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Investors looking for stocks with solid dividend yield, steady payouts during recessions, and dividend growth should consider stocks that have long histories of raising dividends every year. There is a group of stocks known as the Dividend Kings that have increased their dividends for over 50 years.

These 3 dividend growth stocks have current dividend yields above the S&P 500 Index average of 1.5%. The 3 dividend growth stocks also have the ability to maintain their dividends, even if the economy enters a recession.

Abbott Laboratories (ABT)

Abbott Laboratories, founded in 1888, is one of the largest medical appliances & equipment manufacturers in the world, comprised of four segments: Nutrition, Diagnostics, Established Pharmaceuticals, and Medical Devices. Abbott Laboratories provides products in over 160 countries and employs 115,000 people. The company generated $44 billion in sales and $9.4 billion in profit in 2022.

On October 18th, 2023, Abbott Laboratories reported third-quarter earnings results for the period ending September 30th, 2023. For the quarter, the company generated $10.1 billion in sales (62% outside of the U.S.), representing an 2.5% decrease compared to the third quarter of 2022, but this was a deceleration from the decline seen in the preceding period. Adjusted earnings-per-share of $1.14 compared to $1.15 in the prior year. Revenue was $320 million more than anticipated while adjusted earnings-per-share was $0.04 better than expected.

Abbott Laboratories’ dividend payout ratio has never been above 50% throughout the last decade. Coupled with the fact that the company’s earnings-per-share did not decline during the last financial crisis – it actually continued to grow – Abbott Laboratories’ dividend looks very safe.

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. PPG Industries was founded in 1883 as a manufacturer and distributor of glass (its name stands for Pittsburgh Plate Glass) and today has approximately 3,500 technical employees located in more than 70 countries at 100 locations.

On July 20th, 2023, PPG Industries raised its quarterly dividend 4.8% to $0.65, extending the company’s dividend growth streak to 52 consecutive years.

On October 18th, 2023, PPG Industries announced third-quarter results for the period ending September 30th, 2023. Revenue improved 3.8% to a quarterly record $4.64 billion, which was in-line with estimates. Adjusted net income of $493 million, or $2.07 per share, compared to adjusted net income of $393 million, or $1.66 per share, in the prior year. Adjusted earnings-per-share was $0.13 more than expected.

PPG Industries’ earnings-per-share have a growth rate of 5.8% over the last decade. We expect earnings-per-share to grow at a rate of 8% through 2028. PPG Industries’ key advantage is that it is one of the most well-known and respected companies in the paints and coatings space. The company is also one of just three similarly-sized companies in this industry, which limits PPG Industries’ competitors. This gives PPG Industries size and scale and the ability to increase prices.

Lowe’s Companies (LOW)

Lowe’s Companies is the second-largest home improvement retailer in the US (after Home Depot). The stock has a current market capitalization of $133 billion. Lowe’s operates or services more than 1,700 home improvement and hardware stores in the U.S.

Lowe’s reported third-quarter 2023 results on November 21st, 2023. Total sales came in at $20.5 billion compared to $27.5 billion in the same quarter a year ago. Comparable sales decreased by 7.4%, while net earnings-per-share of $3.06 compared to $0.25 in third quarter of 2022. Adjusted EPS in the year-ago period was $3.27. Lowe’s opened one store and three Lowe’s Outlet stores during the quarter. The company suffered from a reduction in DIY discretionary spending. The company repurchased 7.3 million shares in the third quarter for $1.6 billion. Additionally, it paid out $642 million in dividends.

Between 2013 and 2022, Lowe’s grew its earnings-per-share by 19% a year. In the recent 5-year period, LOW was able to compound earnings by 18% per year. Earnings-per-share have been driven by comparable store sales growth, increasing margins, and the company’s share repurchases, which have lowered the share count meaningfully.

Lowe’s enjoys competitive advantages from scale and brand power as it operates in a duopoly with Home Depot (HD). Neither of the two are expanding their store count significantly, and neither is interested in a price war. Both should remain highly profitable, as the home improvement market in the US is large enough for the two industry leaders.

Lowe’s has raised its dividend by 18% per year over the last 5 years. Overall, Lowe’s has increased its dividend for 60 consecutive years. LOW shares currently yield 2%.

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