The 10 Highest Paying Dividend Stocks In The S&P 500 To Buy

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by Forbes
2024-03-20

See all articles
The 10 Highest Paying Dividend Stocks In The S&P 500 To Buy

In the 1970s, a beer advertising slogan highlighted one of life's great challenges. Miller Lite's "Tastes Great. Less Filling" catchphrase reminds us that most things don't deliver on all fronts. A light beer that tastes good is as much a rarity as the stock that provides ample returns with low risk.

To be clear, no single stock breaks the risk-reward relationship. But if you are aiming for dividend income, you might find the right combination of risk and return with high-yielding S&P 500 dividend stocks. Read on to find out why and which stocks to consider.

Dividend Stocks And The S&P 500

The S&P 500 is a financial market index that includes 500 top-performing, U.S. public companies. The index is widely referenced as a benchmark for large-cap U.S. stocks. It also accounts for about 80% of U.S. market capitalization.

Stocks are selected for inclusion in the S&P 500 based on size, liquidity, profitability and sector. New additions to the index must have a minimum market cap of $15.8 billion or more, trade at least 250,000 shares monthly and be profitable, among other things.

The index committee updates these requirements periodically, particularly the market cap minimum. Companies already in the index that fall short of updated capitalization requirements aren't necessarily dropped -- some of the stocks on this list are examples. The committee reviews all eligibility criteria to make removal decisions.

While there is no dividend requirement for S&P 500 stocks, about three-quarters of them do provide cash returns to shareholders. Collectively, S&P 500 stocks produce a dividend yield of 1.4%.

That modest yield is generally considered the price you pay for quality. But you know what? You don't have to settle for sub-2% yields from these leading dividend payers. In truth, there are dozens of good S&P 500 stocks that yield 3% or more. Ten of them are introduced below.

The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download Forbes' most popular report, 12 Best Stocks To Buy for 2024.

Methodology Used To Pick These Dividend Stocks

To identify these 10 dividend stocks, I started with all stocks included in SPDR Portfolio S&P 500 High Dividend ETF (SPYD SPYD ). The fund tracks the performance of the S&P 500 High Dividend Index, which includes the top 80 yielding stocks in the S&P 500. I then screened that group to remove any that do not have an average analyst rating of moderate buy or higher. Of the resulting list, these are the top 10 in terms of dividend yield.

The 10 Highest Paying Dividend Stocks In The S&P 500

The table below lists 10 S&P 500 dividend payers that analysts like, with yields of 3.25% or higher.

This group of stocks is not intended to be a diversified dividend portfolio. You'll see that real estate is heavily represented here, for example. That's not surprising, since real estate investment trusts are required to pay high dividends to retain their favorable tax status. You should understand the risks associated with REITs before diving in.

Also note that REIT dividends are taxed as ordinary income, while qualified dividends are taxed at the lower capital gains rate. Yields shown here are pretax.

AT&T is a major telecom provider with a history of hefty dividend yields. The company lost its Dividend Aristocrat status in 2021 after spinning off WarnerMedia and slashing its dividend.

Still, AT&T remains a top-yielding stock, currently at 6.5%. More importantly, the telecom has made strides improving the sustainability of its dividend with an improved cost structure and balance sheet, plus rising cash flow.

VICI owns gaming and entertainment properties, including Caesars Palace Las Vegas and MGM Grand. The company also owns golf courses and finances properties for other operators.

In 2023, VICI grew revenues by 38.9% to $3.6 billion. The company also generated $2.5 billion in net income, up 124.9% from the prior year. Shareholders reaped rewards, too, with a 6.4% dividend increase last year. VICI has increased its dividend six times in six years, good for a current yield of 5.8%.

KeyCorp provides consumer and commercial banking services through regional bank chain KeyBank.

KEY stock had a tough year last year, shedding about 18% of its value when several larger banking peers rose. One catalyst was the collapse of Silicon Valley Bank (SVB VB ), which dragged down smaller regional banking stocks in its wake.

Those smaller banks have been challenged to manage through rising interest rates, credit quality declines and a soft lending environment. Despite those factors, KEY did make progress improving its balance sheet and shifting to a more growth-oriented strategy. In time, those changes should deliver a stronger bank. For now, shareholders are getting a 5.7% yield as they wait for conditions to improve.

Evergy generates and distributes electricity to homes, businesses and municipalities.

For 2023, Evergy reported lower GAAP EPS of $3.17 vs. $3.27 in the prior year. Unfavorable weather played a role in the decline, along with higher expenses for interest, depreciation and amortization.

Even so, analysts like the company's strategy and growth outlook. The strategy includes operational and financial execution, alongside regulatory activities that will benefit future earnings. Evergy's stated growth target is 4% to 6% through 2026. The stock currently has a yield of 5.0%.

Stop chasing shadows in the market. Forbes' expert analysts have pinpointed the 12 superstars poised to ignite returns in 2024. Don't miss out -- download 12 Best Stocks To Buy For 2024 and claim your front-row seat to the coming boom.

Huntington Bancshares provides commercial, consumer and mortgage banking services through regional banking chain Huntington National Bank.

HBAN's stock price has been slightly more resilient than KEY's in the past 12 months. Still, the environment remains challenging and that has affected HBAN's results. The good news is that interest rate hikes have paused and the business climate for smaller banks should improve.

In the meantime, HBAN has momentum in deposits. The bank's conservative underwriting discipline has also produced high-quality loan growth. The current yield is 4.5%.

Regency Centers is a REIT that develops, owns and manages shopping centers in suburban neighborhoods.

In 2023, REG reported a $40 million gain in core operating earnings, to $700 million. The net income result was less favorable, due to various one-time events in 2022 and 2023. Regency sports a yield of 4.5%.

A significant company milestone in 2023 was the completion of the Urstadt Biddle acquisition. The deal increases REG's leadership position and footprint in grocery-anchored shopping centers. The larger inventory combined with REG's disciplined approach to capital management and commitment to managing ESG risks set the stage for long-term growth.

Entergy produces and distributes electricity in Arkansas, Louisiana, Mississippi and Texas.

Entergy grew in 2023, with adjusted EPS of $6.77 vs. $6.42 in the prior year. The company has also beat analysts' EPS expectations in six of the last seven quarters, despite underperforming on revenue.

ETR's dividend yield of 4.4% is respectable, especially in light of the company's low valuation metrics. The PE ratio of 9.3 compares favorably to ETR's five-year average PE of 17.3 and the peer group PE of 24.0.

Federal Realty is a REIT that specializes in mixed-use properties combining spaces for living, working, shopping and dining.

FRT has the elite title of Dividend King, meaning it has increased its dividend annually for the most recent 50 years. With 56 consecutive years of dividend increases, FRT has the longest-running dividend growth record of any REIT.

Federal Realty's dividend performance to date doesn't guarantee future results, of course. It does, however, demonstrate leadership discipline and the ability to manage through all economic cycles. FRT currently has a 4.4% yield.

Ventas is a REIT that owns and leases senior living communities, medical buildings and hospitals.

VTR's normalized funds from operations, a REIT-specific cash flow measure, remained steady from 2022 to 2023. Nareit FFO, a standardized measure, grew 15.6%.

More compelling than recent performance is VTR's outlook. CEO Debra A. Cafaro expects to see "unprecedented" demand for senior housing in 2024 and beyond. That demand, driven by an aging population, creates a huge growth opportunity for VTR. Analysts agree. On average, they see about 20% upside in VTR's share price. Ventas has a yield of 4.2%.

Chevron is an integrated oil and gas company based in California.

CVX has a solid balance sheet and a long history of returning value to shareholders. The company has increased its dividend annually for more than 35 years. In the last three years, Chevron's annualized dividend growth amounts to 5.4%. That history, combined with a conservative payout ratio of 57.4% sets the stage of relatively reliable and growing dividend income going forward. Chevron has a current yield of 4.2%.

Bottom Line

Through careful research, you can earn impressive dividend yields from market-leading companies. That has to be more satisfying than a great-tasting light beer, right? Remember to keep an eye on your sector diversification and consider reinvesting those dividends to ramp up your income-earning portfolio faster.

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

Read our detailed Marketing Communication Disclaimer

SHARE

The 10 Highest Paying Dividend Stocks In The S&P 500 To Buy

Avatar photo

by Forbes
2024-03-20

See all articles
The 10 Highest Paying Dividend Stocks In The S&P 500 To Buy

In the 1970s, a beer advertising slogan highlighted one of life's great challenges. Miller Lite's "Tastes Great. Less Filling" catchphrase reminds us that most things don't deliver on all fronts. A light beer that tastes good is as much a rarity as the stock that provides ample returns with low risk.

To be clear, no single stock breaks the risk-reward relationship. But if you are aiming for dividend income, you might find the right combination of risk and return with high-yielding S&P 500 dividend stocks. Read on to find out why and which stocks to consider.

Dividend Stocks And The S&P 500

The S&P 500 is a financial market index that includes 500 top-performing, U.S. public companies. The index is widely referenced as a benchmark for large-cap U.S. stocks. It also accounts for about 80% of U.S. market capitalization.

Stocks are selected for inclusion in the S&P 500 based on size, liquidity, profitability and sector. New additions to the index must have a minimum market cap of $15.8 billion or more, trade at least 250,000 shares monthly and be profitable, among other things.

The index committee updates these requirements periodically, particularly the market cap minimum. Companies already in the index that fall short of updated capitalization requirements aren't necessarily dropped -- some of the stocks on this list are examples. The committee reviews all eligibility criteria to make removal decisions.

While there is no dividend requirement for S&P 500 stocks, about three-quarters of them do provide cash returns to shareholders. Collectively, S&P 500 stocks produce a dividend yield of 1.4%.

That modest yield is generally considered the price you pay for quality. But you know what? You don't have to settle for sub-2% yields from these leading dividend payers. In truth, there are dozens of good S&P 500 stocks that yield 3% or more. Ten of them are introduced below.

The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download Forbes' most popular report, 12 Best Stocks To Buy for 2024.

Methodology Used To Pick These Dividend Stocks

To identify these 10 dividend stocks, I started with all stocks included in SPDR Portfolio S&P 500 High Dividend ETF (SPYD SPYD ). The fund tracks the performance of the S&P 500 High Dividend Index, which includes the top 80 yielding stocks in the S&P 500. I then screened that group to remove any that do not have an average analyst rating of moderate buy or higher. Of the resulting list, these are the top 10 in terms of dividend yield.

The 10 Highest Paying Dividend Stocks In The S&P 500

The table below lists 10 S&P 500 dividend payers that analysts like, with yields of 3.25% or higher.

This group of stocks is not intended to be a diversified dividend portfolio. You'll see that real estate is heavily represented here, for example. That's not surprising, since real estate investment trusts are required to pay high dividends to retain their favorable tax status. You should understand the risks associated with REITs before diving in.

Also note that REIT dividends are taxed as ordinary income, while qualified dividends are taxed at the lower capital gains rate. Yields shown here are pretax.

AT&T is a major telecom provider with a history of hefty dividend yields. The company lost its Dividend Aristocrat status in 2021 after spinning off WarnerMedia and slashing its dividend.

Still, AT&T remains a top-yielding stock, currently at 6.5%. More importantly, the telecom has made strides improving the sustainability of its dividend with an improved cost structure and balance sheet, plus rising cash flow.

VICI owns gaming and entertainment properties, including Caesars Palace Las Vegas and MGM Grand. The company also owns golf courses and finances properties for other operators.

In 2023, VICI grew revenues by 38.9% to $3.6 billion. The company also generated $2.5 billion in net income, up 124.9% from the prior year. Shareholders reaped rewards, too, with a 6.4% dividend increase last year. VICI has increased its dividend six times in six years, good for a current yield of 5.8%.

KeyCorp provides consumer and commercial banking services through regional bank chain KeyBank.

KEY stock had a tough year last year, shedding about 18% of its value when several larger banking peers rose. One catalyst was the collapse of Silicon Valley Bank (SVB VB ), which dragged down smaller regional banking stocks in its wake.

Those smaller banks have been challenged to manage through rising interest rates, credit quality declines and a soft lending environment. Despite those factors, KEY did make progress improving its balance sheet and shifting to a more growth-oriented strategy. In time, those changes should deliver a stronger bank. For now, shareholders are getting a 5.7% yield as they wait for conditions to improve.

Evergy generates and distributes electricity to homes, businesses and municipalities.

For 2023, Evergy reported lower GAAP EPS of $3.17 vs. $3.27 in the prior year. Unfavorable weather played a role in the decline, along with higher expenses for interest, depreciation and amortization.

Even so, analysts like the company's strategy and growth outlook. The strategy includes operational and financial execution, alongside regulatory activities that will benefit future earnings. Evergy's stated growth target is 4% to 6% through 2026. The stock currently has a yield of 5.0%.

Stop chasing shadows in the market. Forbes' expert analysts have pinpointed the 12 superstars poised to ignite returns in 2024. Don't miss out -- download 12 Best Stocks To Buy For 2024 and claim your front-row seat to the coming boom.

Huntington Bancshares provides commercial, consumer and mortgage banking services through regional banking chain Huntington National Bank.

HBAN's stock price has been slightly more resilient than KEY's in the past 12 months. Still, the environment remains challenging and that has affected HBAN's results. The good news is that interest rate hikes have paused and the business climate for smaller banks should improve.

In the meantime, HBAN has momentum in deposits. The bank's conservative underwriting discipline has also produced high-quality loan growth. The current yield is 4.5%.

Regency Centers is a REIT that develops, owns and manages shopping centers in suburban neighborhoods.

In 2023, REG reported a $40 million gain in core operating earnings, to $700 million. The net income result was less favorable, due to various one-time events in 2022 and 2023. Regency sports a yield of 4.5%.

A significant company milestone in 2023 was the completion of the Urstadt Biddle acquisition. The deal increases REG's leadership position and footprint in grocery-anchored shopping centers. The larger inventory combined with REG's disciplined approach to capital management and commitment to managing ESG risks set the stage for long-term growth.

Entergy produces and distributes electricity in Arkansas, Louisiana, Mississippi and Texas.

Entergy grew in 2023, with adjusted EPS of $6.77 vs. $6.42 in the prior year. The company has also beat analysts' EPS expectations in six of the last seven quarters, despite underperforming on revenue.

ETR's dividend yield of 4.4% is respectable, especially in light of the company's low valuation metrics. The PE ratio of 9.3 compares favorably to ETR's five-year average PE of 17.3 and the peer group PE of 24.0.

Federal Realty is a REIT that specializes in mixed-use properties combining spaces for living, working, shopping and dining.

FRT has the elite title of Dividend King, meaning it has increased its dividend annually for the most recent 50 years. With 56 consecutive years of dividend increases, FRT has the longest-running dividend growth record of any REIT.

Federal Realty's dividend performance to date doesn't guarantee future results, of course. It does, however, demonstrate leadership discipline and the ability to manage through all economic cycles. FRT currently has a 4.4% yield.

Ventas is a REIT that owns and leases senior living communities, medical buildings and hospitals.

VTR's normalized funds from operations, a REIT-specific cash flow measure, remained steady from 2022 to 2023. Nareit FFO, a standardized measure, grew 15.6%.

More compelling than recent performance is VTR's outlook. CEO Debra A. Cafaro expects to see "unprecedented" demand for senior housing in 2024 and beyond. That demand, driven by an aging population, creates a huge growth opportunity for VTR. Analysts agree. On average, they see about 20% upside in VTR's share price. Ventas has a yield of 4.2%.

Chevron is an integrated oil and gas company based in California.

CVX has a solid balance sheet and a long history of returning value to shareholders. The company has increased its dividend annually for more than 35 years. In the last three years, Chevron's annualized dividend growth amounts to 5.4%. That history, combined with a conservative payout ratio of 57.4% sets the stage of relatively reliable and growing dividend income going forward. Chevron has a current yield of 4.2%.

Bottom Line

Through careful research, you can earn impressive dividend yields from market-leading companies. That has to be more satisfying than a great-tasting light beer, right? Remember to keep an eye on your sector diversification and consider reinvesting those dividends to ramp up your income-earning portfolio faster.

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

Read our detailed Marketing Communication Disclaimer

SHARE