Do you know how much you received in dividends from stocks in 2019? While you add up your earnings, we want to share this fun fact with you: in 2019, companies around the world paid a record-shattering 1.43 trillion dollars in dividends! That’s more than the market value of all outstanding Apple stocks. Generous dividends are the reason why dividend investing is increasingly popular among investors. In this article, we will teach you everything you need to know to invest in dividend stocks so you can take a bigger share of the delicious “dividend pie”.
What Is A Stock Dividend
A stock dividend is the money a company pays out to its shareholders. Although the term sounds advanced, the concept is familiar to us.
When a company makes money, it can use its profit in a few ways. First, it can reinvest the profit back into research and development to create new products and expand its business. Many tech stocks fall into this category. They spend a major portion of their profit developing new technology to stay ahead of their competitors. On the other hand, companies can also pay out some of their profits to their stockholders. This payout is a dividend. For investors, dividends are a great source of investment income.
When we talk about dividends, we are normally referring to dividend per share, the amount of money paid out on each share of stock. For example, if the dividend per share for a stock is $2, investors will receive $2 for each share they hold. Thus, when you own more shares, your dividend income is also proportionally larger.
Dividend per share is a really important indicator that investors follow for good reasons. The dividend rises and falls with the company. The board of directors of a company decides how much dividends the company will distribute each quarter. These decisions are complex and change with the economy and the performance of the company. If a company loses money or decides to use its profit for expansion, its board can cut dividends or might even skip them altogether.
Consequently, stocks dividends vary greatly from company to company. Successful companies are more likely to pay out generous dividends and reward their investors. A company’s business strategy also affects its dividend payments. For example, growth-oriented companies will pour more money into growing their businesses instead of paying shareholders. Occasionally, companies might pay dividends in the form of stocks. Instead of receiving cash, investors will get additional shares of the stocks they hold.
Why Do Investors Like Dividend Stocks?
Dividend stocks are attractive because it captures the best of two worlds – capital appreciation and income.
The main way stock investors make money in the market is capital appreciation. When your company outperforms, you can sell your stocks and make a profit. However, you can only capture capital gains by selling your positions. Otherwise, you have only unrealized profit.
On the other hand, when you invest in high dividend stocks, you receive regular dividends just by holding them. It is a source of passive income for you to further invest or pay for your daily expenses. That’s more money in your pocket. To many investors, dividends provide a nice supplemental income they depend on.
However, it is important to reiterate that dividend payments are not fixed. Unlike bond investors who are entitled to their interest payments, stockholders only receive dividends when the payments are approved by the board of directors. Most high dividend stocks have stable dividend payouts but there is always a chance that a company might slash its dividends.
How to Measure Dividend Yield
After understanding what dividends are and why many investors care about dividend stocks, let’s look at some useful tools that you can use to measure and find good dividend stocks.
First, we need a tool to compare different stocks in their abilities to generate dividends. A 2 dollar dividend might be a good payout for a $40 stock, but it will be insufficient for a stock trading at $800. Instead of comparing the dollar value of stock dividends, we compare the ratios between dividends and stock prices, also known as dividend yields.
The dividend yield shows investors the percentage return they can get from dividends. It is defined as the annual dividend over the current stock price. Because we cannot predict how much dividend a company might pay in the future, the dividend yield is a backward-looking calculation.
With the dividend yield, investors can get a sense of their potential returns from dividends. Because the calculation is based on the current stock price, dividend yield can fluctuate daily with the stock price. When the stock price goes up, the same dividends will appear smaller. On the other hand, when the stock goes down, the yield will go up, making the stock appear more attractive. Generally, a higher dividend yield is better, but there are exceptions.
Because dividend yield is a backward-looking measure, it doesn’t warn investors of a company’s upcoming problems. For example, company A had a good history of paying dividends but recently lost a major source of its revenues. As a result of a bleak business outlook, its share price dropped by 30%. However, the price drop can push dividend yield alarmingly high. So if you ONLY look at the dividend yield, the stock will look deceivingly attractive.
Consequently, knowing the dividend yield is only the first step to identify an excellent dividend stock. Business outlook, free cash flow, and other fundamental variables are still important when investing for dividends.
How to Pick Good Dividend Stocks
Over the years, investors have learned to identify stocks that are most likely to pay handsome dividends. Dividend stocks are stocks with great track records of paying substantial dividends to their shareholders. These companies generally are well-established with stable cash flow and strong revenues. Their strong finances allow them to compensate shareholders with regular dividend payments. In addition to dividend yield, a good dividend stock must also meet the following criteria.
A Good Dividend Payout History
Dividend stocks must have a solid history of paying consistent dividends to investors. If a company’s dividends are on and off, it is not a dividend stock, because the payments are not reliable. A good track record is the best indicator that the company has a robust dividend policy and prioritizes dividend payments to its shareholders.
Additionally, dividend history can also give you a sense of the potential size of dividends you can expect. If the company has been paying investors well in the past, there is a higher chance that it will continue to do so in the future. Looking up a company’s dividend history is simple. You can find this data by Googling a stock ticker and the phrase “dividend history”.
Strong Business Outlook
A solid dividend history is not enough when it comes to picking a good dividend stock. Just like your brokers always say, past performance doesn’t guarantee future profits. In addition to a good history of dividend payments, a company must also have a strong business outlook that supports its dividend prospect.
The first thing you want to see in a dividend stock is strong profit. If a company is not profitable, it is hard to expect the company to pay dividends. After all, the money has to come from somewhere. Profitability measures such as return on asset (ROA) or return on equity (ROE) are great ways to check a company’s ability to generate profit.
On the flip side, investors should be wary of companies with high debt-to-equity ratios. A leveraged company with an excessive amount of debt is vulnerable to financial downturns and uncertainties. When hardship hits, companies will prioritize debt payments over dividends, which is bad news for investors. A debt-to-equity ratio below 1 is a healthy range for investors to consider a stock for dividend investing.
100 Stocks with the Highest Dividend Yield on May 9th, 2020
As we just discussed, a high dividend yield is not necessarily good or bad by itself. Investors must do additional homework to decide if the stock is a good investment. Nonetheless, dividend yields can help investors identify a few candidates to look into further. That’s why dividend yield can still be a good starting point when you begin your search. Here we listed 100 stocks with the highest dividend yields for your reference.
Top Dividend Stocks by Yield, May 9th 2020
| Company Name | Ticker | Last Price | 5-day Price Change | Dividend (Annual) | Dividend Yield | 5-year Dividend Growth | Dividend Recent | Last Dividend Date |
|---|---|---|---|---|---|---|---|---|
| Entertainment Properties Trust | EPR | 27.38 | -0.62% | 4.6 | 16.76% | 31.58% | 0.38 | 4/29/2020 |
| Icahn Enterprises | IEP | 50.13 | 1.85% | 8 | 15.96% | 33.33% | 2 | 3/19/2020 |
| Simon Property Group | SPG | 58.02 | -8.20% | 8.4 | 14.48% | -45.29% | 2.1 | 2/13/2020 |
| Macquarie Infrastructure Company Trust | MIC | 29.26 | 6.25% | 4 | 13.67% | 5.82% | 1 | 3/5/2020 |
| Cedar Fair LP | FUN | 28.17 | 1.77% | 3.7 | 13.28% | 30.18% | 0.94 | 3/3/2020 |
| Ryman Hospitality Properties REIT | RHP | 31.41 | -4.33% | 3.8 | 12.10% | 63.64% | 0.95 | 3/30/2020 |
| Oneok Inc | OKE | 31.33 | 12.13% | 3.7 | 11.94% | -66.89% | 0.94 | 4/24/2020 |
| Royal Dutch Shell Cl B | RDS.B | 32.03 | 7.38% | 3.8 | 11.74% | 1.08% | 0.94 | 2/13/2020 |
| Rio Tinto Plc | RIO | 46.95 | 4.24% | 4.6 | 9.84% | 214.36% | 2.31 | 3/6/2020 |
| Magellan Midstream Partners LP | MMP | 42.95 | 4.22% | 4.1 | 9.57% | 60.96% | 1.03 | 5/7/2020 |
| National Health Investors | NHI | 52.7 | -1.97% | 4.4 | 8.37% | 36.36% | 1.1 | 3/30/2020 |
| Prudential Financial Inc | PRU | 58.98 | -0.94% | 4.4 | 7.46% | 84.33% | 1.1 | 2/14/2020 |
| Lyondellbasell Industries NV | LYB | 56.45 | 2.34% | 4.2 | 7.44% | 53.70% | 1.05 | 2/28/2020 |
| Canadian Imperial Bank of Commerce | CM | 59.74 | 3.46% | 4.4 | 7.31% | 15.70% | 1.09 | 3/26/2020 |
| Alexander's Inc | ALX | 252.57 | -17.53% | 18 | 7.13% | 38.46% | 4.5 | 5/8/2020 |
| Nve Corp | NVEC | 58 | 5.44% | 4 | 6.90% | 0.00% | 1 | 1/31/2020 |
| Cnooc Ltd | CEO | 112.66 | 3.60% | 7.5 | 6.68% | 26.13% | 3.77 | 9/11/2019 |
| W.P. Carey & Co. Llc | WPC | 62.59 | 0.16% | 4.2 | 6.65% | 12.20% | 1.04 | 3/30/2020 |
| Philip Morris International Inc | PM | 72 | -1.75% | 4.7 | 6.50% | 19.07% | 1.17 | 3/20/2020 |
| Valero Energy Corp | VLO | 65.92 | 12.19% | 3.9 | 5.95% | 242.86% | 0.98 | 2/11/2020 |
| Credicorp Ltd | BAP | 145.66 | 4.36% | 8.7 | 5.94% | 343.68% | 8.66 | 4/9/2020 |
| Grupo Aeroportuario Del Pacifico | PAC | 65.46 | 11.57% | 3.9 | 5.89% | -15.01% | 1.95 | 11/21/2019 |
| Lamar Advertis A | LAMR | 68.25 | 27.07% | 4 | 5.86% | 53.60% | 1 | 3/13/2020 |
| Abbvie Inc | ABBV | 83.96 | 1.35% | 4.7 | 5.62% | 157.83% | 1.18 | 4/14/2020 |
| Chevron Corp | CVX | 95.47 | 6.74% | 5.2 | 5.40% | 13.06% | 1.29 | 2/14/2020 |
| Federal Realty Investment Trust | FRT | 78.12 | -0.38% | 4.2 | 5.38% | 25.45% | 1.05 | 3/13/2020 |
| International Business Machines | IBM | 122.99 | 0.92% | 6.5 | 5.30% | 51.29% | 1.63 | 5/7/2020 |
| Innovative Industrial Properties | IIPR | 75.51 | 0.51% | 4 | 5.30% | 0.00% | 1 | 3/30/2020 |
| Park National Corp | PRK | 77.2 | -0.90% | 4.1 | 5.28% | 12.77% | 1.22 | 2/20/2020 |
| Dominion Resources | D | 78.4 | 3.69% | 3.8 | 4.80% | 52.92% | 0.94 | 2/27/2020 |
| Broadcom Ltd | AVGO | 275.03 | 5.90% | 13 | 4.73% | 838.05% | 3.25 | 3/20/2020 |
| Medifast Inc | MED | 95.62 | 30.45% | 4.5 | 4.73% | 0.00% | 1.13 | 3/30/2020 |
| Duke Energy Corp | DUK | 81.78 | -1.04% | 3.8 | 4.62% | 19.05% | 0.95 | 2/13/2020 |
| Life Storage | LSI | 92.75 | 7.59% | 4.3 | 4.61% | 47.06% | 1.07 | 4/13/2020 |
| Wynn Resorts Ltd | WYNN | 86.94 | 7.56% | 4 | 4.60% | -40.00% | 1 | 2/25/2020 |
| Safety Ins Group Inc | SAFT | 79.47 | 1.11% | 3.6 | 4.53% | 30.77% | 0.9 | 2/28/2020 |
| Boston Properties | BXP | 86.91 | -6.48% | 3.9 | 4.51% | -46.06% | 0.98 | 3/30/2020 |
| Grupo Aeroportuario Del Sureste | ASR | 105.98 | 11.43% | 4.7 | 4.43% | 0.00% | 4.69 | 6/4/2019 |
| PNC Bank | PNC | 105.03 | 2.00% | 4.6 | 4.38% | 123.40% | 1.15 | 4/15/2020 |
| Watsco Inc | WSO | 162.52 | 1.87% | 7.1 | 4.37% | 220.00% | 1.78 | 4/14/2020 |
| United Parcel Service | UPS | 94.83 | 3.19% | 4 | 4.26% | 43.28% | 1.01 | 2/24/2020 |
| Whirlpool Corp | WHR | 112.6 | 0.37% | 4.8 | 4.26% | 64.93% | 1.2 | 2/27/2020 |
| M&T Bank Corp | MTB | 104.87 | -2.17% | 4.4 | 4.20% | 46.43% | 1.1 | 2/28/2020 |
| Public Storage | PSA | 190.34 | 3.24% | 8 | 4.20% | 42.86% | 2 | 3/13/2020 |
| Dte Energy Company | DTE | 101.26 | 0.58% | 4.1 | 4.00% | 43.12% | 1.01 | 3/13/2020 |
| Coresite Realty Corp | COR | 122.89 | 1.69% | 4.9 | 3.97% | 223.81% | 1.22 | 3/30/2020 |
| 3M Company | MMM | 148.51 | -0.06% | 5.9 | 3.96% | 68.42% | 1.47 | 2/13/2020 |
| Vail Resorts | MTN | 178.04 | 6.03% | 7 | 3.95% | 416.80% | 1.76 | 3/25/2020 |
| Extra Space Storage Inc | EXR | 91.69 | 5.20% | 3.6 | 3.93% | 96.69% | 0.9 | 3/13/2020 |
| Entergy Corp | ETR | 95.01 | 1.54% | 3.7 | 3.92% | 10.24% | 0.93 | 5/6/2020 |
| Avalonbay Communities | AVB | 163.96 | 3.48% | 6.4 | 3.88% | 31.03% | 1.59 | 3/30/2020 |
| JP Morgan Chase & Company | JPM | 92.7 | -0.59% | 3.6 | 3.88% | 111.54% | 0.9 | 4/3/2020 |
| Caterpillar Inc | CAT | 112.11 | 1.11% | 4.1 | 3.67% | 45.38% | 1.03 | 4/17/2020 |
| Everest Re Group | RE | 176.8 | 7.15% | 6.2 | 3.51% | 79.69% | 1.55 | 3/10/2020 |
| Mid-America Apartment Communities | MAA | 115.57 | 5.42% | 4 | 3.46% | 31.51% | 1 | 4/14/2020 |
| Business Parks | PSB | 122.74 | 1.05% | 4.2 | 3.42% | -11.58% | 1.05 | 3/13/2020 |
| Snap-On Inc | SNA | 127.33 | 2.64% | 4.3 | 3.39% | 112.43% | 1.08 | 2/21/2020 |
| Essex Property Trust | ESS | 246.65 | 4.16% | 8.3 | 3.37% | 52.64% | 2.08 | 3/30/2020 |
| Sempra Energy | SRE | 124.23 | 3.59% | 4.2 | 3.36% | 46.59% | 1.05 | 3/19/2020 |
| Cummins Inc | CMI | 161.29 | 2.45% | 5.2 | 3.25% | 74.38% | 1.31 | 2/20/2020 |
| General Dynamics Corp | GD | 135.35 | 5.91% | 4.4 | 3.25% | 64.88% | 1.1 | 4/8/2020 |
| Texas Instruments | TXN | 115 | 4.82% | 3.6 | 3.13% | 158.87% | 0.9 | 5/1/2020 |
| Digital Realty Trust | DLR | 145.06 | -0.59% | 4.5 | 3.09% | 30.12% | 1.12 | 3/16/2020 |
| Kimberly-Clark Corp | KMB | 138.51 | 1.26% | 4.3 | 3.09% | -49.20% | 1.07 | 3/5/2020 |
| Crown Castle International Corp | CCI | 157.7 | 0.82% | 4.8 | 3.04% | 144.92% | 1.2 | 3/12/2020 |
| Hubbell Inc B | HUBB | 122.47 | 0.32% | 3.6 | 2.97% | 66.50% | 0.91 | 2/27/2020 |
| Pepsico Inc | PEP | 134.23 | 3.14% | 3.8 | 2.85% | 49.80% | 0.96 | 3/5/2020 |
| McDonald's Corp | MCD | 181.23 | -0.78% | 5 | 2.76% | 44.21% | 1.25 | 2/28/2020 |
| Amgen Inc | AMGN | 234.82 | 1.66% | 6.4 | 2.73% | 137.70% | 1.6 | 2/13/2020 |
| Alexandria Real Estate Equities | ARE | 152 | 0.67% | 4.1 | 2.71% | 38.89% | 1.03 | 3/30/2020 |
| Goldman Sachs Group | GS | 185.39 | 4.68% | 5 | 2.70% | 84.44% | 1.25 | 2/28/2020 |
| Illinois Tool Works Inc | ITW | 161.01 | 0.98% | 4.3 | 2.66% | 128.73% | 1.07 | 3/30/2020 |
| Home Depot | HD | 234.43 | 7.26% | 6 | 2.56% | 189.36% | 1.5 | 3/11/2020 |
| Johnson & Johnson | JNJ | 148.7 | 0.28% | 3.8 | 2.56% | 35.87% | 0.95 | 2/24/2020 |
| Lockheed Martin Corp | LMT | 378.4 | -1.32% | 9.6 | 2.54% | 63.93% | 2.4 | 2/28/2020 |
| Automatic Data Procs | ADP | 146 | 3.97% | 3.6 | 2.49% | 62.77% | 0.91 | 3/12/2020 |
| Union Pacific Corp | UNP | 158.26 | 1.03% | 3.9 | 2.45% | 93.72% | 0.97 | 2/27/2020 |
| Nextera Energy | NEE | 229.73 | 1.18% | 5.6 | 2.44% | 72.41% | 1.4 | 2/27/2020 |
| Air Products and Chemicals | APD | 233.48 | 5.05% | 5.4 | 2.30% | 51.66% | 1.34 | 3/31/2020 |
| Erie Indemnity Company | ERIE | 168.73 | -2.15% | 3.9 | 2.29% | 41.73% | 0.97 | 4/3/2020 |
| Huntington Ingalls Industries | HII | 180.58 | -2.74% | 4.1 | 2.28% | 261.00% | 1.03 | 2/27/2020 |
| Norfolk Southern Corp | NSC | 174.75 | 2.35% | 3.8 | 2.15% | 62.16% | 0.94 | 5/7/2020 |
| Rockwell Automation Inc | ROK | 192.45 | 5.05% | 4.1 | 2.12% | 67.24% | 1.02 | 2/14/2020 |
| Clorox Company | CLX | 204.05 | 5.88% | 4.2 | 2.08% | 35.21% | 1.06 | 4/21/2020 |
| Linde Plc | LIN | 188.41 | 4.48% | 3.9 | 2.04% | -100.00% | 0 | N/A |
| W.W. Grainger | GWW | 285.45 | 6.65% | 5.8 | 2.02% | 36.21% | 1.44 | 5/8/2020 |
| Texas Pacific Land Trust | TPL | 521.55 | 2.61% | 10 | 1.92% | 2122.22% | 6 | 3/7/2019 |
| American Tower Corp | AMT | 238.36 | 1.78% | 4.3 | 1.81% | 170.00% | 1.08 | 4/13/2020 |
| Newmarket Corp | NEU | 426.6 | 3.92% | 7.6 | 1.78% | 55.32% | 1.9 | 3/13/2020 |
| Lam Research Corp | LRCX | 265.4 | 12.93% | 4.6 | 1.73% | 2344.44% | 1.15 | 3/24/2020 |
| Northrop Grumman Corp | NOC | 327.65 | -0.12% | 5.3 | 1.61% | 90.41% | 1.32 | 2/21/2020 |
| Equinix Inc | EQIX | 678.16 | 1.09% | 10.6 | 1.57% | 29.99% | 2.66 | 2/25/2020 |
| Graham Holdings Company | GHC | 372.2 | 1.52% | 5.8 | 1.56% | -45.49% | 1.45 | 4/15/2020 |
| Unitedhealth Group Inc | UNH | 287 | 0.88% | 4.3 | 1.51% | 193.62% | 1.08 | 3/13/2020 |
| Anthem Inc | ANTM | 274.33 | 1.77% | 3.8 | 1.39% | 82.86% | 0.95 | 3/13/2020 |
| Netease Inc Ads | NTES | 359.77 | 10.58% | 4.1 | 1.13% | 301.23% | 1.02 | 3/12/2020 |
| Sherwin-Williams Company | SHW | 549.68 | 4.41% | 5.4 | 0.98% | 105.45% | 1.34 | 2/28/2020 |
| Atrion Corp | ATRI | 678.89 | 7.10% | 6.2 | 0.91% | 108.63% | 1.55 | 3/13/2020 |
| Cable One Inc | CABO | 1844.49 | -0.91% | 9 | 0.49% | 0.00% | 2.25 | 2/14/2020 |
| Seaboard Corp | SEB | 3217.01 | 8.44% | 9 | 0.28% | 0.00% | 2.25 | 5/6/2020 |
