7 Buy Rated Stocks With 50 Years of Dividend Increases

The real purpose of investing in common stocks is to share in the company’s profits via dividend distributions. Many people think investing is buying a stock and then selling it to someone else for more than they paid. Why would someone else pay more? There aren’t that many uninformed stock buyers for all of us to sell our stocks to at inflated prices.

Earnings drive stock prices up, not speculation and hype. Yes, there are occasional times of irrational exuberance, too many stock buyers trying to catch a shooting star on the way up. The reasonable investor doesn’t chase speculation, but rely instead on earnings increases. 

Back to the real reason for investing in stocks: dividends.

Dividends are usually paid quarterly with most common stocks; a Jan, Apr, Jul, Oct cycle, a Feb, May, Aug, Nov cycle or Mar, Jun, Sep, Dec. A person could build a monthly income of dividends. Just imagine reaching a point when your expenses are covered by dividends.

Dividends can be reinvested, usually at no transaction fee, to acquire more shares. Mutual funds provide this service. Many publicly traded companies do, too, in the form of a DRIP, Dividend Reinvestment Program. Corporations allow their shareholders to buy fractional shares, whatever that dividend payment will buy. Using either type reinvestment program creates a compound effect for you. By using a distribution to buy shares, you’ll get more dividends next quarter which gets you more shares which results in more dividends and so on.

Dividend Kings are companies that raised their dividends each year for 50+ years. This is a key marketing strategy as this image of stability and growth in profits creates interest in the stock and helps support its price. This is especially important as many C-Suite execs’ net worth depends on the value of the company’s stock.

Here is a list of Dividend Kings each with a favorable rating from two or more agencies. The research commentaries below are from the research reports of the various organizations as noted.  For a full understanding read the full report from the various research companies. You may contact me via comments or email for more information. I may hold a position in one or more of the companies featured.

Dover Corporation (DOV)  

Dover Corporation manufactures a broad range of specialized industrial products and sophisticated manufacturing equipment.1

CFRA: 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

Reuters: Consensus Recommendation OUTPERFORM Updated 11 September 20202

Johnson & Johnson (JNJ)

Johnson & Johnson is a diversified healthcare company that develops, manufactures and markets products in three primary lines of business: Pharmaceuticals, Medical Devices and Diagnostics, and Consumer Products.3

Charles Schwab: EQUITY RATING “B” Outperform   PRICE VOLATILITY OUTLOOK Below average price volatility


Investment Thesis: We are reiterating our BUY rating on Johnson & Johnson Inc. (NYSE: JNJ) and raising our price target to $165 from $155. With its COVID-19 vaccine candidate among the finalists in the Operation Warp Speed program, J&J has accelerated its timeline for developing and testing this vaccine. We believe that JNJ’s growth opportunities across its three segments and success in integrating acquisitions support our revised target.3

CFRA: 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

Reuters: Consensus Recommendation OUTPERFORM

Coca-Cola Co (KO)

Coca-Cola, based in Atlanta, is a leading producer of soda, juices and juice drinks, and ready-to-drink teas and coffees. Sales in 2019 were $37 billion. KO’s operating groups are Europe, Middle East & Africa; Latin America; North America; Asia Pacific; Bottling Investments; and Corporate. 3

Morningstar: We believe appreciation beyond a fair risk-adjusted return is likely. Coca-Cola’s ubiquity and brand resonance in the nonalcoholic beverage category have been going strong for over 130 years, and we see structural dynamics to ensure this persists. We think that, despite competing in a mature industry, the firm is adequately exposed, either directly or indirectly, to growth vectors such as water and energy drinks. Moreover, we believe Coke will be able to continue extracting incremental value growth from the carbonated soft drink market even as volume declines.

Argus: INVESTMENT THESIS We are maintaining our BUY rating on Coca-Cola Co. (NYSE: KO) and raising our price target to $56 from $54. In this turbulent environment, Argus is recommending that investors dollar-average into existing long-term positions in the highest-quality stocks. Investors may also consider initiating new positions at discounted prices, while being aware of the risks of future volatility in

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individual positions. Historically, periods of severe stock-market turbulence have proven to be good times for investors with a longer-term time horizon to focus on the highest-quality and financially strongest names. We believe that Coca-Cola is one of these.

CFRA: 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

Reuters: Consensus Recommendation OUTPERFORM

MarketEdge® Second Opinion: Long, Upgraded From Neutral on 09/08/20

The current technical condition for KO is strong and the underlying indicators should keep the current uptrend intact. The stock has outperformed the market over the last 50 trading days when compared to the S&P 500. MACD-LT, an intermediate-term trend indicator, is bullish at this time.

Lowe’s Companies

Lowe’s is the world’s second-largest home improvement retailer, with sales of $72 billion in FY20. Based in Mooresville, North Carolina, the company operated 1,977 home improvement and hardware stores in the U.S., and Canada at the end of FY20. About 75% of sales are to individuals and 25% are to maintenance, repair, operations and construction professionals. 3

Argus: INVESTMENT THESIS We are reiterating our BUY rating on Lowe’s Companies Inc. (NYSE: LOW) and raising our target price to $188 from $170. We believe that CEO Marvin Ellison has the experience and ability to improve operations and raise profitability at Lowe’s. The company has improved its business analytics, upgrading its website, and streamlining its Canadian operations, which should lead to better margin performance and inventory turnover.

Ned Davis Research: LOW has been on a BUY signal since 05/26/2020. LOW’s buy rating is due to its NDR Equity Focus Rank of 99.14, which exceeds the required buy rating rank of 90. On a relative basis, LOW has strong technicals and fundamentals. NDR’s Equity Focus Rank seeks profitable, undervalued companies with strong price momentum.

Credit Suisse: Lowe’s Q2 results and Q3 commentary were very strong, and while the debate about sustainability will linger on, the real takeaway is the strong execution and how this team has made numerous changes over the last two years to position the company to participate (even lead) in this unique period of elevated demand. The changes have helped LOW better serve its existing customers (e.g. improved in-stock, service etc.), and acquire new customers, which means that these sales could be stickier even when the company has to lap these strong results at some point. Similar to last quarter we see the stock digesting the positive news today, with further upside potential if we get more evidence that elevated demand is holding up.

Charles Schwab: BUY, Rank “A” (Strongly Outperform): If an investor is looking to add a stock to his or her portfolio, “A” rated stocks may be the best candidates for consideration.

CFRA: 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

MarketEdge® Second Opinion: LONG, Upgraded From Neutral on 05/11/20

The technical condition of LOW is strong. The chart pattern suggests that upward momentum should continue and the stock is positioned for higher prices. The stock has outperformed the market over the last 50 trading days when compared to the S&P 500. LOW’s chart formation indicates a strong rising trend. Upside momentum, as measured by the 9-day RSI indictor is beginning to show signs of strength. Over the last 50 trading sessions, there has been more volume on up days than on down days, indicating that LOW is under accumulation, which is a bullish condition. The stock is trading above a rising 50-day moving average. This validates the strong technical condition for LOW. The stock is above its 200-day moving average which is pointed up indicating that the intermediate term trend is bullish.

Reuters: Consensus Recommendation OUTPERFORM

3M (MMM)

3M Co. is a global manufacturer operating a broadly diversified business. The firm classifies its business into four reportable segments — Safety & Industrial, Transportation & Electronics, Health Care, and Consumer. Most 3M products involve expertise in product development, manufacturing, and marketing, with many of the company’s products involving some form of coating, sealant, adhesive, film or chemical additive that increases the product’s overall functionality and usability for consumers.1

Credit Suisse: Raising Price Target from $179 to $197

Building Momentum: In August, 3M saw continued stabilization in its monthly organic sales growth rate (+3% y/y adjusted for days). We expect this momentum to continue into 2021 driven by China, automotive production, and semiconductor/ consumer electronics. We also view the implied September organic sales growth deceleration as conservative. Per the company’s Q2 update, no PFAS litigation is expected until 2021. While investors have been critical of 3M’s leverage, post Acelity, and given the ongoing PFAS litigation, we forecast a steady decline in net leverage driven by $5.5B+of annual FCF generation. Discount to Peers: 3M currently trades at a 35% discount to short-cycle peers ITW and ROK. At peer valuation, this equates to $58B of “missing” market value. We expect this discount to erode as 3M rebuilds investor credibility.

MarketEdge® Second Opinion: LONG, Upgraded From Neutral on 09/14/20

CFRA: 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

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The Procter & Gamble Company is focused on providing branded consumer packaged goods to the consumers across the world. The Company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care, and Baby, Feminine & Family Care. The Company sell sits products in approximately 180 countries and territories primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high-frequency stores and pharmacies. It offers products un-der the brands, such as Olay, Old Spice, Safeguard, Head & Shoulders, Pantene, Rejoice, Mach3, Prestobarba, Venus, Cascade, Dawn, Febreze, Mr. Clean, Bounty and Charmin.2

CFRA: 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.

Argus: RATING: BUY• Raising target to $145 after strong 4Q

While there is upside to this $145 target based on our analysis, we believe that a potential total return of 13%, including the 2.4% dividend yield, is very attractive in the current environment.

Over the next 12 months, we expect P&G to benefit from increased awareness of health and hygiene and from the increased time spent at home. Based on our store visits (and all the empty shelves), demand for cleaning supplies appears to be strong.

Reuters: Consensus Recommendation OUTPERFORM

Parker Hannifin Corporation (PH)

W. Parker-Hannifin (PH) is one of the world’s largest makers of components that control the flow of industrial fluids. It is also a major global maker of components that move and/or control the operation of a variety of machinery and equipment. In addition to motion control products, PH also produces fluid purification, fluid and fuel control, process instrumentation, air conditioning, refrigeration, electromagnetic shielding, and thermal management products and systems. PH’s offerings include a wide range of hydraulic and pneumatic systems, electromagnetic controls, valves, pumps, filters, and related products. The company’s components are used in everything from jet engines to medical devices, farm tractors, and utility turbines. Sales outside of North America accounted for 33% of total revenue in FY 20. 1

Credit Suisse: Outperform          Price Target $228

Earnings More Resilient in Downturns: Parker Hannifin is benefiting from portfolio shifts to more stable, higher margin markets driven by acquisitions of CLARCOR, LORD, and Exotic, as well as initiatives to streamline and simplify the organization illustrated in Parker’s earnings resilience in FY2020. In the financial crisis, PH organic sales fell 30%+ in the first half of CY2009, which compares to last quarter’s organic growth decline of 21% during the height of COVID-19. Decremental margins were ~17% for the Legacy Parker business in FY2020and compared to 38% in FY’09.

Argus: RATING: BUY•Raising target price to $210

PH shares have outperformed the market over the past quarter, gaining 25% while the S&P 500 has risen 16%.

INVESTMENT THESIS Our rating on Parker-Hannifin Corp. (NYSE: PH) is BUY. In our view, this well-managed company is on track to achieve its long-term goals of raising margins and growing earnings. Over time, we expect it to generate high single-digit EPS growth, driven by 3%-4% revenue growth, margin improvement, and share buybacks. Near-term trends are more problematic due to the coronavirus. But Parker has two attributes we like in this pandemic: a strong balance sheet and an experienced management team. The company has an impressive history of raising the dividend, and most recently boosted the payout by16%. We look for the PH share price to recover along with the global economy and are boosting our 12-month target price to $210 from $180.

Reuters: Consensus Recommendation OUTPERFORM

MarketEdge® Second Opinion: LONG, Upgraded From Neutral on 09/08/20

Summary & Disclosures

Dividend paying stocks are an excellent foundation for a portfolio, in my opinion. Remember, asset allocation has historically been a bigger contributor to total return than market timing attempts. This information is for financial education and does not constitute investment advice. Recommendations cannot be made without a thorough understanding of a specific client’s situation and goals.  

  • 1 CFRA Research, S&P Global, Inc.
  • 2 Thomson Reuters
  • 3 Argus Research Company