Stocks With Growing Dividends Will Survive a Recession

Mark Hake

These dividend stocks will very likely keep their payouts at the same or higher levels, given their history and cash flows.

  • AT&T (T): The company clearly has the ability to fund its $1.11 dividend payout now that it has spun off Warner Bros Discovery (WBD). The stock yields 5.7%.
  • Exxon Mobil (XOM): This company refused to cut its dividend during the Covid crisis.
  • Clorox (CLX): People will still use cleaning products during a recession. The company has a robust history of increasing its dividend over the last 20 years.
  • The Proctor and Gamble Co. (PG): This company has had 66 years of annual consecutive dividend increases, including a recent increase to 91.33 cents.
  • Hormel Foods (HRL): This company has consistently raised its dividend over the last 50 years. In the last 20 years, its average annual dividend increase has been 13%.
  • Kroger (KR): Kroger has been paying higher dividends over the last 17 years. People will still go to retail stores, even during a recession.

It’s important to know that investing in dividend stocks is about consistency and the ability to pay even in the direst of economic circumstances. After all, this is the chief advantage that dividend stocks have over bonds. Bond coupons are not raised. If inflation rises, they cannot adapt, as dividends can. This is why it is almost always better to stick with dividend-paying stocks with a long history of increases.

Here is a simple example of how this works. The average dividend yield of each of these six stocks is about 3% (3.03%). Let’s assume that their average dividend growth is 8% each year for the next 10 years. If we compare that with a bond with a higher coupon, say 3.5%, the results are very interesting.

Over the 10 years, an investor who puts $1,000 in these dividend-paying stocks will receive a total of $438.46 in dividend payments. But the investor with $1,000 in a 4% coupon bond will receive just $400 in payments over that 10-year period. That means that even though the initial yield of 3.03% from dividend stocks is lower than the 4.0% coupon bond, the stock investors collect more income over the next 10 years from dividend growth.

This can be seen in the chart below. It shows that by year eight, the cumulative dividend payments overtake the cumulative bond payments.
Mark R. Hake, CFA

One way to ensure this is to look at the company’s payout ratio. This compares the cost of dividends to the earnings of the company. As long as the dividend per share stays below the earnings per share level, you can be reasonably assured the company’s board won’t balk at raising the dividend. Another important factor is how long the company has been raising its dividend.
Mark R. Hake, CFA
Photo by Troy Squillaci

AT&T (T)

Market Cap: $135 billion
Dividend Yield: 5.7%

AT&T (T) recently spun off its WarnerMedia division to its shareholders and then immediately merged it with Discovery Inc. The new company is called Warner Bros. Discovery (WBD).

In the process, AT&T lowered its $2.08 dividend per share to $1.11. At today’s price, that gives it a 5.7% dividend yield, but its payment is now more secure. That is because the company has said that this will be about 40% or so of its free cash flow (FCF). As FCF grows from the now-more-focused telecom operations of AT&T, it can increase the dividend.
Photo by Pixabay

Exxon Mobil (XOM)

Market Cap: $361 billion
Dividend Yield: 4.1%

Exxon Mobil (XOM) pays out a dividend of $3.52 annually, giving it a 4.1% dividend yield. Moreover, analysts expect that this year its EPS will reach $9.07 this year and (assuming lower oil prices) $7.65 next year. This implies that its payout ratio is still very comfortable at 46% even on the lower 2023 forecasts.
Photo by Kelly Sikkema on Unsplash

Clorox (CLX)

Market Cap: $17.7 billion
Dividend Yield: 3.1%

In the last five years, Clorox (CLX) has grown its dividend by over 7.7%, and in the last 10 years, it has averaged annual growth of 6.8%, according to Seeking Alpha. This should be a comfort to investors, showing that the company intends to grow its dividend over the near and long term.
Photo by The Bio Brand

The Proctor and Gamble Co (PG)

Market Cap: $385 billion
Dividend Yield: 2.2%

The Proctor and Gamble Company (PG) is a consumer goods company with an array of popular brands and 66 years of annual dividend increases — including a recent increase to 91.33 cents as of April 12. That puts its annual dividend at around $3.65 per share, well below analyst EPS forecasts of $5.84 this year and $6.25 next year.

Moreover, over the last 10 years, Proctor and Gamble Company has had an average compound dividend growth rate of 5.13% each year according to Seeking Alpha. That is a very consistent growth rate and implies that investors can expect that in 10 years, the dividend will be 64.9% higher than when it started.
Photo by Eaters Collective on Unsplash

Hormel Foods (HRL)

Market Cap: $29 billion
Dividend Yield: 1.9%

Hormel Foods Corp (HRL)produces grocery and refrigerated products and has iconic brands such as Planters, Skippy, SPAM, Natural Choice, Hormel, Black Label, and over 30 others. The company has consistently raised its dividend for over 20 years.

For example, last year it paid out 98 cents in dividends per share. This year it is on track to pay $1.04, or 6.1% more. Seeking Alpha calculates that Hormel has grown its dividend by 9.9% in the past five years on average.
Photo by Jeffery Erhunse on Unsplash

Kroger (KR)

Market Cap: $39 billion
Dividend Yield: 1.5%

Kroger (KR) is one of the top grocery and drug store retailers in the U.S., with over 2,726 supermarkets in the U.S. Its annual 84 cents per share dividend is well below the company’s forecast EPS of $3.81 this year and $3.97 next year.

Moreover, over the past five years, Kroger has grown its DPS by 11.74% on average each year, according to Seeking Alpha.

In fact, Kroger is due to make an announcement before the end of June about its next quarterly dividend hike. This could make KR stock one of the more interesting dividend stocks — especially if its dividend rises substantially.


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This is not financial advice and you should not rely on my analysis to buy or sell any stock. I am not undertaking to induce you to buy or sell any securities.

I am relying on the “publisher’s exclusion” in the Investment Advisers Act of 1940 to provide this information without any personalized or individualized investment advice.

Mark Hake writes articles on,,, and on stocks and cryptos.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

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