If dividend stocks are attractive to American investors these days, then Dividend Kings must cause most to swoon. Dividend Kings are companies that have increased their dividend each year for the last 50 years. That's year after year of increase during which Americans have gone through several recessions and bank crises.
Yet while these Dividend Kings can be a solid option to consider during a recession, it has to be said that the United States has not yet entered one as of writing. Does that mean you shouldn't consider Dividend Kings for now? Absolutely not.
If you choose Dividend Kings in the right sector, you could see both dividends and shares rise substantially both during and after economic downturns. These sectors usually tend to contain stable industries such as healthcare, industrials, infrastructure, utilities and the like.
So with that in mind, today we’re going to look at three Dividend Kings that investors should absolutely consider today. Each offers a stable sector, strong historical growth, and a stable compound annual growth rate (CAGR) in both share price and dividend.
3M Company
Probably one of the best Dividend Kings to consider these days is 3M Company (MMM), with a current dividend yield at 5.85%. While this is technically a technology company, it provides diversified technology services both in the United States and around the world.
3M stock offers everything from safety and healthcare to transportation and electronics. It’s been around since 1902, but these days it’s doing so well that it’s been announcing spin offs of its top performing sectors. This includes healthcare, which the company recently announced will become its own segment in the near future.
Yet shares of 3M stock fell quite drastically during the month of May, as the month marked poor performance in the industrial sector. This came from a weaker economic outlook, coupled with weaker production in China. That’s definitely of concern to a company like 3M stock, which deals in industrials.
During the company’s earnings report, however, management remained steadfast that 3M stock should recover by the second half of 2023. This report also came with the announcement of a major restructuring of 3M, including everything from layoffs to its supply-chain structure.
Shares weren’t doing so great until recently, when 3M stock announced it would be investing $146 million to expand its biotech manufacturing. Of course, this area has already proven lucrative for 3M as mentioned, which led to a share price jump of 13% practically overnight.
With such a strong future ahead, and plenty of historical growth in the past, 3M stock certainly looks like a solid Dividend King to consider. It currently holds 65 years of dividend growth behind it, yet continues to trade at a valuable 10.88 times earnings as of writing. Shares remain down 35% from 52-week highs.
Johnson & Johnson
Now that we’ve skirted around it, let’s get into healthcare specifically. And among Dividend Kings, Johnson & Johnson (JNJ) is definitely right at the top. The $411.4-billion company has claimed practically every type of healthcare product out there, from cancer drug treatments to skincare. It currently has a dividend yield sitting at 3.03%, as of writing.
In fact, these days it’s now one of the world’s most valuable companies. Even more impressive, it has a prime credit rating of AAA, which is even higher than the United States government. Similarly to 3M stock, JNJ stock has been around for quite a long time, coming on the scene in 1886. That makes it a stock you can be fairly certain will be around for some time to come.
That’s all well and good, but what investors should certainly concern themselves with are the dividends and share growth offered by JNJ stock. The last several quarters, investors have been pleased to see earnings that beat out analyst estimates. It remains a top stock recommendation for secure performance even during an economic downturn.
So why did JNJ stock drop recently? Despite beating out earnings estimates yet again, the company lowered its projected pharmaceutical sales performance for 2023 as the market continues to slump. Shares fell by about 5% from the news, despite still increasing its overall guidance for the year.
What investors should be happy with is that now you can grab this long-term hold for a deal. Shares trade at 15.43 times earnings, and are down 8.7% in the last year, as of writing. What’s more, JNJ stock is expected to spin off a consumer health business, reporting about $3.8 billion in sales. This could certainly bring shares back up to those heights. With 60 years of dividend growth behind it, it’s definitely another of the Dividend Kings to consider.
Procter & Gamble Company
Last, but certainly not least, we have Procter & Gamble (PG), which might be one of the most recession-proof stocks you can own, if those indeed exist. It currently holds a 2.57% dividend yield as of writing, with the company remaining tightly focused on consumer sales since being founded all the way back in 1837.
Similarly to the other Dividend Kings in this article, Procter offers a wide range of these consumer staples, but definitely holds a spot for healthcare products. Yet instead of looking for healthcare tech or pharmaceuticals, Procter stock looks to the everyday consumption of health and personal care.
Yet it hasn’t been completely smooth sailing for Procter stock. The company’s earnings have been a bit all over the place, though its most recent report came ahead of estimates. The company reported third quarter net sales for 2023 at $20.1 billion, which was up 4% year-over-year. Net earnings came in at $3.4 billion for the quarter.
As for the dividend, this company certainly holds the top spot. Procter stock announced the 67th consecutive year of dividend increases, and 133rd consecutive year of paying a dividend since 1890. This strong performance, with shares down just 9% since 52-week highs, has left the stock out of value range, but still a strong consideration.
On the date of publication, Amy Legate-Wolfe did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
