The Dividend Kings have experienced a notable period of underperformance against the S&P 500 throughout 2025, with a significant 13.10% gap in year-to-date returns. Despite this overall trend, a select group of 12 companies within the Dividend Kings index has managed to surpass the broader market's performance. The recent inclusion of MGE Energy into the Dividend Kings roster, coupled with various dividend increases, has elevated the group's overall dividend growth rate to a respectable 5.61%. A detailed analysis utilizing Dividend Yield Theory indicates that 22 of these Dividend Kings currently present as undervalued, projecting long-term annualized returns of at least 10%.
The month of September proved particularly challenging for the Dividend Kings, as they collectively saw an average decline of 1.58%. This performance sharply contrasted with the SPDR S&P 500 ETF (SPY), which outperformed them by a substantial 4.47% during the same period. This trend of underperformance has unfortunately continued into the current month, suggesting ongoing headwinds for these long-standing dividend payers.
Despite the broader underperformance, several Dividend Kings have emerged as strong contenders. Notable top performers include NFG, JNJ, ABBV, MO, FTS, ADM, NUE, GRC, NWN, PH, CDUAF, and MSEX. These companies have demonstrated resilience and growth, offering a brighter spot amidst the general decline. Conversely, SCL registered as the weakest performer within the group, highlighting the divergent outcomes even among highly stable dividend stocks.
The analysis also sheds light on the inherent value present in many of these companies. The Dividend Yield Theory, a framework that assesses a stock's valuation based on its dividend yield relative to its historical averages, suggests a compelling opportunity. With 22 Dividend Kings identified as undervalued, investors looking for long-term growth and stable income may find attractive entry points in these companies, provided their fundamental strength remains intact.
In conclusion, while the Dividend Kings have faced a period of considerable underperformance against the S&P 500 in 2025, the landscape is not uniformly bleak. Several companies continue to deliver strong returns, and a significant portion of the group appears to be trading below its intrinsic value. The ongoing dividend increases across the index underscore the commitment of these companies to shareholder returns, making them potentially appealing for investors focused on long-term value and income generation.