convenience stores having over 2,000 stores across 16 states. In February, RBC Capital raised its price target on the stock to $268 with a Sector Perform rating on the shares, highlighting the company’s improving permitting and construction backdrop.
Casey’s General Stores, Inc. (NASDAQ:CASY) offers a quarterly dividend of $0.38 per share for a dividend yield of 0.72%, as of February 28. The company maintains a 23-year track record of consistent dividend growth. The company’s five-year average dividend payout ratio stands at 16.1%, which places it as one of the best consistent dividend stocks to buy. Exxon Mobil Corporation (NYSE:XOM), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG) are other dividend stocks popular among investors.
At the end of December 2022, 29 hedge funds tracked by Insider Monkey reported owning stakes in Casey’s General Stores, Inc. (NASDAQ:CASY), up from 24 in the previous quarter. These stakes are valued at over $204.4 million.
Upslope Capital Management mentioned Casey’s General Stores, Inc. (NASDAQ:CASY) in its Q4 2022 investor letter. Here is what the firm has to say:
“Focused exclusively on the Midwest/South, Casey’s General Stores, Inc. (NASDAQ:CASY)’s is the third largest independent convenience store operator in the U.S. The company has executed well and shares have outperformed a challenging market nicely since the position was initiated a year ago. It may seem strange to sell a position with this backdrop, but I did so for two reasons. First, it was purchased in the first place as a reasonably priced defensive during an orgy of speculation. In this context, CASY served its purpose. Second, given the developments of the past year and Upslope’s overall still-defensive portfolio, I think there are better uses of capital today – specifically cheaper, less-defensive longs. Some of these are highlighted in Exhibit 4 below.”
Click to continue reading and see 5 Best Consistent Dividend Stocks to Buy.
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Disclosure. None. 16 Best Consistent Dividend Stocks to Buy is originally published on Insider Monkey.
