Investors looking for quality dividend stocks can start with the Dividend Kings, a group of just 48 stocks that have increased their dividends for at least 50 consecutive years.

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 3 Dividend Kings that can raise dividends even in a recession, and also have high yields above 3%.

Altria Group (MO)

Altria Group 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 10% ownership stake in global beer giant Anheuser Busch InBev, in addition to large stakes in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group (CRON

During 2023, Altria focused on expanding its smoke-free product portfolio, including the integration of NJOY into its family of companies and launching on! PLUS 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%.

Hormel Foods (HRL)

Hormel Foods was founded in 1891 in Minnesota. Since that time, the company has grown into a $19 billion market capitalization juggernaut in the food products industry with over $12 billion in annual revenue.

Over the years, Hormel has kept its core competency as a processor of meat products, but has also grown into other business lines through acquisitions. The company sells its products in 80 countries worldwide, and its brands include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.

Hormel posted first quarter earnings on February 29th, 2024, and results were better than expected on both the top and bottom lines. Adjusted earnings-per-share came to 41 cents, which was seven cents ahead of expectations. Revenue was $3 billion, which was up 1% year-over-year, and beat estimates by $90 million. Volume was up 4% year-over-year to 1.1 billion pounds. Sales growth was driven by premium bacon, prepared proteins, poultry, and snacking categories. Retail volume was up 2%, while net sales were down 2%, and segment profit was down 3%. In food service, volume was up 8%, while net sales were up 9% and segment profit rose 10%.

Relatively consistent results have come from a steady stream of acquisitions and a bit of organic growth. This has afforded Hormel the ability to consistently raise its dividend as well. We are forecasting forward earnings growth of 5% annually. We see sales growth as the primary driver of earnings-per-share expansion moving forward, along with cost reductions.

Hormel’s main competitive advantage is its ~40 products that are either #1 or #2 in their category. Hormel has brands that are proven, and that leadership position is difficult for competitors to supplant. In addition, Hormel has a global network of distributors that few food companies can rival. HRL has increased its dividend for 58 consecutive years. HRL stock currently yields 3.1%.

National Fuel Gas (NFG)

National Fuel Gas Co. is a diversified energy company that operates in five business segments: Exploration & Production, Pipeline & Storage, Gathering, Utility, and Energy Marketing. The largest segment of the company is Exploration & Production.

In early May, National Fuel Gas reported (5/1/24) financial results for the second quarter of fiscal 2024. The company grew its production 10% over the prior year’s quarter thanks to the development of core acreage positions in Appalachia. Thanks to effective hedging, the average realized price of natural gas slipped only -1%, from $2.58 to $2.56.

Moreover, thanks to strong volume growth in the production and gathering segments, earnings-per-share grew 16%, from $1.54 to $1.79, and exceeded the analysts’ consensus by $0.33. The company has beaten the analysts’ estimates in 17 of the last 20 quarters.

National Fuel Gas pursues growth by growing its natural gas production and expanding its pipeline network. The company has grown its earnings-per-share at a 4.4% average annual rate over the last decade. Moreover, the company grew its proved reserves 8% in 2022 and 9% in 2023. This certainly bodes well for future growth prospects.

National Fuel Gas has a healthy balance sheet while its interest coverage level stands at a strong 5.6. Moreover, its dividend payout ratio is sufficiently low to enable continued dividend growth even if earnings stall temporarily. Management has always targeted a dividend payout ratio around 50% in order to have a wide margin of safety against the wide fluctuations of the price of natural gas.

With 53 years of consecutive dividend increases, National Fuel Gas qualifies to be a Dividend King. NFG stock currently yields 3.5%.

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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.