5 Dividend Kings For Generations Of Passive Income

Looking to create an income stream for life? If so, companies from the Dividend Kings list might be your answer.

Risks surrounding wars, recessions, and even Social Security can scare off even the most disciplined investors, causing them to make emotionally driven mistakes that they will later regret. Yet, creating a passive stream of income for life is the dream many dividend growth investors long for. Once those dividends start coming in, it’s easier for investors to shake off the noise that comes from the market pundits – present company included.

That said, not all dividend stocks are equal. Some pay high yields, yet come with higher degrees of risk, while other stocks pay lower yields, carry the same amount of risk, but tend to offer capital growth over the long term.

In this article, I’m going to be covering the Dividend Kings: companies that have increased their dividends for 50+ years- consecutively. These companies have been through “almost everything”, yet continue to grow their dividends year after year. I’ll cover what the companies do, some notable recent news about them, along with their financials, and what the analysts think (about the stock). And by the end of the article, you’ll be able to decide which (if any) have a place in your portfolio.

• Watchlist: Dividend Kings. If I think of a long-term dividend profile, investing in Dividend Kings is the way to go.

• 5-YR Dividend Growth Rate: More than 20%, that’s because some Dividend Kings increase their payout by as little as $0.01 every year just to maintain the title. Therefore, there must be genuine dividend growth.

• 5-YR Percent Change: More than 20%. Apart from dividend growth, I would like to see a potential for capital appreciation when starting a long-term position.

• Annual Dividend  Yield (FWD): I intentionally left it blank so I can sort them from highest to lowest yield.

• 60-month beta: 0 to 1. Stability is critical for long-term income portfolios. Therefore, I set this metric to “0 to 1” to obtain a list of Dividend Kings with stable stock prices relative to the broader sector.

• Current Analyst Rating: 4 to 5. Moderate to Strong Buy, to ensure I’m only selecting companies with a positive consensus from professional analysts.

After setting the filters above, I ran the screener and ended up with 5 companies. Then, I sorted the list from highest to lowest forward dividend yield.

From there, I compiled a list of five dividend stocks that could provide a lifetime of income: AbbVie Inc. (ABBV), Johnson & Johnson (JNJ), Lowe’s Companies (LOW), Abbott Laboratories (ABT), and The Coca-Cola Company (KO).

AbbVie is one of the leading global biopharmaceutical companies that develops treatments for complex diseases, with a focus on oncology, immunology, neuroscience, and eye care. The company also has a portfolio of treatments for complex conditions, including rheumatoid arthritis and various types of cancers.

The company was established in 2013 after it split off from Abbott Laboratories. Today, it leverages its research expertise to address medical needs that remain unmet.

Recently, the company has announced plans to expand its biologics facility in Massachusetts, expecting to spend $70 million for the overall expansion. That said, this is just a part of a much larger $10 billion investment plan across the country to boost AbbVie’s production of Immunology products.

As for AbbVie’s latest annual financial performance, revenue rose ~3.7% to $56.33 billion. That said, the net income declined 12% to ~$4.28 billion over the same period, resulting in a basic EPS of $2.40 for 2024. At the moment, the ABBV stock trades at $230.69 with a 5YR gain of 163%, while ~308% on a 10YR scale. Meanwhile, ABBV stock’s 60-month beta is just 0.51, which means it’s relatively stable compared to the broader sector.

On the dividend front, AbbVie’s forward payout is $6.56, which is distributed as $1.64 per quarter, reflecting a forward dividend yield of 6.56%. Meanwhile, the payout ratio is 59.92% of AbbVie’s earnings- a widely acceptable range for many investors. Over the past 5 years, AbbVie’s dividend payout increased nearly 45%, which is quite respectable.

A consensus of 28 analysts rates ABBV a Moderate Buy with a score of 4.21 out of 5, and this score has consistently improved over the past 3 months. Remarkably, not a single Sell rating for AbbVie.

The highest price target for ABBV stock is $280 per share, indicating up to 21.38% upside potential from its current levels.

Next up is Johnson & Johnson, a multinational healthcare giant that operates in three major segments: pharmaceuticals, medical devices, and consumer health products. Like AbbVie, J&J also develops treatments for various types of cancer and immune disorders.

The company also manufactures surgical equipment, eye care products, and orthopedic devices, among others. One of their most iconic brands includes Band-Aid and Tylenol – probably something you often see in your grandparents’ medicine cabinet.

J&J’s revenue for full-year 2024 rose roughly 4.3% to $88.82 billion. That said, its net income declined nearly 60% due to a discontinued operation, which resulted in a basic EPS of $5.84 for the year. However, investors expect better figures for 2025.

Right now, JNJ stock trades at $191.08 per share with a 5YR gain of ~26.6%, while ~94.5% on a 10-YR scale. Its 60-month beta is 0.40, which also means the stock is relatively stable. However, the company has faced regulatory headwinds since last year, including complaints surrounding its talc-based powder, which explains the near-term share price setbacks.

J&J’s forward dividend payout is $5.20 per share, which is paid as $1.30 every quarter, reflecting a dividend forward yield of 5.2% and a payout ratio of 49.88%. And in the past 5 years, JNJ’s dividend payout increased nearly 31%, which is highly attractive as a long-term dividend investment.

A consensus among 25 Wall Street analysts rates Johnson & Johnson a Moderate Buy with an average score of 4.04 out of 5. Just like AbbVie’s, JNJ’s rating has been consistently improved over the past three months, and not a single sell rating can be found.

The highest target for JNJ stock is $213, suggesting as much as a 11.5% upside potential for investors willing to start a position from current levels.

Next in line is a retail giant, Lowe’s Company. Lowe’s is one of the most popular home improvement destinations in the United States. The company also claims to have over 1,700 stores nationwide, serving homeowners, tenants, and real estate contractors with products for all types of repairs and renovations. Moreover, Lowe’s also sells home appliances, all kinds of tools, materials for DIY projects, lawn and garden equipment, and home decor, among others – you name it, they probably have it.

Recently, Lowe’s Company announced the completion of the Founding Building Materials acquisition, which is one of the major distributors of building materials in over 370 locations in the United States and Canada. This acquisition will enable Lowe’s to better serve its customer base through an enhanced digital tool, as well as the potential expansion of trade credit options. Moreover, it provides Lowe’s with access to the $250 billion market for large professional customers.

The company’s full-year 2024 revenue declined 3% to $83.67 billion, while the bottom-line figures also declined ~10% to $6.96 billion compared to the same period last year, consequently setting Lowe’s basic EPS at $12.25 (lower than last year’s $13.23).

On the stock market front, LOW Stock currently trades at $234.67 per share with ~35.47% 5YR gain, while ~222% on a 10YR scale. That said, the stock is currently experiencing a near-term decline, which signals a potentially discounted entry point for investors with a multi-year horizon – say 5 to 10 years. In terms of volatility, LOW stock’s 60-month beta is just 0.88, reflecting a solid stability relative to the broader market.

Lowe’s Company pays a forward dividend of $4.8 per share, paid $1.20 per quarter, with a forward yield of 4.80% – another significant yield for a Dividend King. Over the past 5 years, Lowe’s dividend payout increased by over 113.6%, which is the most significant dividend growth rate on this list. However, despite the attractive dividend profile, the payout ratio stands at 38.46% – although relatively lower compared to the others, it remains within a very acceptable range.

A total of 29 Wall Street professionals rate Lowe’s Company a Moderate Buy with a score of 4.21 out of 5, and this has been consistent over the past 3 months. That said, there’s a lone Sell rating among the positive opinions, which is likely driven by the declining bricks-and-mortar business here in the States.

The highest price target for LOW stock is $325 per share, which reflects an upside potential of ~38.5% for investors willing to buy the dip and hold the position for the long haul.

Next on the list is Abbot Laboratories, which is one of the world’s most diversified healthcare companies. They manufacture medical devices, diagnostics, branded generic drugs, and nutrition products, among others. Moreover, their portfolio covers areas like diabetes care, heart health, infant and adult nutrition, neuromodulation, and more. The company was established in 1888 and is now operating in more than 160 countries globally.

For its full-year 2024, Abbott Labs’ revenue rose 4.5% to $41.95 billion. More notably, net income soared 134% to $13.4 billion compared to the same period last year ($5.72 billion), which also resulted in a much higher basic EPS $7.67. As for ABT stock, buying one share currently costs $133.31, with the shares trading in a range of $110.86 and $141.23 over the last year.

According to Abbott’s website, “Abbott has declared 399 consecutive quarterly dividends since 1924 and has increased the dividend payout for 51 consecutive years.” This is a powerful statement that dividend growth investors of all types should take note of. The company currently pays 59 cents a share quarterly, translating to a 1.77% yield.

Fun fact: In 1935, Grace Groner, a secretary at Abbott Labs, bought three shares of ABT stock for $60 each. Grace kept her investment, reinvesting the dividends through 2010 when she passed away. It was then that the estate discovered the investment was now worth $7.2 million.

A consensus among 23 analysts rate ABT stock a “Strong Buy” with an average score of 4.43- a score that’s been increasing over the last three months. The high target price is $159, suggesting as much as 19.2% upside from today’s levels.

As one of Warren Buffett’s favorite companies, Coca-Cola needs very little introduction. Its products are sold in over 200 countries, and more than 2.2 billion drinks are consumed daily. The company’s vision is to create brands that its clients love sustainably, contributing to a better future for all. Coca-Cola continues to innovate, releasing new products each year to stay relevant.

In terms of financials, for FY’24, Coca-Cola’s revenue came in at just over $47 billion, up 2.8% from the previous year. That said, net income declined marginally by 0.8%. Still, with an EPS (basic) of $2.47, there’s lots of room to pay the dividend.

Coca-Cola will release its third-quarter results on Oct. 21 before the bell. Analysts are calling for earnings to come in between 76 and 79 cents a share – marginally above last year’s figures.

KO stock currently trades around $66 per share, and over the last year, it has ranged from a low of $60.62 to a high of $74.38. YTD, the stock is up 6.6% and over the past 5 years, it’s up 32.66%- not including the dividends.

Fun fact: If you had bought just one share of Coca-Cola for $40 at its IPO in 1919 and only reinvested the dividends, 100 years later, that little $40 investment would have grown to ​​$15.4 million.

Coca-Cola currently pays $0.51 per share, per quarter, which translates to $2.04 a year or just over 3% yield. Over the last five years, investors would have seen their dividends increase by 21.25% simply for continuing to own the stock.

A consensus among 25 analysts rate KO stock a “Strong Buy” with an average score of 4.76- stable over the last three months. The high target price is $85, suggesting as much as 28% upside over the next year from today’s price.

These five Dividend Kings share three traits: durable competitive advantages, financials that comfortably fund dividends, and shareholder-friendly management. For income investors, they’re candidates worth looking into further, not automatic buys. Weigh valuation against your risk tolerance because dividends can be cut, so position accordingly.

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