Chicago, IL – July 26, 2022 – Today, Zacks Investment Ideas feature highlights Coca-Cola KO, Emerson Electric EMR and AbbVie Inc. ABBV.
3 Dividend Kings Suited Perfectly for Income Investors
Income investing is a widely-deployed strategy within the market. After all, there are few things in life sweeter than getting paid.
Companies that consistently increase their dividend payouts are well-established in nature with successful business operations. In addition, they tend to carry a lower level of risk, undoubtedly a major positive for investors.
The best of the best of these dividend payers are classified into an elite group – Dividend Kings.
Investors are familiar with Dividend Aristocrats, companies that have successfully increased their dividend payout for 25 consecutive years. However, to be ranked as a Dividend King, a company must increase its dividend payout for a whopping 50 consecutive years.
Three companies – Coca-Cola, Emerson Electric and AbbVie Inc. – are all part of the elite Dividend King group.
Let's look at why these three companies would be excellent bets for any income-focused investor.
AbbVie
AbbVie is a global research-based biopharmaceutical company that delivers innovative medicines.
AbbVie's dividend metrics might be the most robust of them all. The company's annual dividend yields a sizable 3.8%, nowhere near the S&P 500's annual yield of 1.5%. In addition, the company has a stellar 16% five-year annualized dividend growth rate paired with six dividend increases over the last five years.
AbbVie has just joined the elite Dividend King group – the company has increased its annual dividend for 50 consecutive years.
Furthermore, free cash flow of the company has been consistently increasing.
Undoubtedly a major positive, AbbVie has consistently reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in nine of its previous ten quarterly reports.
Top-line results have also been solid; ABBV has recorded seven top-line beats over its last ten quarters.
Coca-Cola
The Coca-Cola Company is an American multinational beverage corporation primarily known for its flagship Coca-Cola drink.
Coca-Cola's dividend metrics are enough to make any income investor celebrate. KO's annual dividend yield resides at 2.9%, much higher than the general market's. In addition, the company has increased its dividend payout five times over the last five years with a solid five-year annualized dividend growth rate of 3.1%.
The company has impressively increased its dividend payout for 59 consecutive years.
In addition to solid dividend metrics, the company's free cash flow has also been strong – free cash flow grew 28% from FY20 to FY21.
Impressively, Coca-Cola has chained together ten consecutive bottom-line beats.
Quarterly sales results have also been rock-solid; KO has recorded eight top-line beats over its last ten quarters.
Emerson Electric
Emerson Electric is a global technology and engineering company providing innovative solutions for customers in industrial, commercial, and residential markets.
Emerson is dedicated to rewarding its shareholders; the company has increased its dividend payout for a mind-boggling 64 consecutive years.
EMR's annual dividend yields 2.5%, well above the S&P 500's yield. In addition, the company has a sustainable payout ratio sitting at 44% of earnings paired with a five-year annualized dividend growth rate of a modest 1.5%.
Emerson has been the definition of consistency within its quarterly results, exceeding the Zacks Consensus EPS Estimate in nine consecutive quarters.
Quarterly sales results have been impressive as well; over the company's previous ten quarterly releases, Emerson has posted seven top-line beats.
Bottom Line
When companies consistently increase their dividend payouts, it's generally a sign of robust financial health and successful business operations.
Becoming a Dividend Aristocrat is challenging enough, let alone becoming a Dividend King. Meeting the parameters to join the elite group speaks volumes about these companies' well-established and thriving nature.
All three companies above have robust dividend metrics and a history of exceeding earnings estimates, making them excellent choices for investors looking to add a reliable income stream.
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