Only 3 Dividend Kings Passed This Brutal Screen. They Could Pay You Well for Years to Come.

Only 3 Dividend Kings Passed This Brutal Screen. They Could Pay You Well for Years to Come.

Rick Orford

4 min read

The longer the market stays noisy, the more attractive businesses look.

That is especially true when those businesses have raised their dividends for more than 50 consecutive years, a rare consistency in any market. Rarer still are those that also deliver strong payouts, healthy revenue growth, and standout long-term gains. Those are the names I wanted to focus on here today: three standout dividend kings.

Using Barchart’s Stock Screener, I selected the following filters to get my list:

Annual Dividend Yield % (FWD): Left blank so I can sort it later from highest to lowest.

5-Year Percent Change: Greater than 50%. I am looking for stocks with more than 50% of upside over the last 5 years.

5-YR Dividend Growth (%): Above 20%. Companies with “High” to “Very High” dividend increases.

5-YR Revenue Growth (%): Above 30%. I am looking for companies with “Very High” revenue in the last 5 years.

Current Analyst Rating: “Moderate” to “Strong Buy”.

Number of Analysts: 12 or higher. The more, the better.

Dividend Investing Ideas: Dividend Kings.

I ran the screen and got exactly three results, and I'll cover each, starting with AbbVie, which has the highest forward annual dividend yield.

AbbVie Inc (ABBV)

AbbVie Inc. is a biopharmaceutical company that develops medicines for complex, long-term health conditions across immunology, oncology, neuroscience, and aesthetics. It's also making progress in oncology, with recent Phase 2 data for ELAHERE showing encouraging results in platinum-sensitive ovarian cancer.

In its most recent quarterly financials, the company reported sales rose 10% YOY to $16.6 billion. Net income is also up over 8,300% to $1.8 billion, after bouncing from a net loss from the past year. Revenue is also up 33.53% over the last 5 years.

Further, AbbVie pays a $6.92 dividend per year per share, translating to around a 3.3% yield- the highest on this list. It also has a 5-year dividend growth of 40%, while the stock gained 87% over the same period.

With that, a consensus among 31 analysts rates the stock a “Moderate Buy.” Finally, a high target price suggests there's as much as 43% potential upside over the next year.

Nucor Corp (NUE)

The next Dividend King on my list is Nucor Corp, one of the largest steel producers in North America, supplying steel and steel products used across construction, infrastructure, manufacturing, and energy. That reach remains important as energy security draws more attention, with Nucor providing steel for projects such as pipelines and other power-related construction.

The company’s recent quarterly financials reported sales are up 8.6% YOY to $7.7 billion, while net income grew 32% to $378 million. It also boasts a 61% 5-year revenue growth, which has helped Nucor increase its dividends for 53 consecutive years. For investors, it means a payout of $2.24 per share per year, currently yielding around 1.2%. Its dividends have also increased 37% in the last five years, while the stock is up 146% over the same period.

Wall Street appears to like Nucor’s trajectory, as a consensus among 15 analysts rates the stock a “Strong Buy”. Based on the mean-to-high target prices, that points to roughly 1% to 17% of potential upside. It’s also worth noting that the target price has increased from $210 to $225 over the past few days.

Parker-Hannifin Corp (PH)

The last Dividend King on my list is Parker-Hannifin Corp, a global manufacturer of motion and control technologies used across industrial, aerospace, and transportation markets. Its products help manage the movement of fluids, gases, and mechanical systems, and that aerospace presence was recently reflected in a new EASA approval for enhanced rotor bearings used on several Airbus helicopter models.

In its recent quarterly financials, the company reported that sales rose 9.1% to 5.2 billion. However, net income was down 11% to $845 million, mainly because the prior-year quarter included a one-time after-tax gain from divestitures, making this year’s comparison look weaker. Still, Parker’s revenue has increased by 45% over the last five years.

This continued growth is reflected in its dividends, which have increased for 69 consecutive years. The company pays $7.20 per share per year, yielding around 0.73%. This dividend rate has grown by 90% over the last five years, while the stock is up 200% over the same period.

Further, a consensus of 25 analysts rates the stock a “Strong Buy,” while the mean and high target prices imply potential upside of 8% to 22% over the next year.

Final thoughts

These three Dividend Kings prove that a boring, long-term dividend-investing strategy can be rewarding for those who have the patience. Companies with a strong history of high percentage growth, dividend growth, and revenue growth often point in the right direction.

And while that does not guarantee success, these stocks, which survived a brutal screen, could be among the best additions to an income-focused investor’s portfolio and may be better positioned to withstand market headwinds, including the ones we are experiencing today.

On the date of publication, Rick Orford 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. This article was originally published on Barchart.com