3 Top-Rated Dividend Kings To Buy and Hold

In 2023, the stock market has been on a wild ride, leaving many investors on the hunt for safe havens and relative stability. When things get rocky, dividend investing can be a lifeline. It's a well-established method for creating passive income streams and growing wealth over time. 

However, not all dividend stocks are created equal. The best investments have a stellar track record of increasing their dividends year after year, even when times are tough in the market. The top-notch companies we've featured here are part of an elite group known as "dividend kings."

These dividend kings are the real deal - the expression refers to companies that have increased their dividends for an impressive 50 years in a row. It's a rare feat that shows their financial strength and commitment to shareholder returns. There's another group, the "dividend aristocrats," that have raised their dividends for at least 25 consecutive years. While that's still impressive, it's not quite as exclusive as the dividend kings: out of over 4,000 U.S. public companies, only 50 make the cut in 2023.

According to a report from RMB Capital, from 1972 to 2018, companies committed to dividend growth delivered an average annual return of 9.62%, while those who didn't pay dividends only managed 2.40%. In the same period, the S&P 500 index ($SPX) returned 7.30%. 

Notably, while the broader market has once again run into some geopolitical and macroeconomic headwinds late in 2023, dividend kings are starting to look uniquely appealing once again. Here, we'll highlight some top choices from the group - with positive price action, buy ratings, from Wall Street, and more upside expected from here.

S&P Global: A Leader in Financial Information Services

S&P Global (SPGI) is a heavyweight in the financial information services industry, known for its remarkable track record of market benchmarking and indexing, for starters - along with ratings, research, and analytics. One big reason S&P Global itself stands out as a smart investment is its dividend king status, raising dividends for 50 consecutive years. It has been paying out dividends every year since 1937, and it's one of fewer than 25 companies in the S&P 500 with this prestigious status.

Currently, it's paying an annual dividend of $3.55, with a yield of 0.97%. Its latest dividend, dished out on Aug. 25, was $0.90, and its dividend payout ratio sits at 29.62%, indicating a sustainable dividend policy.

In 2023, S&P Global is riding a bullish wave, with a year-to-date price boost of 9.2% - not quite on pace with its benchmark S&P 500 and its gain of 13%, but quite respectable for income royalty. 

What's fueling this stock surge? Look at its robust financial performance. In the first quarter of 2023, S&P Global raked in $3.16 billion in revenue, a whopping 32% leap compared to the same period last year. The inclusion of IHS Markit businesses was a big driver of this growth, though it was somewhat offset by declines in Ratings revenue. 

Revenue growth slowed during Q2, but SPGI has consistently matched or exceeded analysts' EPS estimates in each of the last four quarters. Currently, its earnings per share (ttm) stands at $11.74, with an impressive EPS growth of 11.03% compared to the previous year.

Drawing from the wisdom of 19 analysts, the stock has a consensus “strong buy” rating, with 16 of them giving SPGI a “strong buy” and 3 recommending a “moderate buy.” The mean target price for the stock is $436.87, signaling a potential upside of approximately 20% from current levels.

Given S&P Global's durable financial performance and history of growing dividends, it's a tempting investment for those seeking stability and growth in the financial sector.

Walmart: A Retail Giant With Global Reach

Walmart (WMT) isn't just your run-of-the-mill retailer; it's the big kahuna, with over 11,000 stores in 27 countries. They offer cost-conscious shoppers everything from groceries to general merchandise, and they haven't shied away from digital gaming or healthcare services. They're even giving Amazon (AMZN) a run for its money with a beefed-up online presence, and dialed-in delivery and pickup options. Plus, they're globetrotters, doing business in Canada, Mexico, China, India, and beyond.

What makes Walmart a sweet deal for long-term investors? Well, they've been dishing out dividends since 1974, and for the past half-century, those dividends have only gone up. That's the kind of consistency that's earned them a spot among the elite "dividend kings." Right now, Walmart is slicing out a quarterly dividend of $0.57 per share, which translates to a yearly yield of 1.42%. And they're playing it relatively conservative with a dividend payout ratio of 34.57%, meaning they're plowing most of their earnings back into growth.

In 2023, Walmart's stock has outperformed the broader market. Better-than-expected earnings have helped the stock's case; Q2 earnings per share of $1.84 and Q1 EPS of $1.47 both surpassed consensus estimates, continuing a longer-term trend of WMT beating analysts' expectations.

Walmart is setting its sights high for the full year, too. They're expecting 4-4.5% growth in consolidated net sales, up from an earlier forecast of 3.5%, with adjusted EPS expected between $6.36 and $6.46.

Against this backdrop, the stock is up more than 15% this year, and hit an all-time high of $165.85 last month.

Analysts think that Walmart has even more room to grow. The average target price from 30 of these experts is $178.69, which means there's potential 10.2% upside from the current price. Of those analysts, 21 say it's a “strong buy,” 4 recommend a “moderate buy,” and 5 suggest “hold."

PPG Industries: A Global Player in Specialty Chemicals

PPG Industries (PPG) is a global leader in specialty chemicals, producing coatings, paints, and materials for various industries and markets. What's more, they've got a sweet spot for shareholders, consistently serving up dividends and even bagging a spot among the elusive dividend kings. PPG has an impressive streak of growing its payout for 51 straight years, offering an annual dividend of $2.51 per share, with a yield of 1.91%.

What makes PPG a standout is its room to grow. With a payout ratio of 35.47%, they've got ample space to keep those dividends climbing. 

Despite a dip in the Basic Materials sector, PPG's stock has outperformed the industry by adding 3.8% year-to-date - even accounting for today's 2% dip, with some traders selling the shares ahead of tonight's Q3 earnings release from PPG.

While risk-averse investors will want to wait until after the event-related volatility has passed to add shares of PPG, the company's second-quarter results were encouraging. The company reported earnings of $2.25 per share, beating the consensus estimate by 5.14%. Revenue fell short of expectations, but the current quarter EPS forecast was well-received.

Overall, analysts are targeting 23.80% earnings growth in 2023, followed by an 11.08% increase in 2024.

Right now, PPG is trading about 24% below analysts' mean target price of $160.12. The verdict from 20 analysts tracking the shares is a resounding "buy," with 11 “strong buy" ratings and 9 “holds.” 

Conclusion

In a year where the stock market's been tough to navigate at times for growth and income investors alike, names like SPGI, WMT, and PPG have a little something to offer for everyone in the current environment. These dividend kings aren't just reliable income picks; they also offer solid earnings, healthy growth potential, and surprisingly resilient price action - with plenty of room for upside.