3 Dividend Champions for Long-Term Income

Income investors value reliability and consistency, as well as high dividend yields. Some stocks provide a combination of these factors, such as the Dividend Champions — stocks that have raised their payouts for at least 25 years in a row.

These companies have proven that they can manage through recessions while continuing to pay dividends each year and raise their dividends on an annual basis.

These three Dividend Champions have long histories of dividend growth, market-beating yields and the ability to raise their dividends each year going forward.

Dividend Champion: Stryker (SYK)

Stryker (NYSE:SYK) is a global leader in the medical device sector. The company’s product lines include surgical equipment, neurovascular products and orthopedic implants.

The company has continued to generate growth in 2023, even in a difficult macroeconomic environment. On Jan. 31, 2023, Stryker reported fourth-quarter and full-year earnings results for the period ending Dec. 31, 2022. For the quarter, revenue grew 10.6% to $5.2 billion, beating estimates by $230 million. Adjusted earnings per share (EPS) of $3, which compared to $2.71 in the prior year and was 16 cents above expectations.

For 2022, revenue grew 7.8% to $18.4 billion while adjusted EPS of $9.34 was up slightly from $9.09 in the prior year. Organic revenue was 13.2% for the quarter and 9.7% for the year. For the quarter, MedSurg and Neurotechnology had organic growth of 16.9%, while Orthopaedics and Spine grew 8.4%. Results for both businesses were driven by strong demand in volume even as the company had slightly lower realized prices.

Stryker guided for 2023 as well. The company expects organic revenue growth of 7% to 8.5% for the year. Adjusted EPS is forecasted to be in a range of $9.85 to $10.15, which would represent growth of 7.1% at the midpoint.

Stryker has increased its dividend at an average rate of almost 12% per year over the past 10 years. The company has now increased its dividend for 29 consecutive years. Shares currently yield 1.1%.

Dividend Champion: Fortis (FTS)

Fortis (NYSE:FTS) is Canada’s largest investor-owned utility business with operations in Canada, the United States and the Caribbean. It is cross-listed in Toronto and New York. At the end of 2022, Fortis had 99% regulated assets: 82% regulated electric and 17% regulated gas. As well, 64% were in the U.S., 33% in Canada and 3% in the Caribbean.

Fortis has increased its dividend for 49 consecutive years, and the stock currently yields 4.3%.

Fortis reported Q4 2022 results on Feb. 10, 2023. For the quarter, it reported adjusted net earnings up 16% versus Q4 2022, while adjusted EPS rose 14%. The full-year 2022 results provide a bigger picture. Adjusted earnings rose 9% year over year (YOY), while adjusted EPS increased by 7%. For 2023, it plans capital investments of C$4.3 billion. We initiate our 2023 EPS estimate at $2.20.

After releasing its five-year capital plan of C$22.3 billion for 2023 to 2027, which suggests a mid-year rate base growth at a compound annual growth rate of ~6.2% from C$34.0 billion in 2022 to C$46.1 billion in 2027, the company also revealed its dividend growth guidance of 4-6% through 2027.

Because demand for Fortis’ utility services doesn’t change much in various economic environments, Fortis’s results have been quite resilient through economic uncertainties, including the one we’re experiencing in which inflation and interest rates are higher than in recent history. Fortis’ liquidity position is strong, including C$3.8 billion of undrawn liquidity available from $5.9 billion credit facilities at the end of Q4 2022.

Fortis’ payout ratio had been about 70% of earnings, which is where it’s heading. The dividend is important to management, and we believe it is safe and should continue to rise for years to come. Fortis’ competitive advantage is its size and scale. Additionally, Fortis is unique because of its cross-border exposure. Its timely U.S. acquisitions of regulated utilities since 2013 have allowed Fortis to now generate more than half of its revenue from the country.

Dividend Champion: Bank OZK (OZK)

Bank OZK (NASDAQ:OZK), previously Bank of the Ozarks, is a regional bank that offers services such as checking, business banking, commercial loans and mortgages to its customers in Arkansas, Florida, North Carolina, Texas, Alabama, South Carolina, New York and California. The $5.1 billion market cap bank was founded in 1903 and is headquartered in Little Rock, Arkansas.

On Jan. 3, 2023, Bank OZK announced a 34-cent quarterly dividend, representing a 3% increase over the last quarter’s payment and a 13.3% increase YOY. This marks the company’s 50th consecutive quarter of raising its dividend to go along with 26 straight years of boosting its payout.

In mid-January, Bank OZK reported financial results on Jan. 19, 2023 for the fourth quarter of fiscal 2022. Total loans and deposits grew 13.5% and 6.4%, respectively, over the prior year’s quarter. Net interest income grew 25% thanks to loan growth and much higher interest rates. Additionally, the bank reduced its share count by 8%. As a result, EPS grew 14.5% and exceeded the analysts’ consensus by 4 cents. Bank OZK has exceeded the analysts’ consensus in 10 of the last 11 quarters.

Bank OZK had increased its profits on a per share basis in almost every year since the financial crisis, which was a strong feat for a bank. In the 2011-2019 stretch, EPS grew by nearly 11% per year. Moreover, Bank OZK has not only been growing organically, but over the last decade the bank has repeatedly made acquisitions that management viewed as suitable.

Bank OZK has raised its dividend at a very strong pace over the last decade, with multiple dividend raises each year. Indeed, dividends have been increased for 27 years in a row, while shares currently yield 3.8%.

On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.