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Dividend Kings

Dividend Kings

Posted December 14, 2022 at 4:45 pm
Tea Muratovic

In recent years it has been extremely challenging for companies to navigate the markets. Market crashes, economic recessions, wars, a global pandemic, technology revolutions and shifts in consumer tastes have all left their mark.

But what if I tell you that there is an elite group of companies that have overcome all the obstacles, and managed to increase their dividend payout for at least 50 consecutive years?
They are called Dividend Kings!

Strong companies, with great brand awareness, solid balance sheets, low volatility; I like to call them ultimate blue chips.  So, what do we need to know about dividend kings, and how can they optimize your investment strategy?

Firstly, dividends are announced by a company’s board of directors and are usually disbursed quarterly to their shareholders. Not all profitable companies choose to pay a dividend though. Some companies reinvest profits into the business, or boost employee compensation.

How can you Benefit?

Dividend payments follow a strict series of events to determine who is eligible to receive compensation. After the company’s management announces the dividend payment, investors should be aware of the ex-dividend date – the so called day where the dividend eligibility expires. In other words, the investor must purchase the stock before this date in order to receive the compensation. e.g if the ex-dividend date is December 1st, anyone who owns shares before that date is eligible for the payment. 

But not many companies have succeeded in becoming part of this elite group of Dividend Kings.  One of the lucky ones is Canadian Utilities, a diversified global energy infrastructure corporation, delivering solutions in electricity, pipelines & liquid, and retail energy.

Despite multiple recessions and uncertain environments over the past 50 years, the company represents the only Canadian company which made it to the list.

Seasonal Chart of Canadian Utilities Limited over the past 10 years 

Seasonal Chart of Canadian Utilities Limited over the past 10 years 

Source: Seasonax, click on the link to open an interactive seasonal chart

Keep in mind that a seasonal chart depicts the average price pattern of a stock in the course of a calendar year, calculated over several years (unlike a standard price chart that simply shows stock prices over a specific time period). The horizontal axis depicts the time of the year, while the vertical axis shows the level of the seasonal pattern (indexed to 100). The prices reflect end of day prices, and do not include daily price fluctuations.

Looking at the seasonal chart above, it is clear that over the past 10 years the first quarter of the year has been favourable for this company. In this time span of 55 trading days (from January 6 until April 9), shares rose on average by almost 8%. Moreover, since 2013 the pattern returns had a winning strike of 80%. In effect, Canadian Utilities generated gains in 8 out of the 10 years during the selected time period.  

Besides the strong seasonals ahead, I am wondering if it is possible to combine seasonal strategy with the upcoming ex-dividend date, and to receive an additional dividend payment as the cherry on top?

If this topic has awakened your interest, there are many other Dividend Kings that you might consider investing in. 

For instance, American States Water has raised its dividend for 68 consecutive years, earning it the longest dividend growth streak in the stock market.  It operates in the field of regulated water utility business. Moreover, it provides services for water distribution and wastewater collection on 11 military bases in the U.S.

Besides the dividend payments, AWR has a seasonal favourable period in the last quarter of the year. Looking at the seasonal chart, American States Water already had a successful October and November. Will this run continue during December? 

Seasonal Chart of American States Water Company over the past 10 years 

Seasonal Chart of American States Water Company over the past 10 years 

Source: Seasonax, for further statistics click on the link to open an interactive seasonal chart

Dividend Kings aren’t necessarily a good fit for every investor. Many of these stocks frequently deliver relatively low growth. 

However, Dividend Kings can be a great component of retirement portfolios, or for investors looking for a reliable income.  

When choosing the right stocks, don’t forget to take into account fundamentals, and factors such as taxes on the dividend gains. Qualified dividends are taxed at the long-term capital gains tax rate, which is lower than the tax rate on regular income. To earn this status, an investor has to hold the stock for at least 60 days during the 121 days beginning 60 days before the ex-dividend date. For all other short-term investors, the regular tax rate will be applied.

However you decide to structure your investments, make use of Seasonality Screener to identify best entry and exit points based on recurring patterns. By signing up for free to, you will be able to scan for more than 25.000 instruments, including Dividend Kings, stocks, (crypto)currencies, commodities, and indexes. 

Remember, don’t just trade it, Seasonax it!

Originally Posted December 14, 2022 – Dividend Kings

Disclosure: Seasonax

Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. Seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. Seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by Seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. Seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Seasonax and is being posted with its permission. The views expressed in this material are solely those of the author and/or Seasonax and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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