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 2% 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 8%.
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
|Iron Mountain (IRM)||7.6%|
|Helmerich & Payne (HP)||7.4%|
|Occidental Petroleum (OXY)||7.4%|
|Ford Motor (F)||7.0%|
|Nielsen Holdings (NLSN)||6.9%|
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 since year-end 2016 is -38.5%.
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
Macy’s is one of the nation’s leading retailers with 690 department stores and 180 specialty stores. The retailer operates in 44 states primarily under the Macy’s and Bloomingdale’s brands. Macy’s is the highest yielding stock in the S&P 500, but the continuation of the dividend is not a lock.
Macerich is a real estate investment trust (REIT) that specializes in the acquisition, management, and development of regional malls in what firm labels as some of the country’s most attractive and densely populated markets. The REIT owns over 50 million square feet of real estate in 47 regional malls.
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 is the leading cigarette and smokeless tobacco company in the united states. Altria’s cigarette brands include Marlboro, Parliament, and Virginia Slims.
Invesco is a global investment management firm with offices in 25 countries and over $1 trillion in assets under management.
Iron Mountain is a Real Estate Investment Trust (REIT) engaged in the storage of information. The REIT stores and protects critical business information, highly sensitive data, and cultural and historical artifacts for more than 225,000 organizations globally.
Helmerich & Payne is an oil and gas contract drilling company. HP designs and operates high-performance drilling rigs for conventional and unconventional plays globally.
Founded in 1920, Occidental Petroleum is one of the largest U.S. based integrated oil and gas companies. The company is active in oil and gas exploration and production with approximately 2.7 billion barrels of oil equivalent. The company also owns a chemicals and midstream and marketing business.
Ford Motor is of course one of the largest automobile manufacturers in the U.S. and the world. The automaker produces approximately 6 million automobiles annually, with half of that of all vehicles produced sold in North America.
Nielsen Holdings is recognized most commonly for its national Television ratings. The ratings giant is a measurement and data analytics company. The firm has provided data and analytics to the media, advertising, and consumer goods industries for more than 90 years
Jeremy Jones, CFA
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