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%
Newell Brands Inc. (NWL)
Newell is the company behind a host of home goods, such as Calphalon cookware, Rubbermaid storage products, Sharpie and Paper Mate office products, Yankee Candle, and many other brands that lead their categories. Admittedly, it’s a bit of a grab bag of products in the NWL suite, but this variety helps provide a more stable revenue stream because it insulates Newell from changing economic circumstances or consumer tastes. Newell’s stock price fell hard last year, with a 40% decline in calendar 2022, but its $1.58 per share in expected earnings for the full year is more than enough to cover its generous 23-cent quarterly payout.
TTM yield: 6.2%
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%
VF Corp. (VFC)
VF is a leader in consumer apparel and footwear, with big brands in its portfolio that include Timberland, North Face and Vans. Investors have sold off the stock aggressively over the last year, thanks to fears of consumer spending rollbacks combined with an ongoing restructuring that has yet to bear fruit. But whether or not you believe VFC stock will turn around quickly in 2023, the bottom line is that the dividend is among the most generous on Wall Street at present. And with projected earnings per share of $2.07 that will more than cover the 49-cent quarterly payday, investors may have incentive to stick around for the dividend.
TTM yield: 6.8%
Altria Group Inc. (MO)
Tobacco products giant Altria lost a mere 3% last year, marking it as one of the better-performing stocks in the S&P 500. That’s due to rock-solid sales for the company behind Marlboro cigarettes, Black & Mild pipe and cigar products, and smokeless tobacco brands Copenhagen and Skoal. Because of its brand strength, Altria dominates the U.S. market for those who are looking for a nicotine fix. And from an investment income perspective, the company has logged more than 50 consecutive years of dividend increases to boast a sustainable and generous payout that is very attractive to “risk off” investors.
TTM yield: 8.2%
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%
Vornado Realty Trust (VNO)
Vornado is a commercial real estate operator that owns office buildings in key U.S. markets, including New York City, Chicago and San Francisco. Beyond having attractive locations in these economic hubs, Vornado is also on the cutting edge of real estate sustainability policies with more more than 23 million square feet of LEED-certified buildings. LEED, which stands for Leadership in Energy and Environmental Design, is the most widely used system for rating “green” buildings in the U.S. While it was a rough year for VNO in 2022, with the stock losing roughly 50% of its value, the dividend of this real estate investment trust, or REIT, doesn’t seem to be at risk. Consider that in third-quarter earnings posted in October, Vornado cleared 79 cents per share in the key “funds from operations” measure — more than enough to cover its 53-cent quarterly payout.
TTM yield: 9.4%
Coterra Energy Inc. (CTRA)
Coterra is another independent oil and gas exploration company, operating primarily in the Marcellus Shale region in and around Pennsylvania, as well as the Permian Basin and Anadarko Basin in and around Texas. CTRA has proved reserves of about 3 billion barrels of oil equivalent across various classes of hydrocarbons, and it cashed in thanks to rising oil and gas prices in 2022. But while it paid roughly $2.49 in total dividends last year off those earnings, the payouts fluctuated from quarter to quarter based on profitability. That means a rollback in oil processing or the revenue stream for CTRA could mean this big yield shrinks going forward.
TTM yield: 10%
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%
9 highest dividend-paying stocks in the S&P 500:
— Kinder Morgan Inc. (KMI)
— Verizon Communications Inc. (VZ)
— Newell Brands Inc. (NWL)
— VF Corp. (VFC)
— Altria Group Inc. (MO)
— Devon Energy Corp. (DVN)
— Vornado Realty Trust (VNO)
— Coterra Energy Inc. (CTRA)
— Pioneer Natural Resources Co. (PXD)
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Update 01/12/23: This story was previously published at an earlier date and has been updated with new information.