Highest Yielding S&P 500 Dividend Stocks
Economic uncertainty caused by a double dip in housing, now worse than the Great Depression, the potential effect on the markets if the US government fails to raise its debt limit, and the high unemployment rate may lead investors to get back to "old fashioned" investing with higher-yielding stocks.
A review of the S&P 500 reveals that 78 percent of its components are currently paying a dividend, with an average yield of 2.28 percent, and a median value of 2 percent. The current average yield represents a 19 basis point increase from the figure at the end of 2010.
The average dividend yield for the entire S&P 500 stands at 1.77 percent.
According to Standard and Poor's, dividend increases rose nearly 28 percent during the first quarter of 2011 to 510 from 399, and only 30 companies out of 7,000 reduced their dividend payments, compared to 48 during the first quarter of 2010.
Breakdown by Sectors
Dividend investors searching for the highest-yielding stocks can find guidance by looking at the major sectors.
A breakdown of the S&P 500 by sector shows that telecommunications, utilities, and consumer staples companies, as depicted on the table below, have on average the highest dividend yields.
Currently, about 98 percent of the companies in the consumer staples sector pay a dividend with an average yield of 2.69 percent, while telecom stocks have the highest average yield at 4.48 percent.
From December 1936 to March 2009, the average yield of the S&P 500 was 3.84 percent, while the benchmark index annualized return per year stood at 9.51 percent, from January 1926 to March 2009.
>> Highest Dividend Yields of the Dow
Dividends on the Rise
As displayed on the chart below, approximately 68 percent of companies in the S&P 500 have yields less than 4 percent, with fewer companies driving up the overall average. And about a fifth of the companies in the index do not pay a dividend, although this figure has decreased in the past two years.
The following chart portrays the distribution of all the companies in the S&P 500, according to their corresponding dividend yields.
The tables on the next few pages depict some of the companies in the S&P 500 with dividend yields higher than two percent. The yields on these companies are based on the most recent data from Thomson Reuters. Note that dividends are not guaranteed, as companies may decide to raise or halt dividend payouts during uncertain economic times.
As always, keep in mind that the information should help you generate ideas, but there is more homework to be done, especially with stocks paying dividend yields above 6 percent.
Stocks with yields over 5% on the next page
Stocks yielding over 4%
Stocks yielding over 3%