5 Dividend Aristocrats & Dividend Kings That Are Retirement Favorites

By John Whitefoot, BA | December 16, 2022

What Is a Dividend Aristocrat & What is a Dividend King?

When it comes to investing, it’s essential to have a diverse portfolio. This includes a mix of value and growth stocks. Value stocks tend to be shares of large, mature companies. Growth stocks tend to be shares of young companies whose share-price growth outpaces that of the market average. Most people think of technology companies when it comes to growth stocks.

The closer you get to retirement, the more your portfolio should be rebalanced to include a higher portion of value stocks. They provide solid long-term price appreciation and, often, dividends.

Dividend stocks are an important part of an investment portfolio, especially stocks that have a long history of payout increases. The mere fact that a company pays dividends shows that it’s making money and is able to return a portion of its earnings to investors.

Investors who are looking to enrich their portfolios with reliable, growing dividend stocks should consider dividend aristocrats or dividend kings. They’re some of the safest dividend stocks on Wall Street.

A dividend aristocrat is an S&P 500-listed company that has raised its dividend annually for at least 25 consecutive years. Not only do dividend aristocrats raise their dividends every year, but their shares have a history of outperforming the broader market.

A dividend king is a company that has raised its dividend for at least 50 consecutive years. They don’t need to be listed on the S&P 500 to be considered a dividend king, but many of them are.

Companies that have raised their dividends for decades tend to have rock-solid operations and balance sheets. Moreover, they make a lot of money, no matter what’s going on with the economy, whether it’s rising interest rates, soaring inflation, recessions, stock market crashes, pandemics, war—you name it. Investors can rely on these companies to give them annual pay raises, and this is in addition to any underlying growth in the company’s share price.

That’s critical as you get closer to—or are already in—retirement. Retirees need to replace their paychecks with additional income. Social Security helps, but not much. It only replaces a percentage of your pre-retirement income. The average Social Security payout for most of 2022 has been $1,550 per month, or $18,600 annualized. And remember, that’s taxable income. (Source: “Monthly Statistical Snapshot, October 2022,” Social Security Administration, last accessed December 14, 2022.)

Thanks to the current high inflation rate, Social Security is expected to increase in 2023—but not by that much. To make up the gap, it’s wise to invest in stocks with reliable long-term share-price growth and rising dividends.

There are many value stocks with ultra-high dividend yields, but they don’t tend to have a history of raising their dividends annually. That’s where big, blue-chip dividend stocks come in. The companies might be boring, but they report steady revenue and profit growth, regardless of where we are in the economic cycle.

This doesn’t mean the underlying stocks are recession-proof, but they’re generally more recession-resistant than other types of stocks. Moreover, whenever the stock market bottoms, “boring” blue-chip stocks are often the first ones to rebound. Furthermore, during periods of market volatility, their growing dividends can help weather the storm.

5 Dividend Aristocrats & Dividend Kings for Retirement

Company Name	Stock Ticker	Sector	Dividend Yield	Years of Dividend Increases
Atmos Energy Corporation	NYSE:ATO	Utilities	2.5%	39
Walmart Inc	NYSE:WMT	Consumer Defensive	1.5%	49
Middlesex Water Co	NASDAQ:MSEX	Utilities	1.4%	50
Johnson & Johnson	NYSE:JNJ	Health Care	2.6%	60
Genuine Parts Company	NYSE:GPC	Consumer Cyclical	2.0%	66

Atmos Energy Corporation

Atmos Energy Corporation (NYSE:ATO) delivers natural gas through regulated sales and transportation arrangements to residential, commercial, public authority, and industrial customers. The company also operates intrastate pipelines in Texas. (Source: “Form 10-K,” United States Security And Exchange Commission, November 14, 2022.)

The Dallas, TX-based company operates through two segments: Distribution and Pipeline and Storage. The Distribution segment is its largest division, accounting for about 68% of the company’s business mix. Through this segment, Atmos Energy Corporation is the largest pure-play natural gas local distribution company. It has more than three million customers in more than 1,400 communities in Colorado, Kansas, Kentucky, Louisiana, Mississippi, Tennessee, Texas, and Virginia.

The company’s Pipeline and Storage segment consists primarily of the pipeline and storage operations of its Atmos Pipeline-Texas network and its natural gas transmission operations.

For Atmos Energy Corporation, favorable regulations and massive infrastructure investments in eight states have driven high earnings growth and reliable dividend increases. This insulates the company’s profitability from individual negative regulatory decisions.

The framework has allowed Atmos Energy to report 20 consecutive years of earnings-per-share (EPS) growth and 39 straight years of dividend growth. (Source: “Atmos Energy Corporation (NYSE: ATO) Today Reported Consolidated Results for Its Fourth Fiscal Quarter and Year Ended September 30, 2022,” Atmos Energy Corporation, November 9, 2022.)

In November, the company’s board declared a quarterly dividend of $0.74 per share, or $2.96 annualized. The annual figure represents an 8.8% increase over ATP stock’s dividends in fiscal 2022.

Walmart Inc

With debts at record levels and 63% of Americans living paycheck to paycheck (including nearly half of those with six-figure incomes), discount retailers like Walmart Inc (NYSE:WMT) have become necessities for millions of consumers around the world.

Walmart is one of the world’s largest brick-and-mortar retailers, operating approximately 10,500 stores and club retail locations under 46 banners in 24 countries. The company has nearly 600 “Sam’s Club” bulk retail locations in the U.S. and more than 200 in other countries. In the U.S., 90% of the entire population lives within 10 miles of one of the company’s stores. (Source: “About,” Walmart Inc, last accessed December 14, 2022.)

It takes a network of 210 distribution centers to keep Walmart Inc’s stores stocked. Each distribution center is more than one million square feet and supports 90 to 100 stores in a 150+ mile radius.

Walmart Inc is also one of the fastest-growing e-commerce companies. The main Walmart e-commerce site gets up to 100 million unique visitors per month, and those numbers have been rising every year.

The company’s expanding international footprint and low prices help it generate a lot of cash, and it returns some of that cash to investors in the form of dividends and share repurchases. In the third quarter, Walmart returned $1.5 billion to its shareholders through dividends and $3.0 billion through share repurchases. (Source: “Walmart Releases Q3 FY23 Earnings,” Walmart Inc, November 15, 2022.)

Walmart continues to be one of the top dividend stocks, having raised its payout for the last 49 consecutive years. In February, the company’s board approved cash dividends of $0.56 per quarter, or $2.23 per share on an annual basis. This represents an increase of approximately two percent over the $2.20 per share it paid out in the previous fiscal year. (Source: “Dividend History,” Walmart Inc, last accessed December 14, 2022.)

Subsequent to the third quarter, Walmart approved a new $20.0-billion share repurchase authorization. This replaces the previous authorization, which had approximately $1.9 billion remaining at the end of the third quarter.

Middlesex Water Co

Middlesex Water Co (NASDAQ:MSEX) provides a range of regulated and non-regulated water, wastewater utility, and related services, primarily in New Jersey (where it’s headquartered) and Delaware. (Source: “About Us,” Middlesex Water Co, last accessed December 14, 2022.)

The company’s regulated services include collecting, treating, and distributing water on a retail and wholesale basis to residential, commercial, industrial, and fire-protection customers in parts of New Jersey and Delaware. This segment also includes regulated wastewater systems in the two states.

Middlesex Water Co’s non-regulated contract services include the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware.

In October, the company’s board declared a quarterly cash dividend of $0.3125 per share, a 7.8% increase over the $0.29 per share it declared in July. This works out to a yield of 1.4%. It also represents the company’s 50th consecutive year of dividend increases. (Source: “Middlesex Water Company Increases Common Dividend by 7.76%,” Middlesex Water Co, October 24, 2022.)

Johnson & Johnson

When it comes to income and growth, it’s tough to beat Johnson & Johnson (NYSE:JNJ). It has provided investors with strong capital appreciation for decades and it has raised its annual dividend for the last 60 straight years. Whether we’re dealing with recessions, housing crises, pandemics, wars, or black swan events, investors have benefitted from the company’s stock market gains and reliable, annual dividend increases.

Johnson & Johnson is the world’s largest and most diverse health-care product firm. It has entrenched positions in the consumer health, pharmaceutical, and medical device markets. Each day, its 142,000 employees serve more than one billion people. Over the course of one week, the company serves almost the same number of people who live on the planet. (Source: “2021 Investor Fact Sheet,” Johnson & Johnson, last accessed December 14, 2022.)

The company’s drug and device groups generate close to 80% of its sales and drive the majority of its cash flow. Johnson & Johnson’s consumer health segment includes products focused on the skin health/beauty, over-the-counter medicine, baby care, oral care, women’s health, and wound care markets.

The company currently has 29 platforms/products that generate in excess of $1.0 billion in annual sales. About 70% of Johnson & Johnson’s sales come from No. 1 or No. 2 global market share positions.

Despite its massive product portfolio, the company still develops new products. About 25% of its sales currently come from products launched in the past five years.

Few companies have a dividend policy as enviable as that of Johnson & Johnson. In April, the company’s board declared a 6.6% increase in its quarterly dividend to $1.13 per share. This was the 60th consecutive year in which the company increased its quarterly dividend. (Source: “Johnson & Johnson Announces Dividend Increase of 6.6%,” Johnson & Johnson, April 19, 2022.)

Genuine Parts Company

Despite recent interest rate hikes, concerns about the broader economy, and record-high vehicle prices, the U.S. has been reporting high auto sales figures. Nevertheless, the average age of vehicles in the U.S. has continued to increase. Earlier in 2022, the average age of light vehicles reached an all-time high of 12.2 years. This was the fifth straight year that the average vehicle age in the U.S. rose. (Source: “Average Age of Vehicles in the US Increases to 12.2 years, according to S&P Global Mobility,” S&P Global Mobility, May 23, 2022.)

New or old, vehicles need to be serviced and repaired, and that has led to record financial results and share-price gains for Genuine Parts Company (NYSE:GPC). It has also led the company to raise its dividend annually for the last 66 years.

Genuine Parts is a leading global company that distributes automotive and industrial replacement parts and materials. Its segments include Automotive Parts Group and Industrial Parts Group. (Source: “Investor Presentation: November 2022,” Genuine Parts Company, last accessed December 14, 2022.)

The company’s Automotive Parts Group is a network that distributes auto parts, accessories, and service items in North America, Europe, and Australasia. In North America, the business group sells parts primarily under the “NAPA Auto Parts” brand name. The Industrial Parts Group provides customers with supply chain efficiencies through Genuine Parts Company’s on-site solutions.

In addition to providing market-trouncing stock market gains, GPC stock has one of the most enviable dividend programs on Wall Street. Over the last 40 years, the company’s annualized dividend has expanded at a compound annual growth rate (CAGR) of seven percent, from $0.26 per share in 1982 to $3.58 per share in 2022.

Genuine Parts Company targets an annual dividend yield of two to three percent and a payout ratio of 50% to 55%. As of this writing, the company’s payout ratio is just 42.1%. This gives management more than enough financial wiggle room to raise its payout again in 2023.

Dividend Aristocrats & Dividend Kings Thumping the S&P 500

It’s one thing to find dividend stocks that have been raising their payouts; it’s another thing to find dividend stocks that have been crushing the broader market in terms of share price.

That’s exactly what you get with the five stocks discussed above. Over the last 25 years, with dividends reinvested, Atmos Energy stock has posted total returns of 769%, Johnson & Johnson stock has posted 888%, Genuine Parts stock has posted 916%, Walmart stock has posted 992%, and Middlesex Water stock has posted 1,066%!

Over the same time frame, the S&P 500 has only posted returns of 315%.

Chart courtesy of StockCharts.com

Going back even further, the five dividend stocks have still outpaced the S&P 500 (see the below chart).