Here are the 4 Highest Dividend-Paying Stocks in the S&P 500
What Is a Dividend?
A dividend is the distribution of a company’s earnings to its shareholders and is determined by the company’s board of directors. Dividends are often distributed quarterly and may be paid out as cash or in the form of reinvestment in additional stock.
The dividend yield is the dividend per share and is expressed as dividend/price as a percentage of a company’s share price, such as 2.5%.
Common shareholders of dividend-paying companies are eligible to receive a distribution as long as they own the stock before the ex-dividend date.
These top companies all pay 5.9% or better based on 2022 payouts.
When it comes to dividend investing, there’s always risk in chasing the highest-yielding investments. After all, yield is a function of payouts divided by share price – so while sharply rising dividends can help boost yields, it’s also true that a big drop in share prices can quickly prop up yield even if payouts don’t budge. The following stocks are all nominally high yielding based on their trailing payout over the last 12 months. There’s no guarantee that dividends will stay steady, particularly for energy stocks with irregular cycles. And there’s no guarantee that even a double-digit yield will make up for potential declines in share price. But if you’re interested in income investing, these highest dividend stocks in the S&P 500 could be worth a look.
Kinder Morgan Inc. (ticker: KMI)
Unlike some of the other energy stocks on this list, Kinder Morgan is an infrastructure company. It doesn’t drill for oil or gas, but rather owns and operates about 83,000 miles of pipelines and 143 terminals. That allows for a consistent revenue stream that is insulated from the ups and downs in crude oil prices, resulting in steady dividends. Based on the last 12 months of distributions, KMI boasts a dividend that is more than three times the typical payout of S&P 500 dividend stocks.
Trailing 12 month, or TTM, dividend yield: 5.9%
Verizon Communications Inc. (VZ)
Telecom titan Verizon is the kind of stock you would expect to hang tough even in a challenging year for stocks, but a series of bad headlines weighed on shares last year, including earnings misses and lowered guidance. While that created some short-term headaches for shareholders, the 2022 consensus earnings target for Verizon is still more than two times its $2.56 in annual dividend payments to shareholders. That means the payouts aren’t just sustainable, but they’re ripe for future increases even if the profits don’t budge. As a company with enviable scale and entrenched customers, long-term investors have a lot to like about this stock in addition to a yield that is among the biggest in the S&P 500.
TTM yield: 6.3%
Devon Energy Corp. (DVN)
Devon is an Oklahoma-based energy company that drills for oil and natural gas in the U.S. It undoubtedly had a good run in 2022, given its roughly 39% gain last year even as the rest of the S&P 500 index melted down. The future for Devon is anything but certain due to energy sector volatility and the specific nature of DVN dividends. Consider that as recently as 2011, the company paid a mere 11 cents per quarter – a far cry from the peak payout of $1.55 per share in the third quarter of 2022. But however you slice it, Devon is one of the highest dividend-paying stocks in the S&P 500 based on trailing payouts.
TTM yield: 8.2%
Pioneer Natural Resources Co. (PXD)
Rounding out the energy stocks on this lineup and topping the list of the highest dividend-paying stocks in the S&P 500 is Pioneer Natural Resources. This independent oil and gas exploration and production company operates mainly in the Midland Basin in West Texas, and it boasts reserves of more than 130 million barrels of oil, 90 million barrels of natural gas liquids and 460 billion cubic feet of gas. A good year for energy was a good year for PXD stock, with dividends marching higher to result in a double-digit payday for shareholders over the last 12 months. Those dividends are irregular, however, so fair warning that there’s no guarantee the big yield will last in 2023.
TTM yield: 11.3%
