Investors looking for safe dividends should consider the Dividend Kings, a group of just 54 stocks that have increased their dividends for at least 50 consecutive years.
There are many Dividend Kings that have promising long-term growth prospects, and pay solid dividends to shareholders—even during recessions.
This article will discuss 3 dividend stocks that are on the list of Dividend Kings, with yields above the S&P 500 average.
Automatic Data Processing
Automatic Data Processing (NASDAQ:ADP) is one of the largest business services outsourcing companies in the world. The company provides payroll services, human resources technology, and other business operations to more than 700,000 corporate customers. Automatic Data Processing was founded in 1949 and currently trades with a market capitalization of $125 billion, producing annual revenue of about $20 billion.
ADP posted first-quarter earnings on October 30th, 2024, and results were better than expected on both the top and bottom lines. Adjusted earnings-per-share came to $2.33, which was 12 cents ahead of estimates. Earnings were up from $2.08 in the year-ago period. Revenue was up 6.7% year-over-year to $4.8 billion, beating expectations by $30 million.
Management noted revenue and margin performance exceeded expectations as the company benefited from new business bookings, strong revenue retention and higher client funds interest revenue. Employer Services revenue was $3.26 billion, up 7% year-over-year while segment earnings grew 15% to $1.16 billion. That was good enough from pretax margin to rise from 33.1% of revenue to 35.7%.
PEO Services revenue was $1.57 billion, up 7% year-over-year, while segment earnings rose 1% to $226 million. Pretax margin was lower from 15.2% of revenue to 14.3%. ADP acquired WorkForce Software, a workforce management solutions provider that specializes in supporting large, global enterprises, for $1.2 billion in cash.
Automatic Data Processing has compounded its adjusted earnings per share at a rate of more than 13% per year over the last decade, which we believe it can come close to matching moving forward.
Much of this growth is likely to be driven by the company’s Professional Employer Organization (PEO) Services segment, which continues to deliver very impressive revenue growth. Importantly, this revenue growth has been accompanied by meaningful margin expansion, which means that the segment’s growth has had an outsized impact on the firm’s bottom line.
In addition, the company’s buyback has been a low single-digit tailwind annually for earnings-per-share growth.
ADP stock currently yields 2% and the company has increased its dividend for 50 years.
Colgate-Palmolive
Colgate-Palmolive (NYSE:CL) has been in existence for more than 200 years, having been founded in 1806. It operates in many consumer staples markets, including Oral Care, Personal Care, Home Care, and more recently, Pet Nutrition. These segments afford the company just over $20 billion in annual revenue.
Colgate-Palmolive posted fourth-quarter and full-year earnings on January 31st, 2025. The company managed to beat estimates on earnings-per-share by two cents at 91 cents. Revenue was fractionally lower year-on-year to $4.94 billion and missed estimates by $50 million. Organic sales were up 4.3%, including a 0.5% negative impact from lower private-label pet food volume.
Positive pricing and volume added to organic growth, helping to offset the private label impact. Gross margin expanded 70 basis points despite forex headwinds. The product mix is helping margins, particularly from Hill’s and Oral Care, both of which sport high margins. The company achieved record free cash flow and operating cash flow for the full-year and reached $20 billion in full-year sales for the first time.
Management reaffirmed organic sales growth of 3% to 5% for 2025, with both pricing and volume contributing roughly equally. Management also expects slight market share gains. Further, the company expects strong cash flow to be used for debt reduction, share repurchases, and investment in growth areas.
We expect growth for Colgate-Palmolive at 8% annually. Organic revenue growth continues, as well as cost-saving measures in place, we think the future looks bright. The repurchase program is providing another tailwind to earnings per share as well.
CL has increased its dividend for 63 years and the stock currently yields 2.3%.
Sysco Corp (SYY)
Sysco Corporation (NYSE:SYY) is the largest wholesale food distributor in the United States and is expanding internationally. The company now serves 600,000 locations with food delivery, including restaurants, hospitals, schools, hotels, and other facilities. According to estimates, the company has a 16% market share of total food delivery within the United States.
On January 28th, 2025, Sysco reported second-quarter results for Fiscal Year (FY) 2025. The company reported a 4.5% increase in sales for the second quarter of fiscal year 2025, reaching $20.2 billion. U.S. food service volume grew by 1.4%, while gross profit rose 3.9% to $3.7 billion.
Operating income increased 1.7% to $712 million, with adjusted operating income growing 5.1% to $783 million. Earnings per share (EPS) remained at $0.82, while adjusted EPS grew 4.5% to $0.93.
The company reaffirmed its full-year guidance, projecting sales growth of 4%-5% and adjusted EPS growth of 6%-7%. Additionally, Sysco increased its planned shareholder returns to $2.25 billion through $1.25 billion in share repurchases and $1 billion in dividends.
The company demonstrated strength across its business segments, particularly in international operations, which reported a 14.5% increase in operating income and a 26.5% rise in adjusted operating income.
U.S. Foodservice sales increased 4.1% to $14.0 billion, though local case volume declined slightly. Meanwhile, the International Foodservice segment saw a 3.6% increase in sales to $3.7 billion, with gross margin improving by 71 basis points to 20.4%. The company attributed its performance to effective cost management, volume growth, and strategic investments in sales professionals and specialty offerings.
Sysco’s balance sheet remained strong, with a cash balance of $793 million at the end of the quarter. The company returned $803 million to shareholders in the first half of the fiscal year, including $300 million in share repurchases and $503 million in dividends.
Sysco has an economic moat due to its large-scale and entrenched distribution infrastructure, which gives it a cost advantage over most competitors. This moat is evidenced by the company’s double-digit returns on invested capital every year, much higher than its weighted average capital cost.
It’s also quite defensive; the company was almost unfazed by the previous recession and recovered from a mild earnings dip within one year. Thanks to this stability, Sysco has raised its dividend every year since it went public, 53 years ago. SYY shares currently yield 2.9%.
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Neither the author, Bob Ciura, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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