Income investors typically want to find stocks with above-average yields, generally meaning that the stocks have higher yields than the S&P 500 average. Currently, the S&P 500 Index yields about 1.7% on average.

Beyond yield, income investors should also be sure that the dividend payout is sustainable.

Investors looking for safe dividends should consider the Dividend Kings, a group of just 50 stocks that have increased their dividends for at least 50 consecutive years.

The following 3 Dividend Kings have recession-proof dividends, thanks to their leadership positions in their industries and long-term growth.

Hormel Foods (HRL)

Hormel Foods was founded in 1891 in Minnesota. Since that time, the company has grown into a $22 billion market capitalization juggernaut in the food products industry with about $12.5 billion in annual revenue. The company sells its products in 80 countries worldwide, and its brands include Skippy, SPAM, Applegate, Justin’s, and more than 30 others. In addition, Hormel has increased its dividend for 57 consecutive years.

Hormel posted second quarter earnings on June 1st, 2023, and results were mixed. Earnings-per-share came to 40 cents, which was a penny ahead of estimates. However, revenue fell 3.2% year-over-year to $3 billion, and missed estimates by $60 million. Operating income came to $296 million, which was 9.9% of revenue. Earnings before income taxes were $279 million. Cash flow from operations came to $208 million. Hormel guided for full-year net sales growth of 1% to 3%, and the company continues to expect $1.70 to $1.82 in earnings-per-share.

Hormel’s main competitive advantage is its ~40 products that are either #1 or #2 in their category. Hormel has brands that are proven, and that leadership position is difficult for competitors to supplant. Hormel’s payout ratio is just over 60% of earnings, which means the dividend is safe. HRL stock currently yields 2.7%.

SJW Group (SJW)

SJW Group is a water utility company that produces, purchases, stores, purifies and distributes water to consumers and businesses in the Silicon Valley area of California, the area north of San Antonio, Texas, Connecticut, and Maine.

SJW Group has a small real estate division that owns and develops properties for residential and warehouse customers in California and Tennessee. The company generates about $630 million in annual revenues. SJW Group completed its acquisition of Connecticut Water, formerly known as CTWS, on October 9th, 2019.

On May 1st, 2023, SJW Group reported first quarter results. For the quarter, revenue increased 10.5% to $137.3 million, which was $5.3 million above estimates. Earnings-per-share of $0.37 compared favorably to earnings-per-share of $0.12 in the prior year and was $0.15 more than expected. Growth for the period was largely due to water rate increases and new customers. Higher rates added $17.4 million to results while new customers contributed $1 million. Lower customer usage reduced revenue by $6.6 million. SJW Group reaffirmed its prior outlook for 2023 as well, with the company expecting earnings-per-share in a range of $2.40 to $2.50 for the year.

SJW Group’s earnings-per-share often vary wildly from year to year, but earnings-per-share growth over the past 10 years is 6.2%, an impressive growth rate for a water utility. Following the CTWS merger, we estimate that the SJW Group will grow earnings at the average growth rate slightly ahead of the combined companies (8.0%) due to revenue growth and rate increases.

SJW Group raised its dividend 5.6% for the March 1st, 2023 payment, marking 55 consecutive years of growth for this Dividend King. SJW has a 10-year average growth rate of 4.8%. SJW stock currently yields 2.2%.

Black Hills Corporation (BKH)

Black Hills Corporation is an electric utility that provides electricity and natural gas to customers in Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Black Hills was founded in 1941, and the company is headquartered in Rapid City, South Dakota.

The company has increased its dividend for 52 consecutive years. Black Hills Corporation reported its first quarter earnings results on May 7. The company generated revenues of $920 million during the quarter, up 12% from the same quarter last year. Revenues were higher than analyst estimates by a hefty $170 million. Black Hills Corporation generated earnings-per-share of $1.73 during the first quarter, which was above the consensus analyst estimate. Black Hills Corporation forecasts earnings-per-share of $3.65 to $3.85 for the current fiscal year.

Black Hills’ growth over the coming years depends on several factors. This includes rate reviews, which drive revenues and profits per kWh. Another factor is the expansion of the company’s existing assets via new utility infrastructure. Black Hills regularly adds new projects to its growth investment backlog, which currently stands at $2.7 billion through 2024.

Today, the company pays out roughly 67% of its net profits in the form of dividends. The reasonable payout ratio and its decades-long dividend growth track record gives investors assurance that a dividend cut is unlikely from this utility company. Shares currently yield 4%.

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