Highest-Paying Dividend Stocks in the S&P 500 - Cabot Wealth Network

Highest-Paying Dividend Stocks in the S&P 500

More than 75% of the S&P 500 pays a dividend these days. Here are the 10 highest-paying dividend stocks in the index.

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Nearly 75% of the stocks in the S&P 500 pay a dividend, and the dividend for many of them exceeds the yield on U.S. 10-year Treasury bonds (currently around 2.8%).

However, screening for the highest-paying dividend stocks in the S&P 500 reveals some even more impressive yields. In fact, several of these high dividend stocks in the S&P 500 currently yield over 4%. And the top 10 highest-paying dividend stocks all yield between 4.8% and 8.7%.

Higher yields come with higher risks, though. Many of these stocks’ yields are so high because they’re struggling, and some may end up slashing their dividends. Read on to see which yields are still safe, and which you should stay away from.

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From highest yield (8.7%) to lowest yield (4.8%), here are the 10 highest-paying dividend stocks in the S&P 500 today:

The 10 Highest-Paying Dividend Stocks in the S&P 500

  1. Lumen Technologies (LUMN)
  2. Altria Group (MO)
  3. AT&T (T)
  4. Kinder Morgan (KMI)
  5. ONEOK (OKE)
  6. Vornado Realty Trust (VNO)
  7. Simon Property Group (SPG)
  8. Verizon (VZ)
  9. Philip Morris International (PMI)
  10. Williams Companies (WMB)

Here’s a closer look at each one of the top 10 highest-paying dividend stocks.

 

Lumen Technologies is the highest-paying dividend stock in the S&P 500.1. Lumen Technologies (LUMN)

Dividend Yield 8.7%

Lumen is a wireline telecom operator (combing the former CenturyLink and Level 3 Communications) and specializes in fiber-based offerings. It’s also rapidly pivoting toward digital applications and investments in “4th Industrial Revolution” technologies, such as Edge Cloud and other platform-based solutions. The company reaches more than 2.4 million homes through its Quantum Fiber brand, adding more than 400,000 new homes in 2020 alone. Lumen carries a high debt burden, however, although the firm is committed to paying down debt, reducing interest expense and strengthening its balance sheet. Lumen’s CEO reaffirmed the company’s intention to returning more capital to shareholders in the coming quarters through investing in growth and paying out dividends. While its earnings growth outlook isn’t as strong as some of the other companies on this list, its profitability appears to be stabilizing and the de-leveraging strategy should eventually pay off. Worth a look if you can tolerate volatility.

Altria (MO) is one of the highest-paying dividend stocks in the S&P 500.2. Altria Group (MO)

Dividend Yield 6.4%

Altria is well known as one of the world’s biggest producers of tobacco and other smoking-related products. The company is equally well known as being one of the most persistent high-dividend payers among U.S.-based, blue-chip companies, with a current annual dividend of $3.60 per share. Indeed, Altria’s dividend payouts have nearly tripled in the last 10 years. And while some investors are concerned that Altria’s cigarette and tobacco business likely faces headwinds from consumers’ shifting preferences, its investments in increasingly popular vaping and cannabis products should ensure the company’s revenue growth going forward.

3. AT&T (T)

Dividend Yield 5.7%

AT&T sports an attractive dividend yield. But unfortunately for the telecom firm, it has lately attracted the wrong sort of attention from federal regulators. In 2021 AT&T was sued by the Securities and Exchange Commission (SEC) for allegedly providing several Wall Street analysts with insider information before a key earnings release in 2016. The analysts subsequently lowered their collective revenue estimates, which allowed the company to beat consensus expectations when the earnings were formally released to the public. While the suit shouldn’t impact AT&T’s ability to keep paying its dividend and earning money from its substantial customer base, it could nonetheless create some unwanted turbulence for investors in the near term. Conservative investors should probably avoid the stock for now.

4. Kinder Morgan (KMI)

Dividend Yield 5.7%

Kinder Morgan is one of the largest energy infrastructure companies in North America, with an interest or ownership stake in nearly 83,000 miles of oil and gas pipelines. But a nationwide transition to renewable energy has forced Kinder to reevaluate its long-term growth strategy. Instead of continued emphasis on building out its pipeline, the company has indicated it plans a gradual shift toward purchasing existing assets in the alternative energy field, as well as maximizing its existing assets in natural gas. Kinder isn’t one of the strongest-performing energy companies today, but we think its history of adapting to dramatic shifts in the petroleum industry should ensure its dividend stability.

ONEOK is one of the highest-paying dividend stocks in the S&P 500.5. ONEOK (OKE)

Dividend Yield 5.27%

ONEOK is a leading U.S. natural gas midstream company with operations in Kansas, North Dakota and Texas. A year ago, OKE faced significant challenges to its business in the wake of plunging crude oil and natural gas prices. But OKE had been in that situation before, notably in the 2015-16 energy sector crisis, and the company has a history of weathering even the toughest economic climates. Fast forward to today and OKE is making bank once again, thanks to surging petroleum prices. Its dividend payouts have also been trending impressively higher for the last several years, with a current quarterly payout of 94 cents per share. OKE’s steady dividend and attractive yield make it a tempting target for income-oriented investors now that problems in the oil patch have disappeared.

Vornado (VNO) is one of the highest-paying dividend stocks in the S&P 5006. Vornado Realty Trust (VNO)

Dividend Yield 5.1%

Vornado Realty Trust is an REIT that boasts a portfolio of over 20 million square feet of office space and over 2.5 million square feet of retail space, 87% of which is New York-centric. 2020 was a notably tough year for the company as they reported a full-year loss of $1.83 per share and were forced to cut their quarterly dividend to $0.53, levels not seen in a decade. VNO’s inclusion on this list is largely attributable to share underperformance (down 47% over the last five years). The company’s fortunes will largely be tied to pandemic-related concerns and a return to offices. Given the early stages of the work-from-home trend, this may be one to watch instead of diving into.

SPG logo7. Simon Property Group (SPG)

Dividend Yield 5.1%

Simon Property is a real estate investment trust (REIT) that primarily invests in shopping malls, outlet centers, and community/lifestyle centers. It is the largest owner of shopping malls in the United States. In 2021 the firm reported record Funds From Operations (FFO) of nearly $4.5 billion, a 31% increase over the prior year. The company boasts a 93% occupancy rate and anticipates comparable FFO levels for 2022, which should allow it to maintain its healthy dividend.

Verizon (VZ) logo8. Verizon (VZ)

Dividend Yield 4.9%

Verizon is is one of the world’s leading providers of technology and communications services, boasting over 140 million retail connections and over one million miles of global fiber infrastructure. Their 5g services, an essential component of the growth of the Internet of Things, covers over 110 million people with a year-end goal of 175 million. In its most recent earnings announcement, the company reported $18.3 billion wireless service revenue, a year-over-year increase of 9.8%

Philip Morris International (PMI) logo9. Philip Morris International (PMI)

Dividend Yield 4.8%

Proprietor of the globally recognized Marlboro brand, Philip Morris is a multinational cigarette and tobacco company with products in over 180 countries. The company has raised its dividend every year since  2008, representing a total increase of 171.7%, or a compound annual growth rate of 8.0%. Although industry trends point to declining combustible tobacco consumption, Philip Morris is aggressively pursuing growth through its heated tobacco and nicotine pouch initiatives. Russian sanctions are likely to negatively impact shares in the near term (Russia accounts for 10% of total cigarette and heated tobacco volume), so this is not an ideal time to start a position.

10. Williams Companies (WMB)

Dividend Yield 4.8%

Williams Companies is a U.S.-based natural gas processing and transportation firm, with additional assets in petroleum and electricity generation. Williams’ cash flow has been remarkably steady in recent years, and higher energy prices should only boost earnings going forward. The company is currently expanding its operations in the northeastern and southwestern regions of the U.S., which should also allow it to maintain its healthy dividend payouts going forward (current annual dividend $1.70 per share). We like it.

There you have it: those are the 10 highest-paying dividend stocks in the S&P 500 today. If you want the best dividend stocks right now regardless of yield, I highly recommend subscribing to our Cabot Dividend Investor advisory, where chief analyst Tom Hutchinson has a portfolio full of dividend-paying stocks that offer generous yields and strong share price growth.

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*This post has been updated from an original version, published in 2018.

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