Target and Illinois Tool Works Are Not Dividend Kings (yet)

I came up with the term Dividend King in 2010. I used the term dividend king to describe a company, which has increased dividends for 50 years in a row.

As part of my annual reviews, I updated the list of dividend kings annually. It is a lot of fun to check corporate histories and update the list. There were 28 dividend kings in 2020.

However, it looks like other websites and articles show versions of the dividend kings list with more companies. Many of these articles show a larger number of dividend kings. Notably, they include two companies as dividend kings, which are not dividend kings yet.

This bothered me, because I thought I had missed these two companies initially. I tried to determine how I missed them. So I dug a little deeper than usual. 

The companies included incorrectly in the dividend kings list by other websites include Target and Illinois Tool Works. It is relatively easy to determine that Target has increased dividends for less than 50 years in a row by going to its corporate website, and reviewing the dividend history going back to 1967.

Target kept dividends unchanged in 1970 and 1971. Target didn’t start growing dividends until 1972. As of the time of this writing in 2020, Target would have a 49-year streak of consecutive annual dividend increases. Target would be eligible to become a dividend king in 2021. 

For Illinois Tool Works, the research goes a little further. Unfortunately, the company does not list its dividend history going as far back as the 1960s like Target does. We only see data going back to 1990, and we have to manually adjust it for the stock splits during that era too. The dividend history on the ITW website is lacking historical data. Therefore, we would have to rely on other information, in order to check its track record of annual dividend increases.

The company does list in its 2019 annual report that ITW’s annual dividend payment has increased for more than 56 consecutive years, except during a period of government controls in 1971. Source: 2019 ITW Annual Report 

This sentence has confused a lot of folks, because they take the company’s word that it is a dividend king, and has increased dividends for 56 years in a row. That is impossible, because the company also admits that it didn’t increase dividends in 1971 “due to government controls”. Since we are in 2020, that would mean that the company has not increased dividends for more than 49 years in a row, assuming it raised dividends without interruption since 1972. Perhaps Illinois Tool Works could be a dividend king in 2021, assuming it doesn’t blame any further government interruption for its lack of ability to build a record of annual dividend increases to qualify as a dividend king.

I found their annual report statement to be odd due to the above. I also found the reference to government controls to be odd, after reviewing the text of the order ( Source: Internal Revenue Bulletin found and shared by DiarioDeBolsa.com)

Per the text, it looks like companies were unable to grow dividends by more than 4% from the highest dividend paid in 1969, or 1970 or 1971. This was all voluntary of course, but we know from evaluating the history of dividend kings that there were at least 28 companies that raised dividends even during those tumultuous “government controls”. Plus, we should also include the companies like Winn Dixie, AON, Ohio Casualty and the others that used to be part of the list ofdividend kings, but fell off for one reason or another.

I went ahead and dug further to my old stocks manuals. I found out the 2005 Moody’s Manual, which does show that Illinois Tool Works kept dividends unchanged in 1970 and 1972. However, it does show that the company managed to grow the annual dividend beginning in 1972. The data since 2005 is widely available, and it could easily be confirmed that the company has raised dividends since 2005 every single year.

So the verdict is final - Target and Illinois Tool Works are not dividend kings yet. They are still great companies that may be good to consider at the right price.

As an investor, I believe it is important to do your own research. You may have to dig in, and look for information from the original source, rather than rely exclusively on third-parties. This is a good skill that would help develop your independent thinking, and potentially set you apart from the crowd. It is good to have the attitude to trust, but verify as well.

An equally important, if not more important skill is being able to communicate with smart investors, who you can learn from and hopefully reciprocate back. 

In my case, I have managed to accumulate by accident a readership of smart readers, who tend to provide very good feedback, and ask great questions. I get to learn from them, and they hopefully from me. I find that by interacting with other investors, you can learn more together, than on your own. 

Relevant Articles:

- Dividend Kings List- Evolution of the dividend kings list over the years- Illinois Tool Works (ITW) Dividend Stock Analysis- Target: An Attractively Valued Dividend Champion on Sale

Dividend Kings List For 2020

A dividend king is a company that has managed to increase dividends to shareholders for at least 50 years in a row.

There are only 28 such companies in the US, and perhaps a couple more in the rest of the world. It is not a small achievement to have been able to reward long-term shareholders with a dividend raise for over half a century.

Over the past 50 years, some calamities experienced include:

- Seven Recessions since 1967
- The Vietnam War
- The oil crisis in the 1970s
- Stagflationary 1970s
- Double digit interest rates in the 1980s
- Fall of the Soviet Union in 1991
- 9/11 in 2001
- The Dot-com bubble bursting in 2000
- The housing bubble bursting in 2007 - 2008
- ZIRP and NIRP since 2009


Throughout this calamity each of those businesses managed to grow earnings, and raise the dividend to their long-term shareholders. If you are looking for a long-term shareholder base, the best way to build it is by paying those owners more every single year. This is a simple, but novel idea for corporations to embrace.

We had three new additions to the list in 2019, and one company that left the list. These actions brought the number of companies to 28. This is a record since we started tracking the list of dividend kings in 2010.

When I first came up with the idea for the list of dividend kings in 2010, there were only eleven companies on it. While our 2019 list also included 28 companies, I had to remove Target for now, since its streak of annual dividend increases was only 48 years. I am pretty confident that the retailer will hit 50 years in a row by the end of the decade. Other websites show Target as a dividend king, when its press releases and the dividend history on its website show a 48 year track record of annual dividend increases.

The new addition for the current year include:

Altria Group (MO)
H.B. Fuller Company (FUL)
Sysco (SYY)

These were consistent with my predictions from last year. It is a testament to the predictable nature of their businesses, not in my forecasting abilities.

The company that left the list in 2019 includes Vectren (VVC), acquired by Centerpoint in January 2019. This is the second company to leave the list of dividend kings since I started monitoring it in 2010.

I did some research on historical changes of the Dividend Kings list, which you may find interesting. I reviewed the evolution of the dividend kings prior to 2007 in the article, which has not been done by anyone else.

The companies in the 2019 dividend kings list include:

Company Name	Symbol	Sector	Years Dividend Increases	10 Year Annualized Dividend Growth	Dividend Yield	Share Price
ABM Industries Inc.	ABM	Industrials	52	3.42%	1.92%	38.50
American States Water	AWR	Utilities	65	7.80%	1.40%	86.90
Commerce Bancshares	CBSH	Financials	51	4.86%	1.45%	68.20
Cincinnati Financial	CINF	Financials	59	3.20%	2.16%	103.90
Colgate-Palmolive Co.	CL	Consumer Staples	57	7.85%	2.49%	69.18
California Water Service	CWT	Utilities	52	2.54%	1.53%	51.52
Dover Corp.	DOV	Industrials	64	9.72%	1.70%	115.47
Emerson Electric	EMR	Industrials	63	4.69%	2.61%	76.51
Farmers & Merchants Bancorp	FMCB	Financials	55	3.14%	1.85%	773.96
Federal Realty Inv. Trust	FRT	Real Estate	52	4.95%	3.28%	128.15
H.B. Fuller Company	FUL	Materials	50	8.89%	1.23%	51.83
Genuine Parts Co.	GPC	Consumer Discretionary	63	6.33%	2.87%	106.24
Hormel Foods Corp.	HRL	Consumer Staples	54	15.02%	2.05%	45.26
Johnson & Johnson	JNJ	Health Care	57	7.03%	2.61%	145.75
Coca-Cola Company	KO	Consumer Staples	57	7.46%	2.89%	55.35
Lancaster Colony Corp.	LANC	Consumer Staples	57	8.09%	1.75%	160.39
Lowe's Companies	LOW	Consumer Discretionary	57	18.36%	1.83%	120.23
3M Company	MMM	Industrials	61	10.52%	3.25%	177.26
Altria Group Inc.	MO	Consumer Staples	50	9.46%	6.67%	50.40
Nordson Corp.	NDSN	Industrials	56	13.10%	0.93%	162.80
Northwest Natural Gas	NWN	Utilities	64	2.22%	2.63%	72.56
Procter & Gamble Co.	PG	Consumer Staples	63	6.25%	2.36%	126.09
Parker-Hannifin Corp.	PH	Industrials	63	12.32%	1.70%	207.00
Stepan Company	SCL	Materials	52	8.09%	1.10%	99.93
SJW Corp.	SJW	Utilities	51	5.69%	1.68%	71.61
Stanley Black & Decker	SWK	Industrials	52	7.43%	1.66%	165.90
Sysco Corp.	SYY	Consumer Staples	50	5.05%	2.10%	85.74
Tootsie Roll Industries	TR	Consumer Staples	53	4.45%	1.04%	34.73

Note: The prices and yields are as of December 29th, 2019.

There are three companies which are set to potentially join the elite list of dividend kings by the end of 2020. These companies have a 49 year record of annual dividend increases:

Black Hills Corp (BKH)

MSA Safety (MSA)

National Fuel Gas (NFG)

This track record is a testament to the stability of the underlying businesses that generated the earnings growth necessary to grow the dividend for half a century (and longer). This track record is an indication of a business that is relatively immune to outside shocks. This resilience throughout the period manifests itself into the long stretch of dividend increases, spanning over half a century.

While these companies are not investment recommendations, I post them as examples for further study by serious dividend investors. Studying the businesses, their industries, could give you clues as to the type of business that can flourish over a half of a century.

As I mentioned above, I have been compiling the list of dividend kings since 2010. To view the historical changes in the list, please follow the links below:

Dividend Kings List For 2019

2018 Dividend Kings List

Dividend Kings List for 2017

Dividend Kings for 2016

Dividend Kings List for 2015

The Dividend Kings List for 2014

The Dividend Kings List Keeps Expanding in 2013

Eleven Dividend Kings, Raising dividends for 50+ years

Ten Dividend Kings raising dividends for over 50 years