Over 75% of the stocks in the S&P 500 pay a dividend, and the dividend for most of them exceeds the yield on U.S. 10-year Treasury bonds (currently around 1.6%).
However, screening for the highest-paying dividend stocks in the S&P 500 reveals some even impressive yields. In fact, several of these high dividend stocks in the S&P 500 currently yield over 3%. And the top 10 highest-paying dividend stocks all yield between 5% and 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.
From highest yield (7.42%) to lowest yield (0.02%), here are the 10 highest-paying dividend stocks in the S&P 500 today:
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The 10 Highest-Paying Dividend Stocks in the S&P 500
- ONEOK (OKE)
- Lumen Technologies (LUMN)
- Altria Group (MO)
- AT&T (T)
- Williams Companies (WMB)
- Kinder Morgan (KMI)
- PPL Corp. (PPL)
- Exxon Mobil (XOM)
- Philip Morris (PM)
- IBM Corp. (IBM)
Here’s a closer look at each one of the top 10 highest-paying dividend stocks.
1. ONEOK (OKE)
Dividend Yield 7.42%
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 93 cents per share. OKE’s steady dividend and attractive yield make it a tempting target for income-oriented investors now that year’s problems in the oil patch have disappeared.
2. Lumen Technologies (LUMN)
Dividend Yield 7.35%
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 “Fourth 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.
3. Altria Group (MO)
Dividend Yield 7.2%
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 $3.44 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.
4. AT&T (T)
Dividend Yield 7.04%
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. AT&T is being 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.
5. Williams Companies (WMB)
Dividend Yield 6.86%
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: $1.64 per share). We like it.
6. Kinder Morgan (KMI)
Dividend Yield 6.48%
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.
7. PPL Corp. (PPL)
Dividend Yield 6.10%
PPL is a Fortune 500 utility company providing essential energy services to more than 10 million customers in the United States and the United Kingdom, although it’s currently in the process of selling its U.K. utility business. It boasts a 21-year dividend growth track record and currently pays out a forward divided-per-share of $1.66. While the company’s dividend growth rates have softened, PPL’s earnings outlook is expected to be strong enough going forward to continue its generous dividend payout. There has also been speculation lately that the company could become a potential takeover candidate after selling its U.K. electric distribution network operator. It’s not the strongest capital gains performer, but its dividend stability is worthy of commendation.
8. Exxon Mobil (XOM)
Dividend Yield 5.68%
Like the rest of its energy sector peers, Exxon faced significant challenges last year from collapsing oil prices. During the 2020 pandemic-led crash, Exxon’s stock fell 54% from peak to trough in the first three months of the year. Despite the share price setback, the company’s management elected to maintain its quarterly dividend of 87 cents per share. But it failed to raise the dividend within 2020’s calendar year, breaking an 18-year record of consecutive dividend growth. Nevertheless, as of this writing, Exxon is still on the Dividend Aristocrats list and maintains a 37-year record of rising annual dividends, although its dividend payout ratio hit a mind-blowing 154% at one point.
9. Philip Morris (PM)
Dividend Yield 5.54%
Despite declining cigarette sales in the U.S. and other developed nations, tobacco giant Philip Morris is partnering with Altria (mentioned above) to develop heated tobacco products which reduce health risks by releasing fewer toxins than the typical cigarette. Sales volumes of Philip Morris’ heated tobacco products have increased significantly, which puts the company firmly on the path to achieve its long-term goal of replacing its traditional cigarette sales with lower-risk alternative products. The firm’s fairly low valuation is an added attraction, as is its long-term record of steadily increasing the dividend.
10. IBM Corp. (IBM)
Dividend Yield 5.13%
Big Blue has been a laggard performer among Dow 30 stocks in recent years and fell 40% from its high to low during the early 2020 selling panic. Although IBM recovered more than half its losses in the months following last year’s low, the company’s revenues have been declining since peaking at $107 billion in 2011. IBM was slow to adapt as computing and data storage moved to the cloud, and competitors were quick to swoop in. IBM reacted by winding down older operations and investing in faster-growing businesses, but margins and cash flow eroded despite their best efforts, and the stock peaked in 2013. The company has increased the dividend each year anyway, but IBM’s dividend payout ratio has come down considerably in recent quarters. Historically, IBM has maintained a payout ratio of between 20% and 30%, but had a 107% payout ratio in Q4 2020, compared to the 39% payout ratio a year ago.
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.