Dividend Kings: These 48 firms have hiked investor payouts for 50 YEARS

According to research by Aegon Asset Management, only 48 companies worldwide boast a track record of 50 years of consecutive dividend increases.

And perhaps surprisingly, given the UK market’s reputation for large payouts to investors, each of the companies is listed in North America.

The list includes some big consumer names like Johnson & Johnson and PepsiCo, as well as some lesser-known companies like Auto Data Processing.

But which of the ‘Aristocrats’, ‘Kings’ and ‘Diamonds’ dividends should income-oriented investors consider for their May portfolios?

Global Equities Investment Manager at Aegon AM, Mark Peden, says: “A Dividend King is a company with at least 50 years of dividend increases.

PepsiCo joined that elite band last year as Johnson & Johnson and Cincinnati Financial have been increasing their dividends for more than 60 consecutive years, becoming Dividend Diamonds.

“Only high-quality companies can sustain growing dividends for such long periods of time.

Dividend Aristocrats are companies that have increased their dividend every year for more than 25 years. We have several stocks in the Aegon Global Equity Income Fund, including ADP, NextEra and Air Products.”

Here, Peden highlights five stocks that make the grade.

1. Financial Cincinnati

“CINF has a market leading position with independent insurance agents relying on a small number of insurers leading to a high success rate,” says Peden.

“The hiring of 100 new agents per year in recent years should increase revenue as CINF tends to increase its win rate with new agents within the first 10 years.

It has a strong history of dividend growth, which is an investment driver that works well in the current market environment.

“The company has a prudent investment policy, with the bond portfolio more than covering their insurance reserve obligations with a diversified maturity profile.”

2. Nucor

“Steel supply interruptions during Covid, followed by the impact of the war in Ukraine on global steel markets, have pushed Nucor’s sales, operating profits and operating cash flows to record highs,” said Peden.

It is true that this is intrinsically a cyclical business, and it is likely that supply constraints will continue to ease and demand will weaken somewhat, which could well herald a peak for the business.

That said, Nucor has consistently increased its dividend during the peaks and troughs of the steel cycle – every year since going public in the early 1970s. Not many companies of this type can boast of that.’

3. Pepsi Co

PepsiCo is a good defensive name that offers exposure to the American consumer. The company is less exposed to restaurant demand than Coca Cola and is focused on the US.

It has a balanced portfolio, manageable debt, a strong and diverse line-up of brands and a 2.5% yield, having become a dividend king last year.

“While the stock’s entry point isn’t cheap and investors can try to be cute with the entry price, we think it’s worth a starting position, even at current levels.”

4. Johnson & Johnson

“Johnson & Johnson is a highly defensive company operating in advanced pharmaceutical discoveries, medical devices and consumer health.

“This strategy has made it possible to grow the dividend every year for the past 60 years.”

5. ADV

“Auto Data Processing (ADP) isn’t too far off, with 48 consecutive years now, but is still technically just an aristocrat, but has yet to take the throne.”

“ADP is the market leader in payroll software, growing revenue faster than the market with a clear roadmap to increase margins.

Shares of the company have been sold on fears of rising unemployment, although there are now signs that we are past peak worry.

“The share price has significant potential for revaluation with a solid balance sheet, strong cash flows and consistent execution that has enabled it to raise dividends consistently for 48 years.”

What about London-listed dividend payers?

Most UK-based investors will be able to buy shares from some of the biggest names in the above list through their respective trading platforms.

Not all companies will be accessible, however, and investors may want to look closer to home for top dividend payers who can beat inflation.

Here are six listed on the FTSE.