3 Recession-Proof Dividend Kings to Buy For a Lifetime of Income

Name any point in recent history, any point at all, and I’ll bet you dollars to doughnuts that someone, somewhere, is saying that a recession is coming. And you know what the funny thing is? They’re right that it’s coming—but they are often way wrong about the timing. 

Recessions will happen. In my 25+ years of trading, I’ve seen the market plummet several times and always went on to break new highs. However, the uncertainty surrounding when the overall market (and if their stock picks) will recover makes investors sell at steep losses. Investing in recession-proof stocks is an easy way to get around this issue. But do such companies exist? 

Yes, they do. You just have to know where to look. 

How I Came Up With The Following Stocks

To create the list, I went to Barchart’s Stock Screener and used the following filters:

• Watchlists: Dividend Kings. These industry giants have increased dividend payouts for 50 years or more, which shows their stability and reliable cash flow. 
• Market Sectors: Consumer Staples, Medical, Retail-Wholesale, and Utilities. These sectors have historically weathered recessions due to decent cash flow, excellent market position, and consistent demand for products and services in different economic situations,
• Current Analyst Ratings: 4 (Moderate Buy) to 5 (Strong Buy),
• Annual Dividend Yield: Left blank so it populates in the result page,
• Dividend Payout Ratio: 50% and below. A dividend payout ratio is how much the stock pays shareholders out of its earnings. A value below 50% indicates that the company will have no issues increasing dividends. 

After clicking “See Result” and running the screen, I got eight Dividend Kings (see above). I arranged them from highest to lowest dividend yields, then took the top three. Let’s start with number one: 

Target (TGT)

When you say Target, the first image that comes to mind is a distinctive bull' s-eye logo above a physical location. One of the company’s key strengths is being more than just a brick-and-mortar retailer. In less than ten years, the company has revolutionized its supply and logistics process by building sortation and upstream distribution centers. It plans to build at least ten more supply chain facilities by 2033. 

Target, through delivery service Shipt, is also competing with e-commerce giants like Amazon and Walmart to bring their products directly to consumers’ doors. With a solid supply chain, multi-channel sales, and a money-saving business model, the company has seen a boost in profitability, with FY 2023’s net earnings growing by an impressive 48.8% year-over-year. 

Meanwhile, Target has recently increased its dividend payouts to $1.12 quarterly, totaling $4.48 annually, which translates to a decent 2.95% yield. The company is one of the newest Dividend Kings and has increased dividends for 53 consecutive years. With its stable business model, consistent profitability, and a relatively low 45.32% payout ratio, many experts believe Target has many more years ahead of dividend increases. 

Analysts rate TGT stock as a moderate buy with a 4.09 average score. 

Sysco Corp (SYY)

We need food to survive, that much is indisputable. That’s why companies that provide food in wholesale or ready-to-eat variants tend to have business regardless of economic conditions. Sysco is a global food service distribution company catering to restaurants, hospitals, government offices, schools, and travel and leisure operations. 

Sysco offers a complete package, from expansive product categories to tech and business solutions for their clients. It also offers specialty and “foodie” products targeted to hit food trends. 

SYY stock pays 51 cents quarterly, or $2.04 annually, reflecting a 2.61% yield. The company also has a comfortable 46.10% dividend payout ratio, a 55-year dividend increase streak, and is well-favored by Wall Street analysts with its strong buy rating. 

Abbott Laboratories (ABT)

Abbott Laboratories is a multinational healthcare conglomerate that offers products for a wide range of requirements. The company focuses on diagnostics, nutrition, pharmaceuticals, and medical devices, and its products are considered the top choices for most medical facilities worldwide. 

Abbott’s claims about its market presence and longetivity are not just all talk. Professor Hendrik Bessembinder named it “the most profitable healthcare stock” in the world, with the data showing that the company raked in a cumulative compound return of 7,803,730% and an annualized compound return of 13.85% from 1937 to the end of 2023. 

That proves that ABT is not just a dividend stock. But it wouldn’t be on this list if it wasn’t, so let’s talk dividends. Abbott has 52 years of dividend increases, a 47.08% dividend payout ratio, and a $2.20 annual forward rate, which translates to a 1.94% yield. It also has a strong buy rating from analysts. Talk about the complete package. 

Final Thoughts

Bolstering your portfolio with recession-proof stocks can be an excellent move to protect your income over longer time horizons. You just need to select companies with proven track records and operate in a recession-proof industry.