Tags: dividend | stock | retirement | income
OPINION

3 Dividend Kings Flying Under the Radar

3 Dividend Kings Flying Under the Radar
(Dreamstime)

Bob Ciura By Wednesday, 11 December 2024 10:49 AM EST Current | Bio | Archive

Income 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.

Many of the Dividend Kings have massive, global reach and market caps above $200 billion. However, there are just as many quality Dividend Kings that have much smaller businesses.

The following 3 Dividend Kings are attractive dividend growth stocks with recession-proof dividends.

Farmers & Merchants Bancorp (FMCB)

Farmers & Merchants Bancorp is a locally owned and operated community bank with 32 locations in California. Due to its small market cap and its low liquidity, it passes under the radar of most investors.

F&M Bank has paid uninterrupted dividends for 88 consecutive years and has raised its dividend for 59 consecutive years.

In mid-October, F&M Bank reported (10/17/24) financial results for the third quarter of fiscal 2024. The bank grew its adjusted earnings-per-share 2.5% over the prior year’s quarter, from $29.23 to $29.96.

It posted 4% growth of loans and flat deposits. Net interest income dipped -3% due to a contraction of net interest margin from 4.17% to 4.07% amid higher deposit costs.

F&M Bank is a prudently managed bank, which has always targeted a conservative capital ratio. The bank currently has a total capital ratio of 14.95%, which results in the highest regulatory classification of “well capitalized.”

Moreover, its credit quality remains exceptionally strong, as there are extremely few non-performing loans and leases in its portfolio.

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 nearly $700 million and a market capitalization of ~$1 billion.

Today, Gorman-Rupp is a focused, niche manufacturer of critical systems that many industrial clients rely upon for their own success. Gorman Rupp generates about one-third of its total revenue from outside of the U.S.

The company also has one of the most impressive dividend increase streaks in the market, which currently stands at 52 years. That makes Gorman-Rupp a member of the prestigious Dividend Kings.

Gorman-Rupp posted third quarter earnings on October 25th, 2024, and results were weaker than expected on both the top and bottom lines. Adjusted earnings-per-share came to 49 cents, but that was six cents light of estimates.

Revenue was essentially flat year-over-year at $168 million, but missed expectations by over $4 million. The gain in the top line was due to pricing increases that were put in place to help offset a decline in volumes.

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.

Middlesex Water Company (MSEX)

Middlesex Water Company was formed in 1897. The company is a water and wastewater utility in New Jersey and Delaware. Its market capitalization is $1.2 billion. Middlesex has paid consecutive dividends since 1912 and has reached its 52nd consecutive year of dividend increases.

Middlesex Water Company (MSEX) posted strong financial results for Q3 2024, with diluted earnings per share increasing by 42.9% to $0.80 and revenues up 17.95% year-over-year to $55.1 million. The revenue growth was driven by an $8.4 million increase primarily due to an NJBPU-approved base rate hike effective from March 2024 and increased customer demand, especially in the Middlesex System and Delaware operations.

Year-to date, the company reported a net income increase of $9.8 million to $35.5 million and EPS of $1.98, with substantial gains from the base rate increases and a $6.8 million recovery related to water treatment investments. The company continues its 52-year streak of dividend increases, with a 4.62% rise announced.

Earnings-per-share have been rising steadily over the past decade. The Great Recession saw earnings fall markedly in 2009 but recovery was fairly quick and since 2009, earnings have roughly tripled. We see annualized earnings-per-share growth for the next five years in the mid-single-digits as the meaningful sources of growth will be the rate increase in New Jersey and inflationary pressures.

Adding customers will also help some as it will also improve operational efficiencies through economies of scale. Like many other regulated utilities, Middlesex’ quality metrics have remained steady in the past decade thanks to the monopoly-like nature of its assets.

_______________

Bob Ciura
has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.

© 2024 Newsmax Finance. All rights reserved.


BobCiura
Income 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.
dividend, stock, retirement, income
765
2024-49-11
Wednesday, 11 December 2024 10:49 AM
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