5 Dividend Kings to Buy Now – The Motley Fool
Various factors like inflation and the potential for a recession have led the S&P 500 index to drop 21.6% from its all-time high set at the start of this year. This precipitous drop erased over $10 trillion of wealth from U.S. financial markets.
For dividend growth investors the market drop hasn’t been as severe and they can sleep better at night knowing that their passive income will almost certainly grow, regardless of what happens in the market. This is especially true for those who are invested in dividend growth stocks that have earned the title Dividend King. These are stocks that have boosted their dividends paid to shareholders annually for at least 50 consecutive years.
If you are seeking to grow your passive income and wealth over the long haul, you might want to take a closer look at any of these five Dividend Kings that look like great buys at the moment.
1. Abbott Laboratories
With a market capitalization of $179.5 billion, Abbott Laboratories (ABT 0.73%) is one of the largest healthcare companies in the world. The company’s leadership in medical devices (i.e. blood glucose monitors), diagnostic tests (like COVID-19 tests), nutritional products (including Ensure and PediaSure), and off-patent pharmaceuticals in international markets should lead to strong growth in the years ahead.
That’s because a growing and aging global population should lead to increased demand for Abbott Laboratories’ products. This explains why analysts are expecting 12.6% annual earnings growth over the next five years.
With a dividend payout ratio set to be 38.6% in 2022, Abbott Laboratories should have no problem extending its 50-year dividend growth streak in the years to come. Better yet, the stock’s 1.8% dividend yield tops the S&P 500’s 1.7% yield.
Abbott Laboratories’ forward price-to-earnings (P/E) ratio of 21 doesn’t make it the cheapest Dividend King out there. But for a stock of its quality with a double-digit annual earnings growth outlook, this an attractive valuation.
2. American States Water
With more than 1 million customers in nine U.S. states, American States Water (AWR 5.05%) is a well-established water utility. The company has bumped up its dividends paid to shareholders for 67 consecutive years, which is the longest streak among its Dividend King peers.
Unsurprisingly, providing water to the U.S. government, homes, and businesses is a very steady business model. This is how American States Water has delivered nearly 10% annual dividend growth for its shareholders over the last 10 years. And with a dividend payout ratio of 54.9%, the stock’s admirable dividend growth stretch shouldn’t be ending anytime soon.
American States Water’s forward P/E ratio of 27.9 is the most expensive valuation of the five Dividend Kings discussed here. But the company’s unmatched track record and stability seem to justify this lofty valuation.
3. Genuine Parts
As they age, vehicles and industrial equipment are bound to need replacement parts to continue efficiently running. Serving hundreds of thousands of customers from locations throughout North America, Europe, and Australasia, Genuine Parts (GPC 1.27%) is one of the largest automotive and industrial replacement parts companies on the planet. It’s also one of the most stable. The stock has upped its dividends paid to shareholders for 66 years in a row.
The semiconductor chip …….