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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 temporary downturns, including recessions and the recent pandemic, reasonably well and that they are able to maintain their dividend payouts even during such harsh times -- which makes them valuable for those looking for a low-risk income stream.

These 3 Dividend Champions have above-market yields and long-term dividend growth.

PPG Industries (PPG)

PPG Industries is the world’s largest paints and coatings company. Its only competitors of similar size are Sherwin-Williams and Dutch paint company Akzo Nobel. With more than five decades of consecutive dividend increases, PPG Industries is a member of the Dividend Kings.

On April 18th, 2024, PPG Industries reported first quarter results for the period ending March 31st, 2024. For the quarter, revenue decreased 1.6% to $4.31 billion. Adjusted net income of $441 million, or $1.86 per share, compared to adjusted net income of $432 million, or $1.82 per share, in the prior year.

For the second quarter of 2024, PPG Industries expects organic sales growth in the low single-digits and adjusted earnings-per-share in a range of $2.42 to $2.52. For 2024, the company expects organic sales to be higher by a low single-digit percentage and adjusted earnings-per-share in a range of $8.34 to $8.59. At the midpoint, this would represent a 10.4% increase from the prior year.

The company’s strong growth leads to regular dividend increases. Last year, PPG Industries raised its quarterly dividend 4.8% to $0.65, extending the company’s dividend growth streak to 52 consecutive years. PPG stock currently yields 2%.

Even after more than five decades of dividend growth, PPG Industries has a very low payout ratio. The only time the company’s dividend payout ratio was above 50% for the year in the relatively recent past was 2009. The average payout ratio since then is just 34%, indicating a highly secure payout.

Gorman-Rupp (GRC)

Gorman-Rupp began manufacturing pumps and pumping systems back in 1933. Since that time, it has grown into an industry leader with annual sales of about $685 million and a market capitalization of $915 million. Today, Gorman-Rupp is a focused, niche manufacturer of critical systems that many industrial clients rely upon for their own success.

Gorman-Rupp posted fourth quarter and full-year earnings on February 2nd, 2024, and results were ahead of expectations on both the top and bottom lines. Adjusted earnings-per-share came to 34 cents, which was nine cents better than estimates. Revenue was up 10% year-over-year to $161 million, which beat expectations by almost $4 million.

We are forecasting 12% earnings-per-share growth going forward. The company can achieve this result mostly through high single-digit sales growth. Given the company’s robust backlog of uncompleted work, we see revenue growth continuing for the near term.

The company’s competitive advantage is in its many decades of experience in providing innovative solutions for niche, but critical, engineering problems facing its customers. GRC has increased its dividend for 51 consecutive years, making it a Dividend King. Gorman-Rupp’s payout ratio is 45% of earnings for this year following the most recent increase in the dividend, but also higher earnings estimates.

Target Corporation (TGT)

Target was founded in 1902 and after a failed bid to expand into Canada, has operations solely in the U.S. market. Its business consists of about 1,850 big box stores, which offer general merchandise and food, as well as serving as distribution points for the company’s growing e-commerce business. Target and should produce about $107 billion in total revenue this year.

Target posted fourth quarter and full-year earnings on March 5th, 2024, and results were quite strong. Adjusted earnings-per-share came to $2.98, which was $0.56 ahead of estimates. Total revenue was $31.9 billion, which was 1.7% higher year-over-year.

Gross margin was 25.6% of sales, up from 22.7% a year ago. The improvement in gross margin was from lower markdowns and other inventory-related costs, lower freight costs, lower supply chain and digital fulfillment costs, and favorable category mix.

Target’s competitive advantage comes from its everyday low prices on attractive merchandise in its guest-friendly stores. Target is not recession-proof, as consumers tend to curtail their consumption during recessions. However, it is much more resilient than most retail stocks in such periods.

Target has grown its dividend for more than five decades, making it a Dividend King. The payout ratio is now 47% of earnings for this year, which indicates a safe dividend. TGT stock yields 2.7%.

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