In this article, we will take a look at some of the best dividend kings with the highest yields.
Dividend Kings are a distinguished group of companies that have achieved at least 50 consecutive years of dividend increases. While some of these companies are part of the S&P index, the two categories are not entirely overlapping. The appeal of Dividend Kings became especially clear after the disruptions caused by the COVID-19 pandemic in 2020. During this time, numerous companies either reduced or suspended their dividends, leaving income-focused investors disappointed. Many had assumed that dividend-paying stocks were inherently lower risk, only to face steep share price drops alongside payout cuts. However, Dividend Kings stand out for their remarkable consistency, boasting 50 years of uninterrupted dividend increases. This long history of reliable payouts provides a sense of stability, even in volatile market conditions.
Investors often gravitate toward firms with a track record of consistent dividend growth, as such companies tend to perform well in declining or stagnant markets. Even during periods of strong market performance, dividend growers have captured a significant share of the gains. Following a long-term dividend growth strategy can aid in compounding returns for investors. A T. Rowe Price report highlighted that, between 1985 and 2022, companies in the Russell index that consistently increased dividends outperformed the broader benchmark. Furthermore, these companies exhibited lower price volatility compared to the overall market.
Earning income through dividend stocks is a gradual process that requires patience and a commitment to long-term investing. These stocks are particularly suited for investors with a long-term horizon, as they have consistently outpaced inflation over time. According to data from Morningstar and Yale University’s Robert Shiller, since 1871, the market’s dividends per share have grown at an annualized rate 1.6 percentage points higher than inflation. Moreover, the gap between dividend growth and inflation has widened in recent years. Over the past 50 years, dividends have outpaced inflation by 2.5 percentage points annually, and in the last 20 years, the margin has grown to 4.6 percentage points per year.
During market rallies, dividend-growing stocks may underperform as investor enthusiasm and momentum often take precedence over fundamentals such as valuation and business quality. This trend has been especially noticeable in the recent past, with dividend stocks lagging behind the broader market. Nonetheless, maintaining a long-term strategy centered on dividend growth can be advantageous, as the benefits accumulate over time with each increase in payouts. Companies with solid fundamentals and robust financial stability are typically well-positioned to sustain and grow their dividends. In contrast, smaller or emerging businesses often prioritize reinvesting earnings into their operations to fuel growth. Given this, we will take a look at some of the best dividend kings with the highest yields.
Photo by Artem Beliaikin on Unsplash
Our Methodology:
To create this list, we examined a set of over 50 dividend king companies, recognized for consistently increasing dividends for 50 years or more. From this group, we selected companies with the highest dividend yields as of December 3 and organized them in ascending order based on their yield, from lowest to highest. We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 900 as of Q3 2024.
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).
15. Genuine Parts Company (NYSE:GPC)
Dividend Yield as of December 3: 3.14%
Genuine Parts Company (NYSE:GPC) is an American industrial supplies company that specializes in automotive and industrial replacement parts. The stock is down by over 8.4% since the start of 2024 because of temporary business headwinds. The company is currently dealing with two significant demand challenges. The primary issue is a slowdown in industrial production activity within its key U.S. market, which outweighs the growth in demand from international markets. Additionally, there has been a slight decline in sales of replacement automotive parts.
In the third quarter of 2024, Genuine Parts Company (NYSE:GPC) reported revenue of $5.97 billion, which showed a 2.5% growth from the same period last year. The revenue also beat estimates by $21.4 million. However, the company acknowledged that its results fell short of expectations, largely due to ongoing challenging market conditions in Europe and underperformance in its Industrial segment. Its Global Industrial sales of $2.2 billion fell by 1.2% from the prior-year period.
Oakmark Funds highlighted the positives in the company’s business in its Q3 2024 investor letter. Here is what the firm has to say:
“Genuine Parts Company (NYSE:GPC) is a distributor of automotive and industrial replacement parts. The company primarily operates under the NAPA brand name in the automotive market and Motion Industries in the industrials market. The two business segments address different end markets but share some attractive traits. In both markets, the majority of sales are replacement parts, which leads to steady demand and dampened cyclicality. Customers often prioritize speed and service over price, which promotes a rational competitive pricing environment. Additionally, both markets are fragmented, with GPC representing one of a handful of scale players competing against a long tail of independent operators. The NAPA ecosystem, which includes nearly 2,000 company-owned stores and nearly 4,800 independently owned stores in North America, is a difficult-to-replicate asset that offers broad coverage nationwide. We see opportunity for the store base to operate more efficiently as management’s recent investments start to bear fruit. Motion Industries is the clear leader in its niche with roughly twice the revenue base of the closest direct competitor, and it differentiates itself via its technical salesforce and network density. Historically, GPC has consistently earned high returns on capital and supplements solid organic growth with value-accretive tuck-in acquisitions. The stock trades at a sizeable P/E discount to peers and the broader market, which we view as an attractive entry point.”
Genuine Parts Company (NYSE:GPC)’s cash position makes it one of the strongest dividend payers in the industry. In the first nine months of 2024, the company generated $1.1 billion in operating cash flow and its free cash flow for the period was $711 million. During this time, it returned $411 million to shareholders through dividends. The company currently pays a quarterly dividend of $1 per share and has a dividend yield of 3.14%, as of December 3. It is one of the best dividend kings on our list with 68 consecutive years of dividend growth.
At the end of Q3 2024, 27 hedge funds tracked by Insider Monkey held stakes in Genuine Parts Company (NYSE:GPC), compared with 31 in the previous quarter. The consolidated value of these stakes is over $391 million.
14. Johnson & Johnson (NYSE:JNJ)
Dividend Yield as of December 3: 3.22%
Johnson & Johnson (NYSE:JNJ) is an American pharmaceutical company, based in New Jersey. The company specializes in a wide range of biotech and medical products and offers related services to consumers. Its earnings came in strong in the third quarter of 2024, with revenues of $22.4 billion showing a 5.25% growth from the same period last year. In the first nine months of the year, the company generated $14 billion in free cash flow, up from $11.9 billion in the prior-year period.
Johnson & Johnson (NYSE:JNJ) has consistently grown its portfolio through a series of acquisitions. Most recently, it purchased the medical device firm V-Wave for an initial payment of $600 million. The agreement also includes potential milestone payments of up to $1.1 billion, depending on regulatory approvals and commercial achievements.
Johnson & Johnson (NYSE:JNJ) has been growing its dividends regularly for the past 62 years. The company’s current quarterly dividend comes in at $1.62 per share. With a dividend yield of 3.22%, as of December 3, JNJ is one of the best dividend kings on our list.
Insider Monkey’s database of Q3 2024 indicated that 81 hedge funds owned stakes in Johnson & Johnson (NYSE:JNJ), up slightly from 80 in the previous quarter. The stakes are valued at over $5.4 billion. Among these hedge funds, Fisher Asset Management owned the largest stake in the company.
13. National Fuel Gas Company (NYSE:NFG)
Dividend Yield as of December 3: 3.29%
National Fuel Gas Company (NYSE:NFG) is a New York-based natural gas distribution company. It operates across the entire natural gas value chain, encompassing upstream, midstream, and downstream activities. While most companies specialize in one or two of these areas, few—typically the largest energy firms—are involved in all three, and even then, their focus often includes oil. This comprehensive approach makes National Fuel Gas a distinctive option for investors seeking exposure exclusively to natural gas. The stock has delivered a 23.4% return to shareholders year-to-date.
National Fuel Gas Company (NYSE:NFG) reported revenue of $372 million in fiscal Q4 2024, which showed a slight growth of 0.85% from the same period last year. The company successfully negotiated a multi-year settlement for its New York rate case, with approval anticipated in the near future. In the Exploration and Production (E&P) segment, capital efficiency showed notable improvement as non-acquisition capital expenditures dropped by $58 million, or 10%, compared to the previous year, while production rose by approximately 5% to reach 392.0 Bcf.
In FY24, National Fuel Gas Company (NYSE:NFG) generated over $1 billion in operating cash flow. In June this year, the company raised its dividend for the 54th consecutive year. Currently, it pays a quarterly dividend of $0.515 per share for a dividend yield of 3.29%, as of December 3.
Insider Monkey’s database of Q3 2024 showed that 21 hedge funds held stakes in National Fuel Gas Company (NYSE:NFG), which remained unchanged from the previous quarter. These stakes have a total value of nearly $214 million. With over 1.3 million shares, GAMCO Investors was the company’s leading stakeholder in Q3.
12. Consolidated Edison, Inc. (NYSE:ED)
Dividend Yield as of December 3: 3.35%
Consolidated Edison, Inc. (NYSE:ED) ranks twelfth on our list of the best dividend kings. The American energy company remains dedicated to fulfilling its obligations to shareholders, now targeting the distribution of 55% to 65% of its adjusted earnings as dividends, a reduction from the earlier goal of 60% to 70%. This shift allows the company to retain more of its earnings to fund internal growth initiatives. This approach is anticipated to enhance earnings per share growth, potentially increasing overall returns by combining dividend payouts with stock price appreciation as earnings improve. Since the start of 2024, the stock has surged by over 6.6%.
Consolidated Edison, Inc. (NYSE:ED) reported strong earnings in the third quarter of 2024. The company’s revenue came in at $4.09 billion, which showed a 5.7% growth from the same period last year. The revenue also surpassed analysts’ estimates by $25.5 million. The company reported that its programs successfully reduced electric demand during another hot summer in New York, ensuring uninterrupted power supply for customers. As New Yorkers increasingly adopt electrification for building heating and transportation, the company has streamlined the process for installing EV chargers and continues to offer incentives for heat pump installations.
On October 17, Consolidated Edison, Inc. (NYSE:ED) declared a quarterly dividend of $0.83 per share, which fell in line with its previous dividend. The company has never missed a dividend since 1885 and has raised its payouts for 50 years in a row. The stock’s dividend yield on December 3 came in at 3.35%.
As per Insider Monkey’s database of Q3 2024, 29 hedge funds owned stakes in Consolidated Edison, Inc. (NYSE:ED), compared with 32 in the preceding quarter. These stakes have a collective value of over $601.8 million.