Who Paid Out The Most Money In Dividends Per Share Last Year

Looking for an investment that offers regular income? High-dividend stocks can be a good selection.

Dividend stocks distribute a portion of the company'due south earnings to investors on a regular basis. Nearly American dividend stocks pay investors a set up amount each quarter, and the top ones increase their payouts over time, and so investors can build an annuity-similar cash stream. (Investors can as well choose to reinvest dividends if they don't demand the stream of income. Here'south more than about dividends and how they work .)

Companies that pay dividends tend to be well-established, and then dividend stocks may also add together some stability to your portfolio. That's one reason they're included on our list of low-risk investments .

Investing for income: Dividend stocks vs. dividend funds

There are two primary ways to invest in dividend stocks: Through mutual funds — such every bit alphabetize-funds or exchange-traded funds  — that hold dividend stocks, or by purchasing individual dividend stocks.

Dividend ETFs or alphabetize funds offer investors access to a choice of dividend stocks within a single investment — that ways with simply 1 transaction, yous can own a portfolio of dividend stocks. The fund volition then pay out dividends to you on a regular basis, which you can take as income or reinvest. Dividend funds offering the benefit of instant diversification — if one stock held by the fund cuts or suspends its dividend, you tin still rely on income from the others.

Whether it's through dividend stocks or dividend funds, reinvesting those dividends can greatly enhance your return on investment; dividends typically increase the return of a stock or dividend fund by a few per centum points. For example, historically the total annual return (which includes dividends) of the S&P 500 has been, on average, nearly two percentage points higher than the index'due south annual change in value.

And that departure can really add up. Using NerdWallet'due south investment calculator , we tin run across that a $5,000 investment that grows at 6% annually for 20 years could grow to over $16,000. Bump that up to 8% growth to include dividends, and that $5,000 could grow to over $24,000.

In full general, a good dominion of thumb is to invest the majority of your portfolio in index funds, for the above reasons. But investing in private dividend stocks straight has benefits.

Although it requires more than piece of work on the role of the investor — in the form of inquiry into each stock to ensure information technology fits into your overall portfolio — investors who choose private dividend stocks are able to build a custom portfolio that may offer a higher yield than a dividend fund. Expenses tin also be lower with dividend stocks, as ETFs and index funds charge an almanac fee, chosen an expense ratio, to investors.

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The Dividend Aristocrats

Dividend-seeking investors can look for high-yield dividend stocks like those listed on this folio, only at that place'south another factor to consider in dividend investing: consistency, which is specially important for fixed-income investors. And that'due south where the Dividend Aristocrats really shine.

The S&P 500 Dividend Aristocrats is a market alphabetize that includes select companies from the S&P 500. To be included, companies must:

• Have increased dividends every year for the past 25 years.

• Take a float-adapted marketplace cap of at to the lowest degree $iii billion.

• Have an boilerplate daily trading value of at to the lowest degree $five 1000000.

The alphabetize'south methodology also requires a minimum of 40 companies to be included, and no sector tin can business relationship for more than 30% of the index's weight.

And then what'south this mean for investors? The Dividend Aristocrats are large companies with reliable dividend payments and high liquidity, and the alphabetize equally a whole may offer more diversification than loftier-yield dividend indexes (which are typically heavily weighted toward the financials and utilities sectors). Investors tin opt to selection and cull specific Dividend Aristocrats to invest in, or there are ETFs with similar reliability-based criteria. There's too the South&P 500 High-Yield Dividend Aristocrats alphabetize, which has slightly different criteria.

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How to invest in dividend stocks

Building a portfolio of individual dividend stocks takes fourth dimension and effort, but for many investors it's worth it. Hither's how to buy a dividend stock:

ane. Notice a dividend-paying stock. You can screen for stocks that pay dividends on many financial sites, as well as on your online broker's website. We've besides included a listing of loftier-dividend stocks below.

2. Evaluate the stock. To look under the hood of a high-dividend stock, starting time by comparison the dividend yields among its peers. If a company's dividend yield is much higher than that of like companies, it could be a reddish flag. At the very least, information technology's worth boosted inquiry into the visitor and the safe of the dividend.

Then look at the stock's payout ratio, which tells you how much of the company's income is going toward dividends. A payout ratio that is too high — generally to a higher place fourscore%, though it can vary by industry — means the company is putting a large percentage of its income into paying dividends. In some cases dividend payout ratios tin can height 100%, meaning the visitor may be going into debt to pay out dividends. (Read our full guide on how to research stocks .)

3. Determine how much stock you lot want to purchase. You need diversification if you lot're ownership individual stocks, and then you'll demand to decide what percent of your portfolio goes into each stock. For case, you're buying 20 stocks, yous could put five% of your portfolio in each. However, if the stock is riskier, you might desire to buy less of it and put more of your money toward safer choices. If you're going to reinvest your dividends, y'all'll need to recalculate your price basis — the amount you originally paid to buy the stock.

The No. one consideration in buying a dividend stock is the prophylactic of its dividend. Dividend yields over 4% should be carefully scrutinized; those over 10% tread firmly into risky territory. Amid other things, a too-high dividend yield

can indicate the payout is unsustainable, or that investors are selling the stock, driving downwards its share price and increasing the dividend yield as a event.

Another affair to keep in mind is that dividends in taxable brokerage accounts cause taxes to exist realized in the year the dividends occur, dissimilar stocks that do not pay dividends whose revenue enhancement primary occurs when the stock is sold. For investors with taxable accounts and in high income brackets, dividends stock might non be as tax efficient as other options.

25 high-dividend stocks

Beneath is a list of 25 U.Due south.-headquartered high-dividend stocks, ordered past dividend yield. The dividend shown below is the amount paid per menstruum, not annually. To compile this listing, we take into account the dividend growth charge per unit over the last five years and the dividend payout percentage, in addition to the dividend yield and amount.

Symbol	Company name	Dividend yield
MO	Altria Grouping Inc	six.47%
OKE	ONEOK Inc	5.9%
UVV	Universal Corp	five.39%
ALE	ALLETE Inc.	four.38%
PSX	Phillips 66	iv.24%
SAFT	Safety Insurance Group Inc	4.xviii%
MMM	3M Co	4.13%
EIX	Edison International	4.07%
LAMR	Lamar Advertising Co	3.98%
SR	Spire Inc	3.76%
SO	Southern Co (The)	iii.seven%
OMC	Omnicom Group Inc	3.67%
CVX	Chevron Corp	3.62%
VLO	Valero Free energy Corp	3.51%
KMB	Kimberly-Clark Corp	three.34%
BXP	Boston Backdrop Inc	3.33%
BKH	Black Hills Corp	three.24%
AEP	American Electrical Power Co Inc	3.14%
CMI	Cummins Inc.	3.06%
LSI	Life Storage Inc	3.01%
EMN	Eastman Chemical Co	2.96%
OGS	1 Gas Inc	2.93%
ES	Eversource Energy	ii.91%
WEC	WEC Free energy Group Inc	2.nine%
IDA	IDACORP Inc.	2.85%

Stock data current as of May 2, 2022.

Disclosure: The author held no positions in the same investments at the original fourth dimension of publication.

Source: https://www.nerdwallet.com/article/investing/how-to-invest-dividend-stocks

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