2 High-Yielding Dividend Kings That Have Been Paying Off Forever

There are many paths to a profit on Wall Street, but one strategy that has proved more effective than all others is buying dividend growth stocks. Companies that initiate a dividend then grow it over the years have outperformed all other classes of stocks.

Data from Hartford Funds and Ned Davis Research shows that from 1930 on, dividend growth stocks on the S&P 500 have never posted negative returns in any decade. Not even during the Great Depression or the 2000’s, when a combination of the Tech Wreck, 9/11, and the financial and housing markets implosion caused stocks to go nowhere for a decade.

The premiere growth stocks are Dividend Kings, stocks that not only pay dividends, but have increased them every year for 50 years or more. It’s a rarified group of companies. Of the thousands of stocks that trade on the market, just over 50 of them have made the cut.

Now, just because a company is a Dividend King doesn’t make it an automatic buy. The list is fluid as more stocks cross the 50-year threshold and others pause or cut their payouts and are kicked off. 

Last year, long-time Kings 3M (NYSE:MMM) and Leggett & Platt (NYSE:LEG) both slashed their dividends and were removed, while RLI (NYSE:RLI) was added after raising its payout for the 50th time.

Below are two members of dividend royalty that have long track records of hiking their dividends and also have high yields. While chasing yield can be dangerous, as it could signal problems, the two high-yield Dividend Kings that follow also grow their free cash flow at rates that support the payout.

Altria (MO)

Altria (NYSE:MO) is the first high-yield dividend growth royal to buy. With 55 years of consecutive dividend increases, the tobacco giant  has long been a compelling stock for income investors. 

Altria’s core cigarette business, led by its Marlboro brand, which has a 43% share of the U.S. market, generates steady revenue, some $20.4 billion in 2024, net of excise taxes. Despite an 8.8% volume decline, price hikes sustain its profitability, with an 83% payout ratio.

At first glance that may seem high, but Altria is a mature business and management has set returning 80% of its profits back to shareholders in the form of dividends as its target, making the dividend safe. With a 7% 10-year compound annual growth rate for both the dividend and free cash flow, investors can count on many more years of dividend growth.

Diversification into oral nicotine pouches through it on! brand allows Altria to tap into growth markets. Volumes jumped 44% in 2024 as on! increased its market share to 8.3%.  Admittedly, it has run into problems with its NJOY e-vapor product that required it to stop selling it.

MO stock trades at a forward P/E of 10, below the industry’s 15, but it also goes for a deeply discounted 11 times FCF. Its dividend of $4.04 per share yields 6.9% annually, significantly outpacing the S&P 500’s 1.3%. Altria’s stable business model and $1.5 billion cash reserve makes it a cornerstone for dividend-focused portfolios.

Universal (UVV)

It just so happens the second high-yielding Dividend King to buy is also a tobacco stock, but one that is often hidden from investor view. Universal (NYSE:UVV) doesn’t produce cigarettes, but rather tobacco leaf, which its sells in domestic and foreign markets. 

Universal is the world’s largest importer and exporter of leaf tobacco, and its largest customers include Altria, British American Tobacco (NYSE:BTI), and Philip Morris International (NYSE:PM). It also counts China Tobacco International, which sells more cigarettes in a year than the three major western cigarette makers, plus the next 11 largest tobacco companies combined.

Now, Universal did have a snafu last year when it discovered a senior financial officer at its Mozambique division embezzled from the company, which delayed the filing of its quarterly and year end reports. However, that was recently resolved and it has caught up with its filings, so a threatened delisting from the NYSE has been resolved.

Universal has 54 years of consecutive dividend increases, with the payout yielding 5.6% annually. It has increased the payout at a 5% CAGR while growing FCF at 11%. Its $1.4 billion market cap reflects stability in the tobacco and plant-based ingredients sectors, the latter of which also offers diversification while ensuring steady cash flows.

With a 62% payout ratio that supports its dividend, UVV has proven to be a reliable income generator for investors seeking high-yield stability.

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