When it comes to personal finance, one of the most common strategies you hear is to generate a passive income stream. One way of earning passive income is through investing in dividend-paying stocks. Dividends are payments companies make to their shareholders, usually quarterly, as a portion of their profits. 

Investing in dividend companies not only means that you get to collect dividends, but they also allow you to participate in the growth of these companies. Investors should look for companies with a track record of consistently paying and increasing their dividends to maximize profits. With that said, not all dividend stocks are built the same. For dividend investors, the most elite stocks are the dividend aristocrats and dividend kings. No one will blame you if you think they are the same.

A dividend aristocrat is an S&P 500 Index-listed company that has increased its dividend for 25 consecutive years. But there's a much more elite group of dividend stocks that aren't as well-known: dividend kings. These do not have to be members of the S&P 500 but must have increased their dividends for at least the last 50 consecutive years.

Today, there are 49 dividend Kings, and in this article, we’ll cover the 3 with the highest yield.

3M Company (MMM)

Annual Dividend Yield: 5.57%

3M has operations in more than 70 countries. It was founded in 1902. The company has been essential during COVID-19, as it produces various products used in the healthcare industry, including face masks and hand sanitizer. Today, the company markets a range of goods and services in four different segments. These four segments are consumer, health care, transportation and electronics, and safety and industrial.

Products like abrasives, artificial bonds and videotapes, and particular safety gears fall under Safety, and Industrial—transportation safety equipment and systems for the automotive and aerospace sector fall under the Transportation and Electronics segment. Oral care, medical results, and health information systems are under the Health Care Segment. Consumer health and safety products, office inventories, consumer respirators, etc., for its Consumer Care Segment. 

3M’s last trading price was $107.80, has an annual dividend yield of 5.57%, and is part of the coveted Dividend Kings as they’ve increased their dividend for 66 years. Also, 3M has a dividend payout ratio of 58.31% and recently announced its March dividend of $1.50 per share, which will be paid out on March 12, 2023.  

Analysts rate MMM as a "Hold" based on 12 Holds, 1 Moderate Sell, and 3 Strong Sells. The mean target price is $119.85, and a high target price of 155.00 (an upside of 43.78%) in the next 12 months.

Barchart’s Opinion (based on technical analysis) rating is 100% Sell.

Universal Corp (UVV)

Annual Dividend: 6.17%

Universal Corporation's (UVV) business focuses on supplying leaf tobacco and plant-based components for consumption by people and animals. Operations for ingredients and tobacco make up its two components. In Tobacco Operations, the business contracts with producers of consumer tobacco products worldwide and purchases, finances, processes, packs, stores, and transports leaf tobacco to those companies.

UVV obtains leaf tobacco by hiring farmers from various origins, supporting them with agronomy, and financing them. The business's Ingredients Operations division sells plant-based ingredients for food for people and animals. These include specialty vegetable and fruit-based components, botanical extracts, and flavorings. Flue-cured, burley, dark air-cured, and oriental tobaccos are just a few of the many tobacco varieties that the business processes and sells.

There is currently no analyst rating for UVV.

Barchart’s Opinion Rating gives UVV a 40% Sell.

Universal Corp’s last trading price was $51.19, and has an annual dividend yield of 6.17% which makes it one of the high-yielding Dividend Kings. UVV has increased its dividend payouts for more than 51 years.  UVV has a dividend payout ratio of 80.89% and announced their 2nd interim dividend for the year last February 1, 2023, for $0.79 per share. The 2nd interim dividend will be paid on May 1, 2023, with an ex-date of April 06, 2023. UVV is expected to announce its next dividend this May based on its historical announcements.

Altria Group (MO)

Annual Dividend Yield 7.97%

Altria Group (MO) is an international tobacco company with amarket capitalization of $84.54 billion. MO is a component of the Dividend Aristocrats Index, having increased its dividend payments for 52 consecutive years.

Founded in 1902 and headquartered in Richmond, Virginia, United States, the company employs over 6,000 people.Its popular brands are Marlboro, Chesterfield, and L&M.

Altria Group primarily sells oral tobacco products and smokeable products. Among its accessories are cigarettes made and sold in the US by Philip Morris USA Inc. and machine-made cigars and pipe tobacco by John Middleton Co. Altria Group Distribution Company, Helix Inventions LLC, Philip Morris Capital Corporation, and Altria Client Services LLC are further add-ons. The business offers deals and distribution services, support services, and various financial tools.

Altria Group's last trading price was $47.17, and its annual dividend yield is a whopping 7.97%, the highest of all the Dividend Kings. Dividend Kings have a dividend streak of at least 50 consecutive years of payout growth to be considered in this category. MO has a Dividend Payout Ratio of 75.61% and is expected to announce its first dividend of the year next month.

Analysts rate Altria as a "Hold" with 4 Strong Buys, 6 Holds, and 2 Strong Sells from Analysts. MO's Mean Target price is $48.46, with a high estimate of $57.00 (an upside of 20.83%) in the next 12 months.

Barchart’s Opinion Rating gives Altria Group an 88% Buy.

Final Thoughts

Investing for the long term is proven to be the way to go. Investors looking for a reliable way of creating an additional source of income in a diversified portfolio composed of household names can look at dividend kings for potential investment ideas. Any Dividend King that has more than a 5% yield is very rare and one of the rarest opportunities for any serious long-term investor. The only question is, when should you buy it?

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