2 Dividend Kings Just Hiked Payouts Again—Time to Buy?

Dividend aristocrats flex their royalty status—but are these raises legit growth plays or just yield-chasing traps?

Cash flow or smoke and mirrors? Two so-called 'Dividend Kings' just extended their payout streaks. Cue the confetti—or the skepticism.

The yield illusion

Higher dividends don't always mean healthier companies. Sometimes it's just financial engineering to keep income addicts hooked.

The longevity test

Fifty-plus years of consecutive raises sounds impressive—until you realize many boomer stocks achieve this by stagnating into irrelevance.

The crypto contrast

Meanwhile, decentralized protocols auto-compound yields without boardroom approvals. But sure, keep obsessing over quarterly pennies from legacy dinosaurs.

Final verdict? Surface-level yield metrics belong in 20th century investing handbooks. DYOR—or keep chasing 'safety' while inflation eats your lunch.

Image source: Getty Images.

1. Dover

Dover made its yearly dividend raise in early August. Although it wasn't one of the company's biggest lifts -- at less than 1% higher than its predecessor, to a quarterly rate of $0.52 per share -- it was meaningful, as it marked the 70th(!) year in a row that the payout has been enhanced.

Such a miserly raise might falsely indicate that the industrial conglomerate is struggling. In late July, it published second-quarter results that showed growth in the right places, with both revenue and profitability rising at healthy rates. The company's revenue advanced by 5% year over year to $2.05 billion, while its non-GAAP (adjusted) net income ROSE a meaty 16% to $337 million.

Dover management has recently focused on boosting its higher-margin products, while at the same time being aggressive about reining in costs -- hence the double-digit profitability rise.

The company is also choosing to grow through acquisition. Early in August, it announced that it had purchased fueling site monitoring products specialist Site IQ, which has been folded into its new owner's fueling solutions unit.

Although Dover is a well-managed company, I don't feel it's all that compelling as an investment, despite its Dividend King status. Its dividend policy isn't very generous these days, so yield is low (at under 1.2%), and I can't imagine that the company will keep posting such impressive growth rates in key fundamentals in the long term. I'd sit on the sidelines with this stock.

Dover's new dividend will be handed out on Sept. 15 to investors of record as of Aug. 29.

2. Illinois Tool Works

Another post-earnings dividend raise came from Dover's fellow industrial stock, Illinois Tool Works. As August kicked off, ITW boosted its quarterly payout by 7%, or $0.11 per share, to $1.61.

While the company's name implies that it's purely a tool manufacturer, it's actually, like Dover, quite a well-diversified business that operates in several industrial fields. These include automotive, test and measurement electronics, food equipment, and polymers.

It isn't easy to discipline so many different elements into growth, and ITW's most recent quarterly figures reflect this. Revenue for its second quarter inched up only 1% year over year to $4.1 billion, while adjusted net income also slipped at roughly that rate to $755 million. A slightly happier development was management's raising the lower end of its full-year 2025 GAAP earnings guidance.

In proffering revenue guidance that the top line should rise by 3% at best this year, ITW divulged that it'll likely continue "on-going pricing actions that are projected to offset tariff cost impacts and current foreign exchange rates." This sounds like a company in defense mode, rather than a business striding confidently into a high-growth future.

That said, ITW's dividend is relatively high, with the new payout yielding a theoretical 2.5% on the most recent closing share price. That, plus management's tendency to enact generous dividend raises every year, makes it a fine income stock. I wouldn't count on the company growing its fundamentals significantly, though.

ITW's upcoming payout is scheduled for distribution on Oct. 10. Stockholders of record as of Sept. 30 will be eligible for the dividend.