Three High-Growth Dividend Kings to Build Up Your Portfolio

This article will discuss three stocks that have a unique combination of 50 or more consecutive years of dividend increases, plus a high dividend growth rate. Dividend stocks have a tendency to be viewed as slow-growth investments, but while some struggle to generate growth, others do not, like these three Dividend Kings: PPG Industries ; Lowe's Companies ; and Parker Hannifin . Painting a Picture of Growth: PPG Industries PPG Industries is the world's largest paints and coatings company. It was founded in 1883 and the company generates annual revenue above $17 billion. The company recently reported strong quarterly results, proving that it is ideally situated for an economic recovery from the pandemic. In the most recent quarter, revenue increased 45% to $4.36 billion. Adjusted earnings-per-share nearly doubled to $1.94, from $1.09 in the year-ago quarter. Growth was fueled by a 24% increase in volumes, implying strong product demand. Growth was broad-based across segments: Performance Coatings revenue was higher by 33%, while Automotive grew 45%, Industrial Coatings sales increased 70% and aerospace sales increased slightly. By geographic market, the Europe/Middle East/Africa segment generated mid-teens growth on a percentage basis, driven by strength in architectural trade products. PPG Industries enjoys competitive advantages that are durable and provide it with long-term growth. It is an industry leader with scale and top brand strength, which allows it to raise prices over time. It operates in a highly concentrated industry; PPG is one of just three similarly-sized companies in this industry (Sherwin-Williams and Dutch paint company Akzo Nobel (AZKOY)), which limits competition. This has been reflected in the company's ability to increase product prices in order to offset volume declines PPG recently increased its dividend by 9%, for its 50th consecutive year of annual dividend growth. Even after so many years of dividend growth, the company has a very low payout ratio expected at 30% for 2021. This gives PPG plenty of room to continue increasing its dividend at a high rate. Go High With Lowe's Companies Lowe's Companies is the second-largest home improvement retailer in the U.S. (after Home Depot ). The company operates more than 2,000 home improvement and hardware stores in the U.S. and Canada. Home improvement retail has performed extremely well for many years. In the past decade, Lowe's grew its earnings per share by 20% per year. In the recent five-year period, growth was 22% annually. This is because the U.S. housing market boomed in that period, and consumers became more eager to spend on renovation projects. This macro-economic tailwind has fueled excellent growth for Lowe's in the past 10 years, and we believe these benefits will remain intact. Lowe's has continued its excellent performance in 2021. In the most recent quarter, total sales increased 24% to $24.4 billion. Comparable sales increased 26% year-over-year, with the U.S. segment posting 24% comparable sales growth. Net earnings of $2.3 billion nearly doubled from $1.3 billion in the same quarter last year. Diluted EPS followed suit, reaching $3.21 compared with $1.76 in the year-ago period. Like PPG, Lowe's has a huge competitive advantage from operating in a highly concentrated industry. Home improvement retail is essentially a duopoly, with Lowe's and Home Depot as the top two giants. Lowe's is a very shareholder-friendly company, as it returns a high level of cash to shareholders through share buybacks and dividends. The company repurchased 16.8 million shares in the most recent quarter for $3.1 billion. Additionally, they paid out $440 million in dividends. The company remains in a strong liquidity position with $6.7 billion of cash and cash equivalents. The previous outlook of $9 billion in share repurchases was maintained following the first quarter. Shares currently yield 1.6%, which is higher than the average S&P 500 Index yield by about 30 basis points. And, Lowe's is an excellent dividend growth company. In 2021 the company raised its quarterly dividend by 33%. Take a Space in Parker Hannifin Parker-Hannifin is a diversified industrial manufacturer specializing in motion and control technologies. The company was founded in 1917 and now generates annual revenues of $14 billion. Acquisitions are a big part of the company's long-term growth plan. It routinely makes significant acquisitions to bolster its growth. For example, in 2017, Parker-Hannifin acquired CLARCOR Inc., a major manufacturer of filtration products, for approximately $4.3 billion in cash including net debt. This acquisition gave Parker-Hannifin a comprehensive portfolio of filtration products and technologies. More recently, in 2019 Parker-Hannifin completed separate acquisitions of LORD, a leading manufacturer of advanced adhesives and coatings for $3.675 billion, and Exotic Metals Forming Company LLC, for $1.725 billion in cash. These two acquisitions added around $1.5 billion in annual revenues. Parker-Hannifin has reported strong results in recent periods. Orders grew 6%, and adjusted earnings-per-share increased 21% for the most recent quarter. Revenue increased 1% year-over-year, but the strong EPS growth rate was due to margin expansion and accelerated cost synergies from the LORD and Exotic Metals acquisitions. The company has a long history of strong earnings growth. To that end, Parker-Hannifin has exceeded analysts' EPS estimates for 23 consecutive quarters. Since 2010, it has more than tripled its earnings-per-share. Parker-Hannifin has a number of competitive advantages, including its scale, global distribution network, and technical experience. It manufactures components that are relatively obscure yet absolutely critical to the operations of heavy machinery, factory equipment, aircrafts, and other large industrial devices. Parker-Hannifin is a strong cash generator, which allows it to pay down debt and return cash to shareholders. The company accelerated its debt reduction in the most recent quarter, and it raised its dividend by 17%. Management expects strong growth to continue, which is why shareholders can expect continued dividend growth. Management expects flat sales for the full fiscal year, but adjusted EPS of $14.65-$14.95. With a current annual dividend payout of $4.12 per share, Parker-Hannifin has a projected dividend payout ratio below 30%.

Three High-Growth Dividend Kings to Build Up Your Portfolio

Let's look at PPG Industries, Lowe's Companies, and Parker Hannifin.

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