3 High-Yield Stocks That Should Continue Raising Dividends Each Year

The Dividend Kings are a group of just 56 stocks that have all increased their dividends for at least 50 consecutive years. That level of dividend longevity makes these stocks highly appealing for dividend growth investors.

The Dividend Kings are also appealing for retirees because of their ability to withstand recessions. Only companies that can continue to raise their dividends through even the worst recessions make to become Dividend Kings.

This article will discuss three Dividend Kings that have high yields above 4%, and should continue raising their dividends each year.

Stanley Black & Decker

Stanley Black & Decker SWK is a world leader in power tools, hand tools and related items. The company holds the top global position in tools and storage sales. Stanley Black & Decker is second in the world in the areas of commercial electronic security and engineered fastening.

In the 2024 first quarter, revenue declined 1.5% to $3.87 billion, but this topped estimates by $40 million. Adjusted earnings-per-share of $0.56 compared favorably to -$0.10 in the prior year and was $0.01 better than expected. Companywide organic growth declined 1%, but this was a deceleration from preceding quarters.

Organic sales for Tools & Outdoor, the largest segment within the company, decreased 1% as gains in the rest of the world were more than offset by weaker results in North America and Europe. U.S. retail volume declined 1%. The Industrial segment fell 5%, as gains in Engineered Fastening were once again more than offset by weaker Infrastructure results.

Sales are struggling to grow in the present climate of inflation, but the company’s aggressive cost cuts are helping to stabilize earnings. In the first quarter, SWK’s adjusted gross margin expanded 590 basis points to 29% due to supply chain transformation, reduced shipping costs, and lower inventory destocking. The company’s cost reduction program remains on track to deliver $2 billion in pre-tax savings by 2025. Stanley Black & Decker has achieved $1.1 billion of cost savings since starting the program.

Management reaffirmed its prior guidance for 2024 as well. The company continues to expect adjusted earnings-per-share in a range of $3.50 to $4.50 for the year.

Stanley Black & Decker’s key competitive advantage is that its products are well-known and respected by customers. This was why the company has been able to increase prices in certain product categories over the years and not see a decline in sales. Stanley Black & Decker has also been very active in making strategic acquisitions to help grow the company.

SWK’s earnings can continue to maintain and even grow the dividend. The company has a dividend growth streak of 56 consecutive years. SWK stock currently yields 4.1%.

Altria Group

Altria Group MO was founded by Philip Morris in 1847. Today, it is a consumer-staples giant. It sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands. Altria also has a significant investment in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group CRON.

Altria Group, Inc. reported its first-quarter business results for 2024, affirming its guidance for the full year. CEO Billy Gifford noted the company's progress toward its vision and the solid performance of its traditional tobacco businesses despite regulatory challenges. Altria's net revenues amounted to $5.576 billion, down 2.5% from the first quarter of 2023, with revenues net of excise taxes at $4.717 billion, down 1.0%. Adjusted diluted EPS stood at $1.15, a decrease of 2.5% compared to the same period last year.

The decline in smoking in the U.S. is a headwind for the domestic cigarette and cigar manufacturers. In recent years, Altria has refocused on expanding its smoke-free product portfolio, including the integration of NJOY into its family of companies and launching internationally in Sweden.

The company continued its efforts to introduce heated tobacco products to the market through its joint venture with JT and advocated for a regulated e-vapor market, emphasizing enforcement against illicit disposable products.

The company highlighted the significant growth of illicit flavored disposable e-vapor products, estimating that the e-vapor category grew by approximately 35% in 2023, with illicit products representing over 50% of the category.

In response, Altria has taken steps to strengthen NJOY's supply chain, close inventory gaps at retail and expand the distribution of ACE to over 75,000 stores. Altria also provided an outlook for 2024, expecting adjusted diluted EPS in the range of $5 to $5.15, representing a growth rate of 1% to 4%

Altria’s dividend policy is to distribute approximately 80% of its annual adjusted earnings-per-share. The company generates enough cash flow to pay substantial dividends, and also repurchase stock. Altria has increased its dividend for 54 consecutive years and the shares currently yield 8.5%.

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Northwest Natural

NW Natural NWN was founded in 1859 and has grown from a small utility to a large publicly-traded utility today. The utility’s mission is to deliver natural gas to its customers in the Pacific Northwest and it has done that well, affording it the ability to raise its dividend for 68 consecutive years. NW Natural trades with a market capitalization of $1.5 billion.

Northwest Natural Holding Company reported its financial results for the first quarter of 2024, with net income reaching $63.8 million ($1.69 per share), a decrease from $71.7 million ($2.01 per share) in the same period of 2023. Despite this decline, the company saw notable achievements, including adding nearly 15,000 gas and water utility connections in the last 12 months, driven mainly by robust water acquisitions, and providing bill credits totaling nearly $30 million to Oregon gas customers in early 2024.

The company also experienced a significant demand for its gas system during the winter storm in January, setting a new peak day record for therms delivered.

We are forecasting an average growth rate of 7.5% for the next five years as NW Natural pushes through approved pricing increases and continues to acquire customers at low-single-digit rates, as it did with the new Oregon rate case. NW Natural also has its water utilities business that will provide a small amount of growth, but higher earnings will primarily come from customer and pricing growth while the company invests in its water business for longer-term growth.

NW Natural’s quality metrics have been very steady in the past decade. Approximately 76% percent of its total assets are encumbered by debt, which is completely acceptable for a utility. Its interest coverage is fairly strong at 3.6, so there are certainly no financing concerns moving forward.

The payout ratio is around three-quarters of earnings, which is much improved from previous years. The dividend has been increased for 68 consecutive years, while NWN shares currently yield 5.5%.

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