Over 80% of the stocks in the S&P 500 pay a dividend, though most yield only 1% or 2%. But screening for the highest-paying dividend stocks in the S&P 500 reveals some impressive yields. In fact, 24 of these High Dividend Stocks in the S&P 500 currently yield over 5%. And the top 10 highest-paying dividend stocks all yield 6% or more.
Higher yields come with higher risks though. Many of these stocks’ yields are so high because they’re struggling, and they may even have to slash their dividends soon. Read on to see which yields are still safe, and which you should stay away from.
From highest yield (13%) to lowest yield (6%), 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
- CenturyLink (CTL)
- Iron Mountain (IRM)
- Ford Motor (F)
- Kimco Realty (KIM)
- Invesco (IVZ)
- AT&T (T)
- Macerich Co (MAC)
- Seagate Technology (STX)
- Navient Corp (NAVI)
- Altria (MO)
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Cabot’s Best Dividend Stocks
Find Them in This FREE Special Report,
You get this free report and many others when you sign up for Wall Street's Best Daily, our free wealth-building advisory.
Here’s a closer look at each one of the top 10 highest-paying dividend stocks.
1. CenturyLink (CTL)
Dividend Yield 12.5%
CTL consistently tops the list of the highest-paying dividend stocks in the S&P 500, but that doesn’t make it a good investment. The stock has lost more than half its value over the last four years, as landline telephone customers “cut the cord” and revenues decline. The company is attempting to transform, acquiring business internet provider Level 3 Communications last year and installing the CEO of Level 3 at the top of CenturyLink a few months later. The new CEO reduced costs and lowered capex to match the pace of revenue declines, and analysts have been revising their earnings estimates up. But the company’s payout ratio—the percentage of earnings paid out as dividends—is still 200%, which is way above unsustainable.
2. Iron Mountain (IRM)
Dividend Yield 7.1%
Iron Mountain is another perpetual member of the highest yielders list that has seen better days. The company was founded at the height of the Cold War to securely store documents underground. Iron Mountain still stores plenty of important original documents, like film reels and sheet music, but the rise of digitization has severely cut into the company’s business. The company reorganized as a REIT so it can more easily return most of its cash to investors, and revenue has actually increased in the last two years. Analysts expect sales to rise another 10% this year and by single digits next year, and the stock has found decent support and mostly trades sideways. Of course, the primary attraction here is the high yield, but the company isn’t in bad shape today.
3. Ford Motor (F)
Dividend Yield 6.9%
Ford didn’t used to be so high-yielding. In fact, the stock’s yield hit a 10-year high in October. That’s a warning sign, and sure enough, Ford’s EPS are expected to decline nearly 25% this year. U.S. auto sales are declining, and Ford has been especially hard hit. The company is facing declining retail sales in the U.S. and gradually slowing sales in China now too. Investors are skeptical of management’s ability to turn things around, and the stock recently hit its lowest level since 2012. That has brought the stock’s P/E down to less than 6, and Ford’s dividend payout ratio remains under 50%, so bargain-hunting income investors could step in soon. But right now, the stock’s trend is firmly down.
4. Kimco Realty Corp (KIM)
Dividend Yield 6.9%
Kimco Realty is a REIT (real estate investment trust) that owns 507 open-air shopping centers across the U.S., mostly near major cities. Kimco’s anchor tenants are often grocery stores, like Whole Foods, or big box stores, like Costco or Home Depot. That’s helped the company’s plazas fare better than traditional malls, which are typically anchored by old fashioned department stores, in the face of increasing competition from online retailers. But traffic and revenues are still down, and revenues are expected to decline this year and next. The stock got slammed in last year’s big retail selloff and hasn’t really recovered yet, so I’d wait for signs of recovery before investing here.
5. Invesco (IVZ)
Dividend Yield 6.8%
Invesco is an asset manager and owner of the PowerShares family of ETFs. The company is a leader in the huge and growing ETF market, and added to its family of funds with the acquisition of Guggenheim’s ETF business in 2017 and of OppenheimerFunds more recently. But the stock has been in a steady downtrend since the start of 2018, as assets under management decline and earnings growth fails to impress. The company is playing catch-up in the fee-slashing wars; Fidelity’s introduction of zero-fee funds in August forced Invesco to more than halve fees on some of its most popular ETFs, but the funds are still more expensive than alternatives for investors with accounts at Fidelity or Vanguard. Invesco’s revenues are expected to grow by single digits this year and next but EPS are expected to decline this year and be about flat next year. There are plenty of other high yields in the financial industry, so I don’t see any reason for investors to bet on Invesco turning around anytime soon.
6. AT&T (T)
Dividend Yield 6.6%
AT&T is the second-largest U.S. cell network, after Verizon (VZ). The company has paid dividends since 1984, and has increased the dividend every year for 33 years. AT&T’s mega-merger with Time Warner was approved earlier this year, and will give the company control of some major entertainment properties, including CNN, HBO and the Harry Potter film franchise. The combined company will have plenty of potential synergies, like using subscriber data to show targeted TV ads, or letting wireless customers stream HBO shows without using their data allowances. Revenues are expected to rise by high single digits this year and next, fueling decent EPS growth. However, the stock remains in a downtrend, amid worries that AT&T may have overpaid for the media company, as well as the usual competition from Verizon, T-Mobile and Sprint. In the meantime, the 6% yield is attractive, and likely safe, since T has a reasonable dividend payout ratio of 57%.
7. Macerich Company (MAC)
Dividend Yield 6.4%
Macerich is another retail REIT. Macerich owns high-end malls, and like Kimco Realty, has seen earnings shrink as traffic dries up and tenants leave. The stock has been trending down for over two years, and the latest hit came when Sears, a major tenant, finally declared bankruptcy in October. The stock hit a new seven-year low just this week, and shows no signs of stopping. Management isn’t sitting on their hands—they’re trying to re-capture some of the shoppers they’ve lost by opening stores selling online brands, and adding more restaurants and theaters. And Macerich has continued to increase its distributions despite declining revenues. But analysts expect revenues to drop another 5% this year, and the stock hasn’t found support yet. I’d stay away.
8. Seagate Technology (STX)
Dividend Yield 6.3%
Ireland-based Seagate Technology makes hard drives and other data storage solutions. Hard drive demand has been declining for years as disc drives are replaced by faster, smaller solid state drives. Seagate’s revenues began slipping in 2013, and have been uneven since. Management responded by reducing operating expenses and buying back shares to support EPS, while also investing in businesses with better long-term potential. Their efforts looked promising earlier this year—the company signed a long-term agreement with Toshiba, and announced a small but significant stake in the cryptocurrency ripple—and Seagate’s stock started a convincing-looking rebound. Analysts were raising their earnings estimates for Seagate as quickly as they could, and the stock advanced over 40% in three months. But STX came crashing down with most other tech stocks this fall, slicing through its 200-day line on high volume and erasing all of its year-to-date gains and more.
9. Navient Corp. (NAVI)
Dividend Yield 6.3%
Navient is the country’s largest owner and servicer of student loans, and the company is in a world of trouble. In addition to fees and interest, the company earns revenue by packaging student loans into student loan asset-backed securities, or SLABS, and selling them to investors. SLABS have been subject to years of downgrades as more struggling graduates choose income-based repayment plans, and the market’s collapse has been predicted more than once. Navient’s credit rating has been downgraded more than once as well. Now, a Federal audit suggests the company may have used deceptive practices to push borrowers into higher-cost plans, triggering a 10% drop in the stock. On top of that, Senator Elizabeth Warren is pushing for the firm to be investigated for insider trading. Avoid.
10. Altria (MO)
Dividend Yield 6.0%
Cigarettes aren’t as popular as they once were, and Altria, like the other big tobacco companies, is looking for ways to get in on the next big thing. Most recently, Altria took a 45%, $1.8 billion stake in Cronos Group, a large Canadian investor in the medical marijuana companies—including growers, sellers and makers of cannabis oil. And while the company recently discontinued their homegrown vaping brands, they’re reportedly in talks to take a significant stake in Juul, the vaping brand immensely popular with younger consumers. The moves are helping to offset falling cigarette sales, but the stock still got hit hard by increased regulatory activity this year. The company has kept raising its divided through it all, and is also aggressively buying back shares. At these prices, MO’s yield and stock price both offer compelling value, while the company’s investments in cannabis could lead to another era of strong growth in the future.
I’m about to add one of these high-yielding S&P 500 stocks to my Dividend Growth portfolio in Cabot Dividend Investor. Although many of these high yielders are risky investments, my stock picking system, IRIS, ranks dividend stocks on both their dividend safety and dividend growth potential, and recently identified one of these stocks as the latest addition to our portfolio. Click here to find out which one.
Timothy Lutts heads one of America’s most respected independent investment advisory services. Each week, Tim personally picks the single best stock in his exclusive Cabot Stock of the Week advisory. Build your wealth and reduce your risk with the top stock each week for current market conditionsLearn More