If you are on the hunt for yield, the top 10 highest-yielding S&P 500 stocks is a tempting place to look for new ideas. Compared to the less than 1.6% yield offered by investing in an S&P 500 index fund, the average yield of the highest 10 dividend-paying S&P 500 stocks is over 7.2%.
The list below includes the 10 highest yielding S&P 500 stocks along with their indicated dividend yield. Click the company name for more information on each stock.
Highest Yielding S&P 500 Stocks
|Oneok Inc. (OKE)||8.61%|
|Lumen Technologies (LUMN)||8.08%|
|Iron Mountain (IRM)||7.48%|
|Williams Cos. (WMB)||7.29%|
|AT&T Inc. (T)||7.23%|
|Kinder Morgan Inc. (KMI)||7.13%|
|ExxonMobil Corp. (XOM)||6.68%|
|Valero Energy (VLO)||6.05%|
|PPL Corp. (PPL)||5.96%|
There are some compelling indicated yields on the list, but indicated is the operative word. It is often the case that stocks with the highest indicated dividend yields are also the most likely to cut their dividends.
For example, 4 of the 10 highest yielding S&P 500 stocks at year-end 2016 have since decreased or eliminated their dividends. The average performance of that group of stocks over the following three years was -34%.
The Best Dividend Stocks
Selecting the best dividend stocks isn’t as simple as finding the highest yielding companies. The chart below compares the long-term performance of five different dividend investing strategies.
The first strategy represented by the column to the far right on the chart ranks all U.S. stocks by dividend yield and invests in the highest yielding 10% of stocks. All stocks are re-ranked and the portfolio is reformed annually. The second strategy, represented by the second column in from the right, buys companies in the second 10% or second decile as ranked by yield. The other three portfolios follow suit.
The Best Performing Dividend Investment Strategy
As the dividend strategy chart illustrates, investing in the highest yielding stocks doesn’t deliver the best returns. The best performing dividend investing strategy out of the five shown here is the portfolio that invests in dividend-paying stocks in the third decile ranked by yield.
The actionable investment advice is to look beyond stocks with the juiciest yields. Proper dividend investing should weigh a range of factors. Yield is certainly one consideration, but dividend safety and dividend growth are others that may be even more important.
Young Research’s Retirement Compounders® portfolio is a dividend-based strategy that takes into account dividend yield, dividend growth, dividend consistency, and dividend safety, among other factors. To learn more about a managed solution for the Retirement Compounders® visit younginvestments.com.
The 10 Highest Yielding S&P 500 Stocks
Oneok (OKE) • 8.61% • Dividend Safety: Low
ONEOK, Inc. (NYSE: OKE) is a leading midstream service provider and owner of one of the nation’s premier natural gas liquids (NGL) systems, connecting NGL supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets.
Lumen Technologies (LUMN) • 8.08% • Dividend Safety: Low
CenturyLink is an integrated communications company that provides communications services to residential and business customers. The communications company owns a vast fiber optics network that spans the globe.
Altria’s wholly-owned subsidiaries include Philip Morris USA Inc. (PM USA), U.S. Smokeless Tobacco Company LLC (USSTC), John Middleton Co. (Middleton), Sherman Group Holdings, LLC and its subsidiaries (Nat Sherman), Ste. Michelle Wine Estates Ltd. (Ste. Michelle) and Philip Morris Capital Corporation (PMCC). Altria owns an 80% interest in Helix Innovations LLC (Helix). Altria holds equity investments in Anheuser-Busch InBev SA/NV (ABI), JUUL Labs, Inc. (JUUL) and Cronos Group Inc. (Cronos).
Iron Mountain Incorporated, founded in 1951, is the global leader for storage and information management services. Trusted by more than 225,000 organizations around the world, and with a real estate network of more than 90 million square feet across nearly 1,450 facilities in approximately 50 countries, Iron Mountain stores and protects billions of valued assets, including critical business information, highly sensitive data, and cultural and historical artifacts. Providing solutions that include secure records storage, information management, digital transformation,
secure destruction, as well as data centers, cloud services and art storage and logistics, Iron Mountain helps customers lower cost and risk, comply with regulations, recover from disaster, and enable a more digital way of working.
The Williams Companies, Inc., is an energy company based in Tulsa, Oklahoma. Its core business is natural gas processing and transportation, with additional petroleum and electricity generation assets.
AT&T Inc. (NYSE: T) is a diversified, global leader in telecommunications, media and entertainment, and technology. WarnerMedia is a leading media and entertainment company that creates and distributes premium and popular content to global audiences through its consumer brands, including: HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim and Turner Classic Movies. Xandr, now part of WarnerMedia, provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its platform. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband. Plus, it serves high-speed, highly secure connectivity and smart solutions to nearly 3 million business customers. AT&T Latin America provides pay-TV services across 10 countries and territories in Latin America and the Caribbean and wireless services to consumers and businesses in Mexico.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. Our mission is to provide energy transportation and storage services in a safe, efficient and environmentally responsible manner for the benefit of people, communities and businesses. Our vision is delivering energy to improve lives and create a better world. We own an interest in or operate approximately 83,000 miles of pipelines and 147 terminals. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products, and our terminals store and handle various commodities including gasoline, diesel fuel chemicals, ethanol, metals and petroleum coke.
ExxonMobil, one of the world’s largest publicly traded energy providers and chemical manufacturers, develops and applies next-generation technologies to help safely and responsibly meet the world’s growing needs for energy and high-quality chemical products.
Valero Energy (VLO) • 6.05% • Dividend Safety: Moderate
Valero Energy Corporation, through its subsidiaries (collectively, “Valero”), is an international manufacturer and marketer of transportation fuels and petrochemical products. Valero is a Fortune 50 company based in San Antonio, Texas, and it operates 15 petroleum refineries with a combined throughput capacity of approximately 3.2 million barrels per day and 14 ethanol plants with a combined production capacity of approximately 1.73 billion gallons per year. The petroleum refineries are located in the United States (U.S.), Canada and the United Kingdom (U.K.), and the ethanol plants are located in the Mid-Continent region of the U.S. Valero also is a joint venture partner in Diamond Green Diesel, which operates a renewable diesel plant in Norco, Louisiana. Diamond Green Diesel is North America’s largest biomass-based diesel plant. Valero sells its products in the wholesale rack or bulk markets in the U.S., Canada, the U.K., Ireland and Latin America. Approximately 7,000 outlets carry Valero’s brand names.
PPL Corp. (PPL) • 5.96% • Dividend Safety: Moderate
Headquartered in Allentown, Pa., PPL Corporation (NYSE: PPL) is one of the largest companies in the U.S. utility sector. PPL’s seven high-performing, award-winning utilities serve more than 10 million customers in the U.S. and United Kingdom. With more than 12,000 employees, the company is dedicated to providing exceptional customer service and reliability and delivering superior value for shareowners.