In this article, we will take a look at some of the best dividend kings for safe dividend growth.
The importance of dividend stocks cannot be denied, even in today’s market environment, which is dominated by AI stocks. The S&P Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years, is down by over 4% since the start of 2025, compared with a much harsher decline of 13% in the broader market.
Dividend stocks become increasingly popular when companies grow their payouts regularly. Historically, dividend growth stocks have performed better than their peers and have shown less volatility. The dividend growth track records, backed by solid fundamentals, offer reliable investment options to income investors. According to a report by Nuveen, dividend growth stocks have outperformed other asset classes with less risk. The report revealed that companies with strong dividend growth streaks delivered an annual average return of over 10% between 1973 to 2024, as compared to a 4.2% return of non-dividend paying stocks. During this period, dividend cutters delivered a nearly -2% return.
Though dividend stocks also do not come with a promise and can also fluctuate, these stocks have made significant contributions to the market’s overall return over the decades. According to a report by Hartford Funds, dividends and reinvested dividends represented nearly 40% of the market’s return from 1930 to 2024, with capital appreciation making up the rest. The report also highlighted their significance when the economy was in the trenches. The data mentioned that during the 1940s, 1960s, and 1970s, the total returns were lower than 10%, however, dividends represented a larger portion of the market’s performance.
According to Jerome Powell, inflation in the US is likely to ramp up because of the President’s sweeping tariffs. Here are some comments from Powell:
“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.”
While this presents an overall uncertain environment for an investment landscape, dividend investors are in the catbird seat, as dividend stocks have historically been successful in protecting capital against inflation. WisdomTree reported that from 1957 through 2023, dividends have grown by an average of 5.7%, compared with a 3.67% growth in inflation. The report also mentioned that over the past 68 years, dividend payouts have only decreased in six years, and in just one of those years, they dropped by more than 5%. In comparison, stock prices experienced declines in 18 years during the same period, with the worst drop exceeding 40% and an average decline of more than 11%. Stock prices have proven to be more than twice as volatile as the underlying dividend cash flows. This is because market sentiment often causes short-term fluctuations in stock prices, whereas dividend cash flows, which reflect the company’s long-term value, are less volatile. Given this, we will take a look at some of the best dividend kings for safe dividend growth.
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Our Methodology
For this article, we scanned the list of dividend kings, which are the companies that have raised their payouts for 50 years or more. From that list, we picked 12 companies with the highest 5-year annual average dividend growth rates. The stocks are ranked in ascending order of their annual average dividend growth in the past five years.
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12. Hormel Foods Corporation (NYSE:HRL)
5-Year Average Annual Dividend Growth Rate: 5.69%
Hormel Foods Corporation (NYSE:HRL) is a Minnesota-based multinational food processing company. It is dealing with some challenges at the moment, partly due to the bird flu affecting the turkey market—a key segment of its operations. On top of that, the company’s over $3 billion purchase of Planters in 2021 has yet to deliver the kind of results investors were hoping for. As a result, both its gross and operating margins have slipped below the typical levels seen over the past two decades.
In fiscal Q1 2025, Hormel Foods Corporation (NYSE:HRL) reported mixed earnings, with revenues coming in at $2.99 billion. Though revenue declined by 1% on a YoY basis, it still surpassed analysts’ estimates by $42 million. The company’s operating income stood at $228 million, with an operating margin of 7.6%.
Despite facing headwinds, Hormel Foods Corporation (NYSE:HRL)’s cash position remained strong, which makes it a strong company for income investors. The company’s cash and cash equivalents grew to $840.4 million in the most recent quarter, from $741.8 million in the same period last year. It also returned $155 million to shareholders through dividends. Currently, it offers a quarterly dividend of $0.29 per share and has a dividend yield of 3.77%, as of April 4. The company has been raising its dividends for 51 consecutive years, which makes HRL one of the best dividend kings.
11. Lancaster Colony Corporation (NASDAQ:LANC)
5-Year Average Annual Dividend Growth Rate: 6.5%
Lancaster Colony Corporation (NASDAQ:LANC) is an Ohio-based food company that mainly focuses on manufacturing and marketing specialty food products for the retail and food service markets. The company’s growth has been fueled by its focus on innovation and technology. The company has effectively broadened its presence in the frozen foods and condiments space, aligning with changing consumer tastes that favor healthier and more sustainable products. Over the past three years, it has poured more than $250 million into automation and advanced manufacturing, which has helped improve efficiency and cut down on expenses. These proactive efforts have not only enhanced its market position and profitability but also set the stage for continued success in a competitive environment.
In fiscal Q2 2025, Lancaster Colony Corporation (NASDAQ:LANC) reported a revenue of $509.3 million, which showed a 4.8% growth from the same period last year. Retail net sales rose by 6.3% to reach $280.8 million, while Foodservice net sales saw a 3.0% increase, coming in at $228.5 million. Overall, consolidated gross profit climbed by $11.3 million, marking a 9.3% improvement and setting a new second-quarter record at $132.8 million.
Lancaster Colony Corporation (NASDAQ:LANC)’s cash position also remained stable, with cash and cash equivalents amounting to over $203 million at the end of December 2024, up from $163.4 million six months ago. The company offers a quarterly dividend of $0.95 per share, having raised it by 5.6% in November 2024. This was its 62nd consecutive year of dividend growth. The stock has a dividend yield of 2.11%, as of April 4. With a 5-year average dividend growth rate of 6.5%, LANC is one of the best dividend kings on our list.
10. California Water Service Group (NYSE:CWT)
5-Year Average Annual Dividend Growth Rate: 7.21%
California Water Service Group (NYSE:CWT) is an American public utility company, headquartered in California. The company offers drinking water and wastewater services. In Q4 2024, the company reported revenue exceeding $222 million, marking a 4% increase compared to the same period a year earlier. This growth was supported by higher rates, which added $24.2 million to the top line. A key highlight for the quarter was the submission of the 2024 California General Rate Case (GRC), outlining planned investments to support a reliable and sustainable water supply for customers.
Operating expenses rose to $189.9 million, up $10.6 million from $179.3 million in the prior-year quarter. The cost of water production increased by $3.4 million to $73.7 million, mainly due to higher wholesale rates and greater consumption.
California Water Service Group (NYSE:CWT) continues to demonstrate financial strength and a commitment to shareholder returns. On January 29, the company announced a 7.1% increase to its quarterly dividend, raising it to $0.30 per share. This was the company’s 58th consecutive year of dividend growth, which makes it one of the best dividend kings on our list. In the past five years, the company has raised its payouts at an annual average rate of 7.21%. As of April 4, the stock has a dividend yield of 2.48%.