Best Dividend Kings: August 2025

Dividend Kings have exhibited mixed performance, trailing the S&P 500 year-to-date with a 5.71% gain versus SPY's 8.75%, yet recently outperforming in August (+2.94% vs +0.55%). While 17 Kings now surpass SPY's YTD performance, led by National Fuel Gas (+44.92%), Target remains the group's worst performer (-26.74%). The collective 2025 dividend growth rate for these companies has risen to 5.49%, though still below 2024's 6.32%, while analyst 3-5 year earnings growth projections for the group saw a modest average increase of 0.16%. Notably, 15 Kings are currently identified as potentially undervalued with at least a 10% expected long-term return.

Analysis

The Dividend Kings group is exhibiting mixed performance characteristics. Year-to-date, the group's total return of 5.71% lags the S&P 500 ETF's (SPY) 8.75% gain, but a recent reversal in August shows the Kings up 2.94% versus just 0.55% for SPY, suggesting a potential rotation into these names. Performance within the group is highly dispersed: 17 of the 55 Kings now outperform SPY year-to-date, with leaders like National Fuel Gas (NFG) returning +44.92%, while laggards such as Target (TGT) are down 26.74%. On the fundamentals front, the collective 2025 dividend growth rate has increased to 5.49% following recent hikes from seven companies, though this still trails the 6.32% growth rate achieved in 2024, indicating a potential deceleration. Analyst 3-5 year earnings growth projections for the group have been revised slightly higher on average (+0.16%), with notable upward revisions for firms like Archer-Daniels-Midland (ADM) and downward revisions for Nucor (NUE) and Kenvue (KVUE). A valuation screen using Dividend Yield Theory has identified 15 Kings as potentially undervalued with expected long-term annualized returns over 10%, though a similar list from the prior month posted a marginal short-term loss, underscoring the long-term nature of this value-oriented thesis.

Key Decisions for Investors

• Given the significant performance divergence between top performers like NFG and laggards like TGT, investors should prioritize individual stock selection over a broad-based investment in the Dividend Kings category.
• Monitor for disconnects between stock performance and forward-looking fundamentals, such as Nucor's (NUE) strong year-to-date return despite a downward revision to its long-term earnings growth forecast.
• Consider the list of 15 potentially undervalued stocks as a starting point for long-term value opportunities, but be aware that this strategy may underperform in the short term, as evidenced by the previous month's results.
• Factor in the moderating dividend growth, as the current collective 2025 rate of 5.49% is below the 2024 rate of 6.32%, which could temper total return expectations for income-focused portfolios.