Highest-Paying Dividend Stocks in the S&P 500

US Shares certificate with a Dividend Check and a $1 coin

Most of the stocks in the S&P 500 pay a dividend—422 of them. But only 41 of those qualify as High Dividend Stocks, with yields over 4%. And even fewer S&P companies currently have a dividend yield over 5%—just 20 at latest count. However, the yields in their select group have risen since the start of the year, thanks to big selloffs in REITs and retail stocks. The 10 highest-paying dividend stocks in the S&P 500 now all yield 5.7% 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 (12.5%) to lowest yield (5.7%), 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. CenturyLink (CTL)
  2. Kimco Realty (KIM)
  3. Iron Mountain (IRM)
  4. SCANA (SCG)
  5. HCP (HCP)
  6. L Brands (LB)
  7. Welltower (HCN)
  8. Ventas (VTR)
  9. PPL Corp (PPL)
  10. AT&T (T)

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

What if I told you that you could pay JUST A DOLLAR to start an entire portfolio comprised of market-beating stocks that could help you build long-lasting wealth and position you for a comfortable retirement?

Would that interest you?

1. CenturyLink (CTL)

Dividend Yield 12.5%

CenturyLink is a telecom providing landline phone, TV and internet service. Its business is shrinking as customers cut the cord: revenues have declined in four of the past five years. CenturyLink is attempting to stay relevant, pivoting toward broadband and acquiring business internet provider Level 3 Communications last year. But CenturyLink continues to shrink, and has missed earnings estimates in each of the last four quarters. The stock has lost about 50% of its value over the past five years. The dividend has remained stable, but CenturyLink’s dividend payout ratio is well over 100%.

2. Kimco Realty Corp (KIM)

Dividend Yield 8.0%

Kimco Realty owns 507 open-air shopping centers, covering the U.S. from coast to coast. Kimco is structured as a real estate investment trust, or REIT, a type of company that passes most of its cash on to investors in the form of dividends. Like most REITs, Kimco has a high debt load. That’s increasingly becoming a liability as interest rates creep up, and the stock has fallen 30% over the past year. Like all brick-and-mortar shopping destinations, Kimco is also facing increasing competition from online retailers. Kimco’s properties have so far fared better than malls, which are typically anchored by old fashioned department stores. Kimco’s anchor tenants are often grocery stores, like Whole Foods, or big box stores like Costco or Home Depot. Still, Amazon’s reach continues to expand into previously safe categories like grocery, and justifiably wary investors have driven KIM’s yield over 7% as a result. Kimco’s payout ratio is still under 100%, but the stock’s action tells me a dividend cut isn’t out of the question.

3. Iron Mountain (IRM)

Dividend Yield 7.0%

Iron Mountain was founded at the height of the cold war to securely store documents underground. The company still stores plenty of important original documents, like film reels and sheet music, but business declined as paper was replaced by digital records. 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 by single digits this year and next, but at this point IRM is primarily a yield play, not a growth story.

4. SCANA Corp (SCG)

Dividend Yield 6.8%

South Carolina-based SCANA is an electric and gas utility serving both Carolinas and Georgia. The company has an unusually high 6.8% yield—the average utility stock yields between 2% and 3%. However, larger (and lower-yielding) Dominion Energy (D) recently made a takeover offer SCANA, so this yield probably won’t be available to investors much longer.

5. HCP Inc (HCP)

Dividend Yield 6.7%

HCP is a health care REIT that mostly owns senior housing, life sciences and medical office properties. The company spun off its skilled nursing and assisted living assets in 2016, reducing its exposure to Medicare reimbursement levels (as well as a bunch of lawsuits against major tenant ManorCare). HCP reduced its dividend as part of the spinoff, and spent the next few months divesting other assets and paying down debt. The company is certainly leaner today than a year ago, but rising interest rates are still a threat, and the stock has fallen over 30% over the past year. I think investors looking to add a health care REIT to their portfolio will do better with one of HCP’s better-performing peers, like Ventas (VTR) or Welltower (HCN), which are the seventh- and eighth highest-paying dividend stocks in the S&P 500.

6. L Brands (LB)

Dividend Yield 6.6%

Some of the biggest losers of the rise of e-commerce have been mall-based chains like Victoria’s Secret and Bath & Body Works—both owned by L Brands. LB peaked back in 2015—revenue peaked in 2016—and is over 60% off its highs. The company didn’t increase its dividend last year, and its payout ratio is 76%. Analysts expect revenues to grow very slightly this year and next (under 5%) but EPS are still likely to decline again this year. Most recently, PINK—the millennial-targeting offshoot of Victoria’s Secret that had been crucial to keeping L Brands afloat—reported their first-ever quarter of lower same-store sales.

7. Welltower (HCN)

Dividend Yield 6.6%

Welltower is a healthcare REIT. The company’s 1,400 properties fall into three categories: senior housing, post-acute care centers and outpatient centers. The company has positioned itself in a particularly lucrative segment of the health care real estate market, focusing on high-end properties where most patients or residents have private insurance or pay their own way. Many of the company’s senior housing properties are in big cities, where demand is higher and supply lower. Welltower’s modus operandi is keeping patients and seniors out of hospitals, where medical care is most expensive. The company is benefiting from the dual trends of the aging U.S. population and the fight to lower health care spending, however, like all REITs, Welltower is currently struggling against rising interest rates. That’s pushed the REIT’s yield over 6%, but it also means more downside is possible as long as rates continue to rise.

8. Ventas (VTR)

Dividend Yield 6.3%

The third-highest-yielding health care REIT in the S&P 500, Ventas has a lot in common with slightly larger peer Welltower. Their stocks are highly correlated, and both have been under pressure in recent months as interest rate expectations rise. Ventas also has a large portfolio of senior housing properties, but the second-largest segment of their real estate portfolio is medical office buildings. Revenue has been steadily rising for the past decade, and management has increased the distribution every year for seven years. Long-term, demographic trends are in the company’s favor. But in the short-term, the trend is down, and more interest rate-related downside is possible.

9. PPL Corp (PPL)

Dividend Yield 5.9%

PPL is a gas and electric utility with operations in the U.S. and the United Kingdom. The name comes from its predecessor company, Pennsylvania Power and Light. Utilities are usually incredibly reliable cash generators, but revenues and earnings at PPL are less consistent than at most utilities. Revenue declined in each of the last three years, and EPS fell in 2015 and 2017. PPL’s stock peaked in mid-2016, and has fallen 24% since (vs. a slight gain for the utilities index). Analysts do expect single-digit revenue and EPS growth this year and next though, so investors who are more interested in high yield than reliability might find the utility worth a look.

10. AT&T (T)

Dividend Yield 5.7%

AT&T is the second-largest U.S. cell network, after Verizon (VZ). It faced stiff completion in 2017, as Verizon, T-Mobile and Sprint lowered prices and sweetened plans to lure customers—you may have heard about the pricing war’s impact on inflation, or even seen your own cell phone plan get cheaper. The failure of Sprint and T-Mobile’s merger talks toward the end of 2017 was good news for the larger carriers, and helped AT&T stock find a bottom and start rebounding, but it was short-lived, and the stock has been trending down since the start of the year. AT&T will be the first U.S. carrier to introduce 5G service later this year, which could provide another boost to the stock, and possible subscriber numbers. But in the meantime, revenue growth has stagnated, and EPS growth is low. So while the 5.5% yield is attractive, and probably still safe (T’s payout ratio is down to 58%) the stock still isn’t out of the woods.

The rest of the S&P’s highest-paying dividend stocks yield 5.6% or less—but their yields are often more sustainable. For example, there are several utilities, which traditionally have sustainable high yields, on the list, including The Southern Company (SO) and Dominion Energy (D). The 15th-highest-yielding stock is a natural gas pipeline company that is highly rated enough to be included in the High Yield Tier of my portfolio.

In other words, for sustainable high dividend yields, it can pay to look beyond the highest yielders. For more sustainable dividend yields, consider taking a trial subscription to Cabot Dividend Investor. My stock picking system, IRIS, ranks dividend stocks on both their dividend safety and dividend growth potential, so you can earn high and reliable income.

To join, .

Chloe Lutts Jensen developed Cabot's proprietary Individualized Retirement Income System (IRIS) and to provide both high income and peace of mind. If you’re retired or thinking about retirement, her advisory is designed for you.

 

Comments

You must be to post a comment.