Indestructible Dividend Shares Continuously Reward Their Shareholders Imperially
Many businesses have either ceased enhancing their dividends or, even worse, reduced or discontinued their payouts due to financial difficulties throughout the years. Those that have managed to maintain uninterrupted dividend growth streaks stand out even more. A minuscule fraction of publicly traded companies boast multidecade streaks of dividend growth.
Less than 50 firms have provided 50 or more years of dividend growth. These companies, referred to as Dividend Kings, have demonstrated consistent dividend growth despite wars, recessions, pandemics, and other significant events. Let's examine a trio of companies that have treated their investors like nobility for decades.
Embracing its royalty
ADP (ADP 1.22%) recently announced its latest dividend payment. The payroll and HR services provider increased its payout by 10%, bumping the quarterly rate to $1.54 per share, amounting to $6.16 annually.
This was a significant dividend increase for ADP. CEO Marcia Black commented on the payout in a press release: "We're thrilled to celebrate our 50th consecutive year of dividend increases and our 75th anniversary at the forefront of workforce innovation. We're honored to be among the select group of 'Dividend Kings', who have a history of increasing dividends for at least 50 consecutive years, and we remain dedicated to delivering strong results for our shareholders."
Several factors contribute to ADP's unwavering dividend. The company offers essential services to clients, ensuring steady and growing revenue. It also invests in innovation to maintain a competitive edge. Furthermore, ADP boasts a robust financial profile, positioning it well to navigate through economic downturns.
An impressive achievement
Consolidated Edison (ED 1.08%) became a member of the Dividend Kings this year. The utility increased its dividend payment by 2.5% in January, raising the quarterly rate to $0.83 per share, equivalent to $3.24 annually.
CFO Robert Hoglund commented on that milestone in a press release: "The 50th consecutive annual dividend increase for shareholders, the longest period of consecutive annual dividend increases for any utility in the S&P 500 index, showcases our unwavering focus on providing value to our investors while meeting the needs of our customers during the transition to clean energy."
Utilities often have lengthy records of dividend growth. While Consolidated Edison boasts the longest dividend growth streak among utilities in the S&P 500, a few smaller peers have even longer dividend growth streaks. Utilities are able to maintain steady dividend growth due to their stable cash flow, backed by government-regulated rate structures, and increased demand for electricity and gas. Meanwhile, Consolidated Edison maintains a financially conservative profile, with a target dividend payout ratio of 55% to 65% of its steady earnings. This allows it to retain cash for expanding its operations, such as clean energy infrastructure.
Extending its record
Federated Realty Investment Trust (FRT 3.06%) enhanced its quarterly dividend to $1.10 per share in August. This extended its dividend growth streak to 57 consecutive years, making it the longest consecutive annual dividend growth record in the real estate investment trust (REIT) sector.
Since REITs are required to pay dividends to maintain compliance with IRS regulations, many have lengthy streaks of boosting their dividends. Federated Realty's streak is the longest due to its longevity and prudent approach.
The company has a narrow investment focus, owning high-quality retail centers strategically located in the first-ring suburbs of nine major metro markets. These markets are more affluent and offer limited space for new competition, benefiting Federated Realty's retail centers. Additionally, Federated Realty is a selective investor with a strong financial profile. These factors have allowed the REIT to consistently increase its cash flow and dividend over the decades.
- To maintain its status as a Dividend King, ADP continuously invests in innovation, ensuring its financial stability and ability to deliver dividends even during economic downturns.
- Companies like Consolidated Edison, with long-term dividend growth streaks, demonstrate their commitment to shareholder value, often leveraging stable cash flow and government regulations to sustain their dividend payments.
