3 Dividend Kings You’ve Never Heard Of

Investors looking for safe dividends should consider the Dividend Kings, a group of just 53 stocks that have increased their dividends for at least 50 consecutive years.

Most investors are familiar with the largest companies on the Dividend Kings list, such as Procter & Gamble PG and Johnson & Johnson JNJ.

But there are many lesser-known Dividend Kings that have equally promising growth prospects for the future, and pay solid dividends to shareholders.

Let's discuss three dividend stocks that are on the list of Dividend Kings, that may not get as much coverage, but are attractive for dividend growth investors.

Banking on Impressive Dividend History

United Bankshares UBSI was formed in 1982 and since that time, has acquired more than 30 separate banking institutions. This focus on acquisitions, in addition to organic growth, has allowed United to expand into a regional powerhouse in the Mid-Atlantic with a $5 billion market capitalization, about $30 billion in total assets, and annual revenue of about $1 billion.

The company has a long dividend history, with a very impressive 50 consecutive years of dividend increases. United posted second-quarter earnings on July 25, and results were slightly better than the comparable period in 2023. Earnings came to $96.5 million, or 71 cents per share. That was better than the $92.5 million and 68 cents, respectively, from last year’s Q2.

Net interest income was $226 million, down less than 1% year over year. The slight decline was due to higher interest expense and an increase in average interest-bearing deposits. In addition, the yield on average earning assets was up 46 basis points, keeping pace with funding cost increases. That means that net interest margin was 3.50%, essentially flat from last year’s 3.51%. Provisions for credit losses were $5.8 million, down from $11.4 million a year ago.

Noninterest income was $30.2 million, down $5 million, or 14%, from last year’s second quarter. Noninterest expense was flat year over year.

Future growth is likely for UBSI from general economic growth which is positive for banks. It will also generate growth externally, through acquisitions. In the most recent quarter, United also agreed to acquire Piedmont Bancorp, which it has agreed to pay 0.3 shares of United for each share of Piedmont, or about $267 million at the time of the announcement. The bank has $2.1 billion in total assets and the merger is expected to be completed late this year or early next year.

United’s dividend payout ratio is now 55% of earnings, and we expect it will move higher. We see United’s dividend as safe and able to weather an economic downturn, as it did during the Great Recession. 

UBSI stock currently yields 4.2%.

Get Pumped About Dividend Increases

Gorman-Rupp GRC began manufacturing pumps and pumping systems back in 1933. Since that time, it has grown into an industry leader with annual sales of nearly $700 million and a market capitalization of $1 billion. Today, Gorman-Rupp is a focused, niche manufacturer of critical systems that many industrial clients rely upon for their own success. The company generates about one-third of its total revenue from outside of the U.S.

Gorman-Rupp posted second-quarter earnings on July 26, and results were somewhat weak. The company saw revenue come to $169.5 million, which was off about 1% year over year. The decline in sales was due to a drop in volume, partially offset by the impact of pricing increases taken in the first quarter. The company’s gross profit was $54 million, resulting in gross margin of 31.9% of revenue, which were improvements from $51.7 million and 30.2%, respectively, a year ago.

The gross margin increase was due to a 280 basis-point improvement in cost of material, most of which was from higher selling prices. These were partially offset by a 110 basis-point deterioration in labor and overhead expenses. Operating income was $26 million, or 15.4% of revenue, both of which were higher year over year. Operating income totaled $24.3 million and 14.2% of revenue, respectively, a year ago.

The company can achieve future growth mostly through high single-digit sales growth. Given the company’s robust backlog of uncompleted work, we see revenue growth continuing for the near term, which the company says continues to occur. Gorman-Rupp's competitive advantage is in its many decades of experience in providing innovative solutions for niche, but critical, engineering problems facing its customers.

The company also has one of the most impressive dividend increase streaks in the market, which currently stands at 51 years. That makes Gorman-Rupp a member of the prestigious Dividend Kings.

Gorman-Rupp’s payout ratio is 39% of earnings for this year following the most recent increase in the dividend, but also higher earnings estimates. We see it declining in the years to come as earnings rebound. 

GRC stock currently yields 1.9%.

Go With the Flow of 51 Consecutive Years 

Middlesex Water Company MSEX was formed in 1897. The company is a water and wastewater utility in New Jersey and Delaware. Its market capitalization is $1.1 billion. Middlesex has paid consecutive dividends since 1912 and has reached its 51st consecutive year of dividend increases.

Middlesex Water reported its second-quarter 2024 financial results, revealing net income of $10.5 million, a 6.5% increase from $9.9 million in 2023. Revenues for the quarter rose by 14.8% to $49.1 million, up from $42.8 million in the same period last year. This revenue growth was largely attributed to a base rate increase approved by the New Jersey Board of Public Utilities (NJBPU), which took effect on March 1, 2024, and higher billings from commercial and industrial customers. In Delaware, revenue increased by $0.6 million due to customer growth and higher demand.

For the first half of 2024, net income increased by $5.5 million compared to the same period in 2023. Diluted earnings per share for the six months ended June 30, 2024, were $1.18, up from $0.88 in the same period in 2023. The increase was primarily due to the NJBPU-approved base rate increase and a one-time recovery of $6.4 million related to previously incurred depreciation, operating, and carrying costs for the water treatment facilities at the Park Avenue Wellfield.

Year-to-date revenues reached $89.7 million, an increase of $8.7 million over the same period in 2023, with growth in the Middlesex System, Delaware system, and Pinelands system.

Like many other regulated utilities, Middlesex’ quality metrics have remained steady in the past decade thanks to the monopoly-like nature of its assets. However, since pricing is regulated, they cannot drive excessive profitability, thereby explaining the resistance to significant margin expansion.

Its assets are mostly debt-financed, allowing for an excellent interest coverage ratio for a utility. Middlesex has the balance sheet to weather virtually any economic storm so there is no question of safety.

MSEX shares currently yield 2.1%.

At the time of publication, Ciura had no positions in any stocks mentioned.