3 Dividend Kings That Have Raised Payouts for 50+ Years and Still Look Cheap

Dividend King stocks are surprisingly cheap across the board because most investors are still heavily leaning on growth stocks. Stocks like Stepan Co (NYSE:SCL), Marzetti (NASDAQ:MZTI), and American States Water (NYSE:AWR) can get you both a handsome yield and healthy upside on top when the pendulum eventually swings the other way.

If you expect the stock market to tilt defensive soon, accumulating dividend stocks is the best way to go. These stocks trade at premium valuations because everyone likes cash cows that raise their dividends reliably. Dividend Kings have over half a century of dividend increases under their belt, so it’s almost a given that your investment will snowball over time if you keep reinvesting.

And if you buy cheap Dividend King stocks, it’s even better because they’ll give you an early head start when the stock market shifts to their advantage.

Let’s take a deeper look at them.

Stepan Co (SCL)

Stepan is a specialty chemicals maker that sells “ingredients” rather than branded end products, with surfactants as the core franchise. SCL stock dropped over 18% in just one day as of this writing, and the weakness makes up for a perfect argument to buy this stock. Adjusted EPS came in at -$0.02 against 45 cents expected. Revenue came in below expectations, but the surfactants portion still grew from $378.8 million in 2024 to $401.8 million in 2025.

The company’s bread and butter is surfactants. These chemicals make up detergents, cleaners, shampoos, and a long list of industrial formulations that stay in demand no matter what happens in the broader economy.

The market is punishing this stock mostly for macro troubles coming from high interest rates. The Q4 earnings report said the loss was “largely due to higher interest expense”. Total debt is sitting at $626.7 million, which has incurred $10 million to $15 million per year in net interest losses. It’s not trivial against the $5 million of net income in Q4.

The main product is still in demand with growing sales. Profitability is where Stepan needs to work on, and it has started to do precisely that with a $100 million cost savings plan announced this week.

The forward dividend yield is 2.95% with a forward payout ratio of 85.16%. I expect profits to rise faster than the dividends as the company recovers. SCL has 57 consecutive years of dividend growth.

Marzetti (MZTI)

Marzetti is an under-the-radar Dividend King stock that has compounded investors’ cash remarkably well from 2009 to 2021. MZTI stock has been undergoing a rough stretch since then, but I smell opportunity.

You’re able to snag a bona fide Dividend King stock at just 23 times forward earnings. Marzetti is still growing, with the 3-year average EBITDA growth rate at 14.9% annually. The stock has slid downwards since future EPS growth is expected to be around the 7% ballpark. Regardless, this is a really good deal since Dividend Kings generally grow their profits by the high single digits and can still trade higher than 30 times forward earnings.

Historically, Marzetti has traded at over 31 times earnings. It’s a screaming buy when you take into account that it’s a cash-positive company with $161 million in cash on the balance sheet against $56 million of debt. The current slowdown is just a reversion to the mean after record growth in 2020 and 2021.

Marzetti has two business segments, split roughly evenly. The Foodservice business is slightly smaller, selling sauces and dressings made for national chain restaurant accounts. On the retail side, it sells dressings, dips, croutons, and frozen breads. These are high repeat, low drama items, so you don’t have to worry about the cash flow.

You get a 2.44% dividend yield at a 56.85% payout ratio. It has 62 consecutive years of dividend growth.

American States Water (AWR)

AWR stock is a more well-known Dividend King stock, but it is still too cheap. The stock is down 30% from its late 2021 peak and hasn’t even recovered to its late 2019 level. It earns most of its money from regulated water and electric service in California, plus long-term contracted water and wastewater work on US military bases.

​The reason the dividend record is 70 consecutive years long is that these are essential services with relatively predictable demand, and the company’s two cash engines, regulated rates plus long-duration military work, are built for consistency. The forward dividend yield is 2.74%.

Right now, you get a true “steady eddie” with some 20-30% upside potential this year. The downside risk, as I see it, is quite negligible. It already trades close to 20 times earnings.

AWR’s biggest issue is debt servicing. In FY 2024, net interest losses stood at $42.5 million against $184.5 million in operating income. As interest rates decline, this will directly boost the company’s profits.