It’s no secret that I love Dividend Kings. Having traded stocks since 1999, I've come to accept that any company that consistently pays and increases dividends for over five decades is not something to sneeze at. The Dividend King status indicates solid foundations, expert management, adaptability, and staying power. 

Now, when investors screen for Dividend Kings, they typically use yields as the deciding factor. And why not? A 5 or 6% yield means more money for you, especially since increases are practically ensured. 

Yet, some investors fail to recognize the importance of how much the dividends increase when making long-term choices. 

You see, a Dividend King that has increased yearly payouts by 1% for 50 years is no less eligible than another that has increased payouts by 10% yearly over the same period. The criteria are “50 years” and “consecutive increase,” nothing more. Some companies only increase their dividend by 1 penny a year, or less, and make a seeming effort only to keep the status.

However, if you want to maximize your returns over long periods, you should consider Dividend Kings, which have a track record of significantly increasing payouts. And I have three candidates for you. 

Methodology

As usual, I used Barchart’s Watchlist and Free Stock Screener features to develop this list of Dividend Kings with the highest dividend growths. 

Then, I clicked the “Screen” link, added the “5-YR Dividend Growth” to “Add a Filter,” and then hit “See results.” 

Once the list was populated, I clicked the “5Y Div%” column to sort the stocks by 5-year dividend growth- and selected the top 3.

Now, without further ado, let’s jump into these three Dividend Kings with the highest dividend payout growth, starting from lowest to highest.

Parker-Hannifin Corp (PH)

Parker-Hannifin Corp, or Parker to its friends, is an American company that manufactures and distributes motion and control systems and solutions. 

The company’s tech is highly sought by sectors requiring precise engineering motion solutions, like semiconductor manufacturers, oil and gas companies, biotech outfits, industrial manufacturers, marine and land transportation, aerospace programs, and digital service providers.

There’s a lot to love about Parker-Hannifin. The company’s latest financials (Q2’24) reported 3% growth in sales from the same period last year, and organic sales growth also saw a similar increase during the period. Even better, earnings per share reached $5.23, a significant improvement from $3.04 last year. 

Chairman and Chief Executive Officer Jenny Parmentier is also quite happy with the quarter's outcome. “We continue to produce exceptional results that reflect the strength of our portfolio and our ability to execute at a high level, underpinned by our business system, The Win Strategy.” Excellent and consistent financial performance always spells good news for long-term investors. 

Parker-Hannifin has increased dividend payouts for 67 years, and its current quarterly payout is $1.48. Annually, that’s $5.92, representing a yield of 1.09% based on current price. 

PH stock has also registered a 99.64% 5-year dividend growth rate—even more reason to want it on your long-term portfolio. 

Nordson Corp (NDSN)

Similar to Parker, Nordson Corp provides precision technology. However, while Parker provides precision control solutions, Nordson focuses more on serving the healthcare sector. 

The company’s products include syringes, dispensers, microscopes, measurement and control solutions, and other tech that uses polymers, adhesives, sealants, biomaterials, and other fluids. 

Nordson welcomed 2024 with modest growth across key metrics. Q1’24 pointed to a 4% increase in sales and a 1.1% gross margin improvement YOY. Net income also increased slightly from $1.82 to $1.92. 

As for dividends, Nordson increased payouts by 5% in August 2023, marking the company’s 60th consecutive year of dividend increases. The current dividend rate is $2.72, reflecting a 1.03% yield. 

Last but certainly not least, NDSN stock has increased dividend payouts by 110.40% since five years ago while maintaining a very healthy 28.35% payout ratio. 

Lowe's Companies (LOW)

A familiar name tops the list of Dividend Kings with the highest dividend growth—an excellent 135.14% 5-year increase. 

Lowe’s is a home improvement retail company that operates across the United States. The company has over 1,700 locations in the country, backed by 120 supply chain facilities.

Lowe’s sells appliances, automotive products, construction materials, tools, clothing, pet care products, cleaning supplies, and other things you’d expect from a retailer. 

Lowe’s FY’23 revenues were slightly lower year over year at $86.4 billion. Still, the company grew its diluted EPS from $10.17 in 2022 to $13.20 in 2023. However, the company cited “near-term macroeconomic uncertainty” for lowering its 2024 revenue guidance to $84 billion to $85 billion and EPS to $12.30 on the high end. 

Regardless, long-term investors have good reasons to consider buying LOW stock. Lowe’s has increased dividends for more than 50 years. Its latest dividend increase was 5%, raising quarterly payouts to $1.10. That brings the annual rate to $4.40, or a 1.93% yield based on current prices. 

If a 135% dividend increase isn't enough, the “cherry on top” could be LOW’s low (heh) 32.81% payout ratio, indicating the company’s capacity to increase dividends without too much financial trouble. 

Final Thoughts

Yields don’t make Dividend Kings—increases do. So, always factor in dividend growth when looking for long-term investments, in addition to your usual due diligence. 

And don’t worry about putting in too much work; when it comes to the stock market, there’s no such thing as being overprepared. 

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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.