Dividends: 10 Highest-Yielding S&P 500 Stocks
November 18, 2014 5:16 PM
Dividends: 10 Highest-Yielding S&P 500 Stocks
Many investors would like to own high-yielding stocks that have very low risk. Unfortunately, in the real world, such beasts are extremely rare. The following 10 stocks currently offer the highest dividend yields in the S&P 500 index. All prices and yields are as of the market close on November 14, 2014. All data is from S&P Capital IQ.
By industry, the top yielders are a concentrated group with four telecommunication service providers, four oil and gas drillers, and two REITs.
Only half of the top-yielding stocks featured here are paying higher dividends than they paid a few years ago. Others now sport rich yields in large part because the share prices have declined. That is further evidence that yield alone is not a good reason to buy any stock. We've included the ratio of long-term debt to capital to give you some indication of the financial strength of these companies. If too much cash goes to debt service, there is less to support the dividend.
Advisors seeking income for their clients should consider this a research list, not necessarily a shopping list. -- Joseph Lisanti
View this in a single-page version here.
By industry, the top yielders are a concentrated group with four telecommunication service providers, four oil and gas drillers, and two REITs.
Only half of the top-yielding stocks featured here are paying higher dividends than they paid a few years ago. Others now sport rich yields in large part because the share prices have declined. That is further evidence that yield alone is not a good reason to buy any stock. We've included the ratio of long-term debt to capital to give you some indication of the financial strength of these companies. If too much cash goes to debt service, there is less to support the dividend.
Advisors seeking income for their clients should consider this a research list, not necessarily a shopping list. -- Joseph Lisanti
View this in a single-page version here.
10. HCP
HCP is a REIT specializing in health care properties. Dividends have been increased steadily, if not spectacularly, over the past decade and now provide a 5% yield.
9. IRON MOUNTAIN
Iron Mountain furnishes document-storage and information-management services to corporate clients. Dividends began in 2010 and have been increased annually. IRM converted to REIT status this year and will pay out 90% of future earnings to shareholders.
8. AT&T
AT&T is one of the countrys largest telecom companies and has been a steady dividend increaser since its 1984 birth as Southwestern Bell, one of the smaller spinoffs from the old AT&T. The stock yields 5.1%.
7. CENTURYLINK
CenturyLink, formerly CenturyTel, is the third-largest U.S. telecom company, providing services to both residential and business customers. In 2013, CTL cut its dividend by more than 25% and announced a $2 billion share buyback program. Yield is 5.2%.
6. FRONTIER COMMUNICATIONS
Frontier Communications provides rural areas and smaller cities in 28 states with voice, data and video services. The company reduced dividends in 2010, 2011 and 2012 but has held steady at $0.40 annually since then. Current yield is 5.8%.
5. NOBLE
An offshore contract oil driller, Noble upped its indicated dividend this year by 50%. Even so, the companys dividend history has been somewhat erratic. Management is proposing a large share buyback program and more assets are being spun off. The shares, under pressure from falling energy prices, have a rich 7.2% yield.
4. ENSCO
Ensco is an international offshore contract oil driller whose shares have held up better than those of some competitors during the oil price slide. Nevertheless, the company faces continued softness in energy prices and an increasing supply of previously ordered drilling rigs in the market. The stock yields 7.7%.
3. DIAMOND OFFSHORE DRILLING
Diamond Offshore Drilling has often paid special dividends to its shareholders. Recently, $3 of the annual $3.50 dividend has been in special payments. That may disappear in light of current weak energy prices. The yield, including special dividends, is now 9.7%.
2. WINDSTREAM
Windstream provides wireline telephone service in 29 states. It also offers broadband and TV service to its customers. This debt-heavy company has received IRS approval to spin off some assets to a newly formed REIT, which should help it pay down some obligations. Current yield is 10.2%.
1. TRANSOCEAN
Transocean has the highest current yield among S&P 500 stocks at 11.5%. The oil drilling company has been hurt by a weak market and its shares have plunged more than 50% from their 52-week high.
