Quick Read
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Coca-Cola and Procter & Gamble pair 64 and 70 straight years of dividend raises with payouts covered by strong free cash flow.
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Kimberly-Clark yields about 5%, the group's highest, but dividends nearly match earnings and Kenvue debt leaves less room for error.
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P&G's rising input and interest costs hold core EPS growth to 0-3%, which could mean smaller dividend raises for a while.
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Some brands simply outlast every fad. A Coke at the ballpark, a jug of Tide in the laundry room and a box of Kleenex on the nightstand have been fixtures in American homes for generations. The companies behind them have turned that loyalty into some of the most reliable dividend checks on Wall Street. All three names below are Dividend Kings, meaning they have raised their payouts for at least 50 consecutive years, and the longest streak in the group has reached 70 years. If you are at or near retirement and want income that keeps rising, here is how safe each payout looks today.
Coca-Cola: 64 Straight Raises From the World's Most Famous Drink
The story started on May 8, 1886, when Dr. John Pemberton brought his syrup to Jacobs' Pharmacy in downtown Atlanta and the first glass of Coca-Cola was poured. Today, Coca-Cola( NYSE:KO ) has what CEO Henrique Braun calls "a strong portfolio of 32 billion-dollar brands and unmatched system reach with our bottling partners."
Yield:Coca-Cola pays $0.53 per share each quarter, or an annualized $2.12. Given the recent price of $96.15, that works out to a forward yield of about 2.2%.
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Dividend safety:The trailing dividend of $2.10 per share uses about 62% of trailing EPS of $3.39, which leaves comfortable room. Free cash flow reached $11.4 billion through the first three quarters, and management now expects at least $13 billion for the full year. Its finances are in good shape too. The CFO put net debt leverage at 1.3 times EBITDA, below the company's target range of two to 2.5 times, and interest coverage stands at 8.32x. Coca-Cola's latest raise, to 53 cents from 51 cents, marked its 64th consecutive year of dividend increases, and the quarterly rate has rose from $0.44 in 2022.
Why it lasts:People keep buying Coke whatever the economy is doing. In the latest quarter, adjusted EPS of $0.91 came in ahead of the $0.88 estimate, revenue rose 7.4% to $13.38 billion, and Coca-Cola Zero Sugar grew 16%. Management raised full-year guidance to comparable EPS growth of at least 11%. CFO John Murphy also made the income priority clear: "As always, we're here to return capital to our shareowners. Again, at the moment, that's primarily through our dividend." A beta of 0.269 shows how calmly the stock tends to trade compared with the broader market.
Risk:Coca-Cola is waiting on a court decision in its long-running dispute with the IRS. Murphy said the company is "anticipating a decision in the coming months," and a bad outcome could tie up cash that would otherwise go toward future dividend growth or buybacks.
Procter & Gamble: 70 Years of Raises Funded by Tide and Pampers
William Procter and James Gamble founded Procter & Gamble( NYSE:PG ) in Cincinnati in 1837. Nearly two centuries later, its portfolio covers much of what's in a typical household: Tide, Pampers, Gillette, Crest and Pantene. P&G has paid a dividend for 136 consecutive years.
Yield:The quarterly dividend is $1.0885, an annualized $4.354. At $166.68 per share, the forward yield is about 2.61%.
Dividend safety:Few dividends are better covered. P&G generated $15.84 billion in free cash flow last fiscal year on $19.56 billion of operating cash flow. For the current fiscal year, it plans to pay over $10 billion in dividends and buy back about $5 billion of stock. The forward dividend uses about 62% of the $7.00 midpoint of core EPS guidance, which ranges $6.89 to $7.11. The current increase marks the company's 70th consecutive year of dividend increases, and the quarterly payout has rose from $0.8698 in 2022.
Why it lasts:Shoppers don't put off buying detergent, diapers or toothpaste when times get tight. Last quarter, core EPS of $2.00 beat the $1.89 estimate, and net sales rose 4.0% to $23.28 billion, with management pointing to "each of our 10 product categories growing organic sales." As management put it, "In aggregate, the consumer is resilient." The completed Thorne acquisition adds a health and wellness brand to the lineup. With a beta of 0.361 and a forward P/E of 24, P&G trades as a low-volatility income stock at a moderate valuation.
Risk:Input costs are squeezing margins. Guidance includes about $1.4 billion after tax in higher raw material, energy and transportation costs, plus roughly $300 million in higher net interest expense. That holds core EPS growth to 0-3%, which could mean smaller dividend raises for a while.
Kimberly-Clark: A Kleenex Fortune With the Group's Highest Yield
Kimberly-Clark( NASDAQ:KMB ) has a 154-year history, and Kleenex itself dates to 1924. Its shelf lineup includes Huggies, Cottonelle, Scott and Kotex. With the $49B Kenvue acquisition now closed, it also has Tylenol, Listerine, Neutrogena and Johnson's.
Yield:Kimberly-Clark pays $1.28 per quarter, an annualized $5.12. At $109 per share, that's a forward yield of about 4.7%. It's the only high-yield name in this group, and it pays more than twice Coca-Cola's rate.
Dividend safety:Coverage is lower here. Trailing dividends of $5.10 per share sit just below trailing diluted EPS of $5.24, so reported earnings leave little cushion. Adjusted results look healthier: Q3 adjusted EPS of $1.70 exceeded the $1.65 estimate, and the stock trades at a forward P/E of just 15. The track record is long. The company reported continuing its dividend increase streak to 54 consecutive years, and the quarterly rate has risen from $1.07 in 2020 to $1.28 today.
Why it lasts:Tissue, diapers and pain relievers are everyday purchases that families keep making. North America tissue gained 20 basis points of share last quarter, and e-commerce is growing north of 20%. Kenvue brings scale in consumer health and about $1.9 billion in expected cost synergies. CEO Mike Hsu said, "I think we will beat the synergies we've talked about publicly." The stock has returned only 0.1% over five years, leaving dividends as the main source of shareholder return over that stretch.
Risk:The Kenvue deal will substantially increase indebtedness, and management does not expect to get back to approximately two times leverage until the end of the second year after closing. If the integration stumbles, the dividend has less room for error than at Coca-Cola or P&G.
Three Household Names, One Steady Paycheck
Coca-Cola, Procter & Gamble and Kimberly-Clark sell products people buy in every economy, and each has turned that demand into more than 50 straight years of higher dividends. Coca-Cola and P&G have the best-covered payouts, with strong free cash flow and solid balance sheets. Kimberly-Clark has the highest yield, though its post-Kenvue debt needs closer monitoring. Together, they represent a long record of reliable, rising dividend income.
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