Fifty years is a long time. In the last half-century alone, humanity has been moved from an industrialized collection of countries to a globe-spanning digital civilization. These changes have caused massive upheavals in every aspect of society, including business. And while companies that have lasted for over 50 years are somewhat common, companies that manage to pay and increase dividends for 50 or more consecutive years are not. 

That takes me to the Dividend Kings, which are some of the best investments for income generation and retirement planning. But like any “best of anything” list, there are a handful of standouts that, in this case, provide excellent dividend growth while maintaining healthy financials to keep the growth coming. 

So, today, I'll cover the three best Dividend Kings with unstoppable growth potential. 

How I Came Up With The Following Stocks

This analysis was done on the Barchart Stock Screener, with assistance from the Watchlist feature. So, first, I went to Barchart.com then to the Stock Screener, then used the following filters to get my desired results: 

• Current Analyst Ratings: 3.5 (Moderate Buy) to 5 (Strong Buy).
• Dividend Payout Ratio: 50% or less. The payout ratio measures how much of a company’s after-tax earnings are paid out to shareholders as dividends. Setting this to 50% or less means I get Dividend Kings with enough cash margins to increase their dividends in the short- and medium-term without a hitch. 
• 5-Year Dividend Growth: 50% or more. The S&P 500 has a historical annual return of 10 - 11%. Setting the 5-year dividend growth rate to 50% or roughly 10% every year allows me to look for Dividend Kings that can roughly match it on dividend increases. Note that dividend increases are not similar to returns but can be used as an excellent benchmark for growth. 
• Annual Dividend Yield: Left blank to appear on the results list.  
• Watchlists: Kings. I have a bunch of watchlists on Barchart, which I can use singularly or in combination for stock screens. For now, I’m using just the Dividend Kings list. 

After setting the filters, I got six results, which I arranged from highest to lowest 5-year dividend growth. Today, I'll cover the top three.

Lowe's Companies (LOW)

5-year Dividend Growth: 135.14%

Lowe's Companies, Inc. is a major American home improvement retailer that operates a chain of retail stores that provide home improvement, renovation, and maintenance products, serving both DIY (do-it-yourself) customers and professional contractors. The company boasts 16 million customer transactions per week globally from its 1,700 physical locations. 

Source: Lowe’s Companies Q2 2024 10-Q Report via SEC

Lowe’s latest quarter (Q2 2024) saw a marginal decline in revenue to $23.59 billion from $24.96 billion in the same period last year, or 5%. Accordingly, net earnings followed the slight drop by 11%. As a result, the company adjusted full-year comparable sales expectations from -2% to -3% to -3.5% to -4.0%. 

Still, considering that its 6-month EPS is at $7.23, the company can more than cover its $4.60 per share dividend (1.76% yield). Investors need not worry about Lowe’s suddenly losing its Dividend King Status anytime soon. In fact, Lowe's trailing twelve-month dividend payout ratio is 36.92%—leaving plenty of headroom for growth. 

Analysts rate LOW stock a moderate buy with a 4.03 average score and a $290 high target price. 

Nordson Corporation (NDSN)

5-year Dividend Growth: 110.40%

Nordson Corporation is a global manufacturer of precision dispensing, coating, and processing equipment for a wide variety of industries. Its offerings include adhesives, coatings, sealants, biomaterials, and other materials used in production processes.

Source: Nordson Corporation Q3 2024 10-Q Report via SEC

Nordson’s Q3 financials reported a modest 2% year-over-year increase in sales, while basic EPS dropped slightly from $2.24 to $2.05. The company increased revenue guidance but narrowed its adjusted EPS outlook to between $9.45 and $9.65, though the midpoint was unchanged. 

The company also increased its quarterly dividend for the 61st straight year by 15% to 78 cents per share quarterly, translating to a $3.12 annual rate and a 1.19% yield. It also has a low 28.65% dividend payout ratio and a 3.75 moderate buy rating. 

Parker-Hannifin Corporation (PH)

5-year Dividend Growth: 92.09%

Parker Hannifin is an international engineering firm that develops and sells motion and control technologies. The company develops, produces, and supplies a wide range of products and systems for controlling motion, fluid, and gases across various industries ranging from transportation to healthcare. 

Source: Parker-Hannifin Corporation 2024 Annual 10-K Report via SEC

Parker-Hannifin has had a record year in 2024, with full-year sales reaching $19.93 billion against last year’s $19.06 billion. EPS also jumped to $22.13 compared to $16.23 in 2023. The company’s growth across all financial metrics in the last three years is quite impressive, and CEO Jenny Parmentier has expressed optimism about reaching financial targets for 2029. 

Meanwhile, the company pays a $1.63 quarterly dividend, translating to a $6.52 annual rate and 1.04% yield. It's also the only company on the list with a strong buy rating, with a consensus score of 4.71, and maintains a healthy 23.54% dividend payout ratio. 

Final Thoughts

Dividend Kings are great investments, but with time, diligence, and a little patience, you can improve your chances of increased long-term income by finding the ones that offer the best dividend growth overall. 

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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. For more information please view the Barchart Disclosure Policy here.