Dividend Kings

Dividend Kings

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Numerous investors are seeking an investment portfolio that strikes a harmonious balance between growth, income, and security. In this series, we’ll explore stocks that meet specific dividend criteria.

In today’s video, we will be focusing on Dividend Kings.

What are Dividend Kings?

Dividend Kings are U.S. public companies that have successfully raised their dividends for an exceptional 50 or more consecutive years.

Unlike Dividend Challengers and Dividend Aristocrats, which have shorter track records, Dividend Kings are an elite group with a remarkable and unparalleled history of consistent dividend growth.

Why Invest in Dividend Kings, and What Are the Benefits?

Income Generation:

  • Dividend Kings are renowned for their ability to generate a consistent and reliable source of income. For income-focused investors, this is a paramount advantage. The regular dividend payments can supplement other income sources, making them especially appealing to retirees or those seeking steady cash flow.
  • Unlike relying solely on capital gains, which can be unpredictable and market-dependent, dividends offer a dependable stream of income. Investors can count on these payments as a source of financial support, helping to cover living expenses, reinvest in the market, or simply enjoy a more secure financial position.

Long-Term Growth Potential:

  • Beyond providing income, Dividend Kings often exhibit long-term growth potential. These companies have a proven track record of success and stability. Their ability to consistently grow dividends for over 50 years indicates financial strength and management quality.
  • As such, investors can benefit not only from the income but also from potential capital appreciation. These companies are well-positioned for growth in the long run, which can lead to an increase in the stock’s value over time. This dual benefit provides investors with a means to achieve both income and wealth accumulation.

 

Risk Mitigation:

  • The historical trend of increasing dividends suggests financial stability and resilience. Companies that can weather economic downturns and still increase payouts for over five decades are well-equipped to face challenges. This resilience translates to lower investment risk.
  • In times of market volatility or economic uncertainty, Dividend Kings can act as a safe haven within a portfolio. The dependable income stream and a track record of consistency can provide a sense of security for investors, reducing anxiety during turbulent market conditions.

In conclusion, investing in Dividend Kings offers a prestigious set of benefits for investors. They provide a dependable source of income, the potential for long-term growth, risk mitigation, and an opportunity to enhance portfolio diversification. These benefits make Dividend Kings an elite and well-rounded option for those seeking a balanced and reliable investment strategy.

How did I build this portfolio?

Creating a successful dividend challengers portfolio involves a structured approach that can help you maximize the benefits of these promising investment opportunities. Here are the key steps I considered to build this little template portfolio of dividend challengers framed in a way that can help you if you want to make your own:

Stock Selection:

  • Identify and Research: Begin by identifying potential Dividend Kings. Look for publicly traded companies with a remarkable track record of raising dividends for 50 or more consecutive years. Online stock screeners, financial reports, and investment news can be valuable resources.
  • Sector Diversification: Diversify your Dividend Kings across various sectors. This diversification minimizes risk by spreading investments across different sectors, reducing the impact of sector-specific market fluctuations.
  • Financial Health: Evaluate the financial health of the companies you’re considering. Key financial metrics, such as the debt-to-equity ratio, cash flow, and dividend payout ratio, can help you determine if the company can sustain its dividend growth.

Diversification:

  • Spread Your Investments: Diversification is a cornerstone of risk management. Distribute your investments across various sectors and industries to mitigate risk.
  • Risk Mitigation: A diverse portfolio is better equipped to weather economic fluctuations, as the impact of an industry-specific downturn is lessened by holdings in other sectors.

Ok, let’s see the stocks!

MO – Altria Group, Inc.

Altria Group, Inc. and its subsidiaries are involved in the manufacturing and sale of tobacco products in the United States. They offer cigarettes primarily under the well-known Marlboro brand, cigars and pipe tobacco under various other brands. These products are distributed to wholesalers, including distributors, and large retail chains. The company was established in 1822 and is headquartered in Richmond, Virginia.

MMM – 3M Company

3M Company is a global provider of diversified technology services, operating through four key segments. These products are distributed through various retail channels. Founded in 1902, 3M is headquartered in St. Paul, Minnesota, and serves both domestic and international markets.

NWN – Northwest Natural Holding Company

Northwest Natural Holding Company, primarily through its subsidiary Northwest Natural Gas Company, supplies regulated natural gas distribution services to a wide range of customers in Oregon and Southwest Washington. They also run the Mist gas storage facility, offer natural gas asset management services, and operate an appliance retail center. Additionally, the company is involved in gas storage, water, wastewater, non-regulated renewable natural gas, and various investment ventures. They have been serving customers with natural gas and water services for quite a while, as the company was founded in 1859 and is based in Portland, Oregon.

KO – The Coca-Cola Company

The Coca-Cola Company, a global beverage company, is known for producing and selling a wide range of nonalcoholic drinks worldwide. Their products include sparkling soft drinks, water, sports beverages, coffee, tea, juice, dairy, and plant-based drinks. They also provide beverage concentrates and syrups to various outlets, like restaurants and convenience stores. These drinks come under popular brand names like Coca-Cola, Diet Coke, Fanta, Sprite, and many others. Coca-Cola operates through a network of independent bottling partners, distributors, and retailers. Established in 1886, the company is based in Atlanta, Georgia.

SYY – Sysco Corporation

Sysco Corporation, along with its subsidiaries, is involved in marketing and distributing a variety of food and related products to the foodservice industry in the United States, Canada, the United Kingdom, France, and around the world. They operate through several segments. They provide a wide range of food products, including frozen, canned, and fresh items, as well as non-food supplies like paper products and kitchen equipment, to customers such as restaurants, hotels, schools, and healthcare facilities. Founded in 1969, Sysco is headquartered in Houston, Texas.

JNJ – Johnson & Johnson

Johnson & Johnson, along with its subsidiaries, is a global healthcare company that conducts research, development, manufacturing, and sales of healthcare products. They have a Consumer Health segment that offers various products under well-known brands such as AVEENO, NEUTROGENA, JOHNSON’S, and many others, including skincare, baby care, oral care, and over-the-counter medications. This segment also provides sanitary products, bandages, and first aid items. The Pharmaceutical segment specializes in a range of medical areas, including rheumatoid arthritis, HIV/AIDS, mental health disorders, and various types of cancer, serving a wide range of healthcare professionals and outlets.

CINF – Cincinnati Financial Corporation

Cincinnati Financial Corporation, along with its subsidiaries, specializes in providing property casualty insurance products across the United States. They have five main segments of operation: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments. The company also offers life insurance and investment services. Established in 1950, Cincinnati Financial Corporation is headquartered in Fairfield, Ohio.

PG – The Procter & Gamble Company

The Procter & Gamble Company is a global provider of branded consumer packaged goods. They operate through five main segments: Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care. They sell these products through various channels, including retail stores and e-commerce. Established in 1837, Procter & Gamble is headquartered in Cincinnati, Ohio.

GPC – Genuine Parts

Genuine Parts Company is a distributor of automotive and industrial parts and materials, operating through two segments: Automotive Parts Group and Industrial Parts Group. Genuine Parts Company serves customers in several countries, including the United States, Canada, and various European and Asian markets. Established in 1928, the company is headquartered in Atlanta, Georgia.

LOW – Lowe’s Companies, Inc.

Lowe’s Companies, Inc. is a major home improvement retailer in the United States. They offer a wide range of products for construction, maintenance, repair,and remodeling, Lowe’s also provides installation services through independent contractors, protection plans, and repair services. They cater to professional customers, homeowners, and renters, selling both national brand-name and private brand products through their physical stores, website, and mobile applications. The company was founded in 1921 and is headquartered in Mooresville, North Carolina.

CBSH – Commerce Bancshares, Inc.

Commerce Bancshares, Inc. serves as the holding company for Commerce Bank, providing a wide array of banking and financial products and services in the United States. They have three main segments: Consumer, Commercial, and Wealth. They also provide services in private equity investment, insurance, lending, and online banking. Established in 1865, Commerce Bancshares is headquartered in Kansas City, Missouri.

EMR – Emerson Electric Co.

Emerson Electric Co. is a technology and engineering company that offers a wide range of solutions for industrial, commercial, and consumer markets across the globe.. They also provide software for optimizing industrial operations and a variety of residential and commercial heating and air conditioning products, including compressors, thermostats, and control systems. Emerson Electric, founded in 1890, is headquartered in Saint Louis, Missouri.

AWR – American States Water Company

American States Water Company and its subsidiaries offer water and electric services to a broad range of customers in the United States. They have three main segments: Water, Electric, and Contracted Services. The company is involved in acquiring, producing, distributing, and selling water, as well as distributing electricity. They serve over 260,000 water customers across ten California counties and provide electricity to about 25,000 customers in the San Bernardino County mountain communities. Additionally, they provide water and wastewater services to military installations, including facility operation, maintenance, and construction. Founded in 1929, American States Water Company is headquartered in San Dimas, California.

The Portfolio

So those are the stocks in the portfolio, let’s see what it looks like when we put them all together!

I decided to market weight the portfolios, this will probably be the biggest question asked when it lands on the Trading 212 pie library as the allocations might look a little bit weird.

Because the classifiers are only based on the number of years of dividend growth it makes for an unusual mismatch of company sizes.

Therefore, in my opinion, it makes more sense to market weight the stocks in the pie rather than equally weight the tiny ones with the huge mega caps.

This took more time to do it this way but it means that the investment won’t be overwhelmed by movements in the smaller-cap stocks

For the Dividend Challengers here is what the pie looks like:

And for those who will inevitably ask, here is the yield, at the time of making the video at least. Remember yield changes a little every time the market opens.

At the time of making the pie, the yield was 3.26%

If you want to see this pie in real life then you can follow the link here.

One thing to remember is that if you do open an account, as with all investments, your capital is at risk. Investments can fall and rise, and you may get back less than you invested.

Finally, as I know this will get asked, will I be maintaining this pie?

Obviously, as I have said before these pies take a lot of hard work to create and maintain, if you are taking it seriously so I will be maintaining the pies in this series as long as there is significant support from the community.

Unfortunately, if only a small number of people support the pie, i am better off focusing on things you like more.

You should see this pie as more of an example of a certain type of dividend-paying stock rather than a comprehensive portfolio for you to invest in!

Check out the other videos in the series and guess which one will perform the best!