Most investors who want exposure to the financial sector focus on well-known mega-cap stocks such as JP Morgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC). However, some smaller financial services companies have much longer dividend growth streaks. In fact, the only three financial services companies in the group of dividend kings, which have raised their dividends for at least 50 consecutive years, are smaller.

These companies have exhibited superior performance thanks to their conservative, high-quality business models. And, they are reluctant to engage in the riskier lending and trading practices that got big banks in so much trouble in 2008.

This resilience during economic downturns has allowed these three companies to join the exclusive list of dividend kings.

These three financial services companies pass under the radar of most investors due to their low profile and their smaller businesses. However, such lower-risk stocks are sometimes great candidates for the portfolios of income-oriented investors. This is certainly the case for these dividend kings, which have rewarded their shareholders with more than 50 years of consecutive dividend raises. And more increases should be on tap for many more years to come.

• Farmers & Merchants Bancorp (OTCMKTS:FMCB)
• Cincinnati Financial (NASDAQ:CINF)
• Commerce Bancshares (NASDAQ:CBSH)

Dividend Kings: Farmers & Merchants Bancorp (FMBC)

First on this list of dividend kings is Farmers & Merchants Bancorp. Farmers & Merchants is a community bank with 32 locations in California. Due to its small market cap ($710 million) and its low liquidity, it passes under the radar of most investors. This is a shame, as F&M Bank paid uninterrupted dividends for 86 consecutive years. And, it raised its dividend for 56 consecutive years.

Recently, Farmers & Merchants accelerated its growth potential through significant acquisitions. It acquired Delta National Bancorp in 2016 and Bank of Rio Vista in 2018. These acquisitions accelerated growth through expanded branches and customer additions.

The most important feature of Farmers & Merchants Bancorp is its high-quality, conservative business model. This results in great resilience during recessions. In the Great Recession, the worst financial crisis of the last 90 years, Farmers & Merchants Bancorp saw its earnings per share decrease only 9% and thus kept raising its dividend. On the contrary, many banks incurred devastating losses and cut their dividends in that recession.

Farmers & Merchants Bancorp proved resilient in the coronavirus crisis as well. Due to the severe recession caused by the pandemic and the resultant defaults on corporate and individual loans, many banks incurred material provisions for losses and thus their earnings slumped in 2020. That was not the case for Farmers & Merchants Bancorp. The bank grew its earnings per share 4%, to an all-time high, thanks to its high-quality loan portfolio.

The performance remained strong this year. In the first quarter, Farmers & Merchants Bancorp grew its net interest income 13% thanks to 16.5% growth in loans. As a result, it grew its earnings per share 19% over last year’s quarter. Management remains optimistic for the remainder of the year. Officials cite the strong business momentum and the absence of any signs of fatigue.

Farmers & Merchants Bancorp offers a 1.7% dividend yield. The current yield may not be exciting but the yield still beats the S&P 500 average. Investors should note that the payout ratio is extremely low at 18%. Given also the consistent earnings growth and the defensive loan portfolio of the bank, its dividend should be considered safe for many more years.

Cincinnati Financial (CINF)

Cincinnati Financial, a property-and-casualty (P/C) insurance company, is next on our list of dividend kings. The company was founded in 1950. It offers business, home, auto insurance and financial products, including life insurance, annuities, property and casualty insurance.

As an insurance company, Cincinnati Financial makes money in two ways. It earns income from the insurance premiums of the policies it sells to its customers. It also earns investment income by investing its float, i.e., the money it receives from its customers minus the amounts it pays for the claims of its customers.

The latter is actually the reason behind the great interest of Warren Buffett in the insurance business from the very beginning of his investing career. He noticed that this business generates a great amount of float. This money can be invested with a high rate of return. And thus, it generates excessive compounded returns.

Cincinnati Financial has the best long-term performance record in its peer group. Its combined ratio (claims paid to premiums received) outperformed the average of its peer group by 5.9 points in the last five years. In addition, it has raised its dividend for 60 consecutive years. This is an impressive dividend growth record. Only seven other companies have achieved such a long streak.

As Cincinnati Financial has 39% of its capital invested in equities, it is vulnerable to bear markets and sell-offs. Last year, the insurer incurred a 22% decrease in earnings per share. This was due to lower stock prices amid the pandemic as well as higher catastrophe losses.

However, the stock market rallied to new all-time highs while the economy heated again. As a result, Cincinnati Financial is poised to recover strongly from the pandemic. In the first quarter, it grew its earned premiums 6% and its adjusted earnings per share 63%, from $0.84 to $1.37. Thanks to the strong recovery of the economy, we expect Cincinnati Financial to achieve record earnings per share of $4.43 this year.

Cincinnati Financial has a 2% dividend yield. Moreover, the insurer has grown its dividend by 5% per year over the last five years. Thanks to the healthy payout ratio of 57% and the disciplined underwriting policy of the insurer, its dividend is safe for the foreseeable future.

Dividend Kings: Commerce Bancshares (CBSH)

The final entry on the dividend kings list for today is Commerce Bancshares. CBSH is a regional bank holding company headquartered in Kansas City, Missouri. It offers a full line of banking services, including payment solutions, investment management and securities brokerage. Founded in 1865, Commerce Bancshares operates branches in Colorado, Kansas, Missouri, Illinois and Oklahoma.

Commerce Bancshares is well-managed, with a conservative business model and long-term perspective. Its loan to deposit ratio, which currently stands at 60%, is a testament to the discipline of its management.

The conservative business model of Commerce Bancshares has rendered the bank markedly resilient to recessions. In the Great Recession, Commerce Bancshares saw earnings per share decrease only 19% and thus kept raising its dividend, in sharp contrast to many banks.

In the first quarter, Commerce Bancshares revenues grew 5% and earnings per share rose 164%, from $0.42 to $1.11. The reason behind the sharp increase in earnings was the favorable trend in the provisions for loan losses. Last year, the bank greatly increased provisions for loan losses due to the fierce recession caused by the pandemic. But it reversed those provisions in the first quarter of this year thanks to the recovery of the economy.

Commerce Bancshares yields 1.4%, which is roughly on-par with the broader market average. And, the bank has grown its dividend at a consistent 9% average annual rate over the last decade. Moreover, Commerce Bancshares has a healthy payout ratio of 28%. As a result, investors can rest assured that the bank will continue raising its dividend for many more years.

On the date of publication, Bob Ciura did not have (either directly or indirectly) positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bob Ciura has worked at Sure Dividend since 2016. He oversees all content for Sure Dividend and its partner sites. Prior to joining Sure Dividend, Bob was an independent equity analyst. His articles have been published on major financial websites such as The Motley Fool, Seeking Alpha, Business Insider and more. Bob received a bachelor’s degree in Finance from DePaul University and an MBA with a concentration in investments from the University of Notre Dame.