When it comes to stocks, they say past performance is no guarantee of future results (and it’s true). Still, past performance can often be a very good indication of what’s likely in the future.
With that as the backdrop, anyone looking for high-quality passive income at this time might want to start with the market’s most-proven dividend payers, as well as its most-proven dividend growers. Those are the so-called Dividend Kings. Here’s a closer look at your top five bets among these names right now.
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If you’re not familiar with them, they’re not difficult to understand. A Dividend King is simply a stock that’s raised its per-share payout annually for a minimum of 50 consecutive years. There’s no minimum annual increase required … just some degree of annual increase in its dividend payment.
The impressive aspect of these companies, of course, is that they remain able to continue paying and growing their yearly dividend at all. It demonstrates that they raise the dividend in good years, but also that they’re fiscally capable of pushing through competitive and economic headwinds over and over again to raise it in bad years too.
Image source: Getty Images.
There’s a trade-off, of course. Income investments tend not to be fast growers; single-digit percentage revenue and earnings growth is the norm for the vast majority of Dividend Kings.
This trade-off is typically worth it for investors needing reliable income and inflation-beating income growth, though.
If that’s you, here are five that just might have a place in your portfolio.
Procter & Gamble(NYSE: PG) is such a commonly suggested stock pick that it’s almost become a cliché. On the other hand, clichés come into existence because they’re typically true.
You likely already know why P&G has been able to increase its dividend payment in each of the past 69 (soon to be 70) years. That is, it’s the parent company to some of the world’s best-known consumer goods, like Pampers diapers, Tide laundry detergent, Gillette razors, Dawn dishwashing liquid, and Crest toothpaste, just to name a few. These are familiar brands that consumers buy over and over again, mostly out of habit and sheer comfort. These habits are also often passed down from one generation to the next.
P&G also enjoys enough market share to keep would-be competitors from penetrating its markets, just as it’s big enough to sway its retail partners into prominently featuring its products.
Procter & Gamble’s forward-looking dividend yield currently stands at 2.6%.
Much like P&G, beverage giant Coca-Cola(NYSE: KO) is one of the top go-to dividend stocks within the consumer staples sector. And you’ll be fine if you already own it. Right now, however, there’s a case to be made for stepping into rival PepsiCo(NASDAQ: PEP) while its yield is higher at 3.5%.
If you’ve been keeping tabs on the company, you may know this suggestion seems a little “off.” Whereas Coca-Cola’s stock has been performing quite well since 2024, PepsiCo’s stock has underperformed, mostly due to weakness in its food and snack chip business.
Dig deeper, though, and you’ll see that new and more relevant products like lower-sodium chips and higher-protein snacks should help it more easily extend its dividend growth track record that’s now 54 years old.
As you might have guessed, H2O America(NASDAQ: HTO) is a water company; you used to know it as the utility name SJW Group.
It’s the perfect business for supporting dividends too. Consumers may forego the purchase of some new clothing or postpone the purchase of a new car. But they’ll pay whatever they need to pay to keep the spigots running. That’s how the utility company has managed to continue raising its dividend payment for an incredible 58 consecutive years.
You’d be plugging into that streak while the stock’s yield is a respectable 3.1%.
Kimberly-Clark‘s (NASDAQ: KMB) track record of annual dividend growth is almost as strong, at 54 years.
You may be more familiar with this outfit than you think. Kimberly-Clark makes a range of important paper-based products, including Huggies diapers, Kleenex tissue, Cottonelle toilet paper, and more. None of it is world-changing. All of it, however, is very necessary every single day.
The kicker: There may not be a great deal of growth to be gleaned by holding a stake in Kimberly-Clark, but with a forward-looking yield of 4.6%, newcomers will be stepping into the highest starting yield of any of the five Dividend Kings in focus here.
Last but not least, add Emerson Electric(NYSE: EMR) to your list of dividend royalty to buy hand over fist while the stock’s yield stands at 1.5%. That’s not huge. But the fact that this company’s been able to raise its per-share dividend payment for 68 straight years makes it worth it for longer-term-minded income investors.
Then there’s the more timely thing.
In simplest terms, Emerson makes industrial automation solutions. From control systems to pneumatics to vacuum equipment to pressure relief valves to actuators — and the software to manage it all — this company offers it, supplying the equipment that every factory and assembly plant needs but nobody ever gives a second thought to.
It’s a business that’s never going to go away and certainly never going to be displaced by artificial intelligence (AI). That’s why Emerson is consistently profitable, which not only supports continued dividend payments and payment growth but also augments this value by funding persistent stock buybacks … not a lot, but enough to matter.
That’s not the core reason you might want to own a piece of this company right now, though. What’s arguably being underestimated is the likelihood AI will actually create demand for industrial automation solutions like Emerson’s now that AI can get the very most out of them. As CFO Michael Baughman commented during fiscal Q1’s earnings conference call held in early February, “The threat of AI disrupting our software business is very minimal as we see it today. And really, as a counterpoint, [the] AI capability we’re building into our software should frankly accelerate the growth.”
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James Brumley has positions in Coca-Cola and Procter & Gamble. The Motley Fool has positions in and recommends Emerson Electric. The Motley Fool has a disclosure policy.
