Key Points in This Article:
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Dividend growth investing prioritizes companies that consistently raise payouts, signaling financial strength and resilience, ideal for income-focused investors navigating volatile markets.
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Dividend Kings, a rare group of 55 stocks, have increased dividends for at least 50 years, showcasing exceptional commitment to shareholders across economic cycles.
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High-yield dividend stocks offer passive income, but require scrutiny for sustainability, as payout ratios and sector stability determine long-term reliability.
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The Power of Dividend Growth Investing
Dividend stocks offer investors a reliable income stream, making them a cornerstone of wealth-building strategies, particularly for those seeking stability in volatile markets.
Dividend growth investing extends that strategy by focusing on companies that consistently raise their dividends, signaling financial health and disciplined management. For nearly 100 years, stocks that have paid shareholders a dividend have outperformed all other classes of stock. Hartford Funds, in partnership with Ned Davis Research, analyzed the performance of stocks for the
Even better, stocks in the S&P 500 index that initiated a dividend and then raised the payout over time beat those that simply paid dividends but didn’t increase them.
Among these, Dividend Kings — an exclusive club of 55 stocks out of thousands traded on major exchanges — stand out for increasing dividends for at least 50 consecutive years.
These elite companies, spanning utilities, consumer goods, and industrials, demonstrate resilience through economic cycles, making them prized for long-term investors. Their rarity underscores their exceptional commitment to shareholders, balancing reinvestment with consistent payouts.
This select group represents a gold standard in income investing, but one Dividend King reigns supreme, holding the longest streak of dividend increases.
American States Water: The Dividend King Champion
American States Water (NYSE:AWR), a California-based utility providing water and wastewater services to 265,000 customers across California and U.S. military bases, holds the distinction of the longest dividend increase streak at 70 years, unmatched in the market. Founded in 1929, AWR has weathered economic upheavals, from the Great Depression to the 2008 financial crisis, consistently raising its dividend annually since 1955. Its current yield of 2.4% and a quarterly dividend of $0.47 per share reflect a sustainable 49% payout ratio, supported by stable cash flows from regulated water services.
AWR’s reliability stems from its essential role in providing water, a non-discretionary service with predictable demand. Two other Dividend Kings trail closely: Procter & Gamble (NYSE:PG), with 69 years of increases and a 2.6% yield, leverages its consumer staples portfolio, while Genuine Parts (NYSE:GPC), also at 69 years with a 3.4% yield, thrives in the auto parts sector.
A King You Can Count On
AWR’s appeal as a long-term investment lies in its stability, not flashy growth. As a regulated utility, it doesn’t deliver the explosive returns of tech stocks like Nvidia (NASDAQ:NVDA), which surged 171% in 2024. Instead, AWR offers steady, predictable returns, with a 9.3% annualized total return over the past decade, driven by consistent revenue from water and wastewater contracts.
Its regulated status ensures stable margins, as rates are approved by public utility commissions, shielding it from market volatility. Everyone needs water, and AWR’s contracts with military bases and municipalities guarantee demand, even in economic downturns.
Investors can rely on AWR’s income stream, with its 70-year streak signaling a commitment to shareholders. While its stock price growth lags tech, its low beta ensures minimal volatility, making it a bedrock for income-focused portfolios.
However, investors must consider risks. Regulatory changes could cap rate hikes, and water infrastructure upgrades require capital, potentially straining cash flows. Still, AWR’s disciplined management and $608 million in trailing revenue provide a buffer. AWR’s dividend dynasty underscores its reliability for retirees or risk-averse investors. It serves as a dependable anchor, delivering consistent income without the rollercoaster ride of other stocks.
Key Takeaway
American States Water’s unmatched 70-year dividend increase streak makes it the premier Dividend King, offering stability and reliable income for long-term investors. While you won’t match tech’s growth, its essential services and predictable cash flows over decades make it a safe haven in uncertain markets.
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