In the 1970s, a beer advertising slogan highlighted one of life's great challenges. Miller Lite's "Tastes Great. Less Filling" catchphrase reminds us that most things don't deliver on all fronts. A light beer that tastes good is as much a rarity as the stock that provides ample returns with low risk.
To be clear, no single stock breaks the risk-reward relationship. But if you are aiming for dividend income, you might find the right combination of risk and return with high-yielding S&P 500 dividend stocks. Read on to find out why and which stocks to consider.
Dividend Stocks And The S&P 500
The S&P 500 is a financial market index that includes 500 top-performing, U.S. public companies. The index is widely referenced as a benchmark for large-cap U.S. stocks. It also accounts for about 80% of U.S. market capitalization.
Stocks are selected for inclusion in the S&P 500 based on size, liquidity, profitability and sector. New additions to the index must have a minimum market cap of $15.8 billion or more, trade at least 250,000 shares monthly and be profitable, among other things.
The index committee updates these requirements periodically, particularly the market cap minimum. Companies already in the index that fall short of updated capitalization requirements aren't necessarily dropped—some of the stocks on this list are examples. The committee reviews all eligibility criteria to make removal decisions.
While there is no dividend requirement for S&P 500 stocks, about three-quarters of them do provide cash returns to shareholders. Collectively, S&P 500 stocks produce a dividend yield of 1.4%.
That modest yield is generally considered the price you pay for quality. But you know what? You don't have to settle for sub-2% yields from these leading dividend payers. In truth, there are dozens of good S&P 500 stocks that yield 3% or more. Ten of them are introduced below.
The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download Forbes' most popular report, 12 Best Stocks To Buy for 2024.
Methodology Used To Pick These Dividend Stocks
To identify these 10 dividend stocks, I started with all stocks included in SPDR Portfolio S&P 500 High Dividend ETF (SPYD
The 10 Highest Paying Dividend Stocks In The S&P 500
The table below lists 10 S&P 500 dividend payers that analysts like, with yields of 3.25% or higher.
This group of stocks is not intended to be a diversified dividend portfolio. You'll see that real estate is heavily represented here, for example. That's not surprising, since real estate investment trusts are required to pay high dividends to retain their favorable tax status. You should understand the risks associated with REITs before diving in.
Also note that REIT dividends are taxed as ordinary income, while qualified dividends are taxed at the lower capital gains rate. Yields shown here are pretax.
1. AT&T T
- Market cap: $122.4 billion
- Stock price: $17.10
- Annual dividends: $1.11
- Dividend cadence: Quarterly
Why T Is A Top Choice
AT&T is a major telecom provider with a history of hefty dividend yields. The company lost its Dividend Aristocrat status in 2021 after spinning off WarnerMedia and slashing its dividend.
Still, AT&T remains a top-yielding stock, currently at 6.5%. More importantly, the telecom has made strides improving the sustainability of its dividend with an improved cost structure and balance sheet, plus rising cash flow.
2. Vici Properties (VICI)
- Market cap: $30.1 billion
- Stock price: $28.82
- Annual dividends: $1.66
- Dividend cadence: Quarterly
Why VICI Is A Top Choice
VICI owns gaming and entertainment properties, including Caesars Palace Las Vegas and MGM Grand. The company also owns golf courses and finances properties for other operators.
In 2023, VICI grew revenues by 38.9% to $3.6 billion. The company also generated $2.5 billion in net income, up 124.9% from the prior year. Shareholders reaped rewards, too, with a 6.4% dividend increase last year. VICI has increased its dividend six times in six years, good for a current yield of 5.8%.
3. KeyCorp (KEY)
- Market cap: $13.4 billion
- Stock price: $14.34
- Annual dividends: $0.82
- Dividend cadence: Quarterly
Why KEY Is A Top Choice
KeyCorp provides consumer and commercial banking services through regional bank chain KeyBank.
KEY stock had a tough year last year, shedding about 18% of its value when several larger banking peers rose. One catalyst was the collapse of Silicon Valley Bank (SVB
Those smaller banks have been challenged to manage through rising interest rates, credit quality declines and a soft lending environment. Despite those factors, KEY did make progress improving its balance sheet and shifting to a more growth-oriented strategy. In time, those changes should deliver a stronger bank. For now, shareholders are getting a 5.7% yield as they wait for conditions to improve.
4. Evergy EVRG
- Market cap: $11.9 billion
- Stock price: $51.64
- Annual dividends: $2.57
- Dividend cadence: Quarterly
Why EVRG Is A Top Choice
Evergy generates and distributes electricity to homes, businesses and municipalities.
For 2023, Evergy reported lower GAAP EPS of $3.17 vs. $3.27 in the prior year. Unfavorable weather played a role in the decline, along with higher expenses for interest, depreciation and amortization.
Even so, analysts like the company's strategy and growth outlook. The strategy includes operational and financial execution, alongside regulatory activities that will benefit future earnings. Evergy's stated growth target is 4% to 6% through 2026. The stock currently has a yield of 5.0%.
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5. Huntington Bancshares (HBAN)
- Market cap: $18.8 billion
- Stock price: $12.92
- Annual dividends: $0.62
- Dividend cadence: Quarterly
Why HBAN Is A Top Choice
Huntington Bancshares provides commercial, consumer and mortgage banking services through regional banking chain Huntington National Bank.
HBAN's stock price has been slightly more resilient than KEY's in the past 12 months. Still, the environment remains challenging and that has affected HBAN's results. The good news is that interest rate hikes have paused and the business climate for smaller banks should improve.
In the meantime, HBAN has momentum in deposits. The bank's conservative underwriting discipline has also produced high-quality loan growth. The current yield is 4.5%.
6. Regency Centers REG
- Market cap: $11.0 billion
- Stock price: $59.36
- Annual dividends: $2.68
- Dividend cadence: Quarterly
Why REG Is A Top Choice
Regency Centers is a REIT that develops, owns and manages shopping centers in suburban neighborhoods.
In 2023, REG reported a $40 million gain in core operating earnings, to $700 million. The net income result was less favorable, due to various one-time events in 2022 and 2023. Regency sports a yield of 4.5%.
A significant company milestone in 2023 was the completion of the Urstadt Biddle acquisition. The deal increases REG's leadership position and footprint in grocery-anchored shopping centers. The larger inventory combined with REG's disciplined approach to capital management and commitment to managing ESG risks set the stage for long-term growth.
7. Entergy ETR
- Market cap: $21.7 billion
- Stock price: $101.89
- Annual dividends: $4.52
- Dividend cadence: Quarterly
Why ETR Is A Top Choice
Entergy produces and distributes electricity in Arkansas, Louisiana, Mississippi and Texas.
Entergy grew in 2023, with adjusted EPS of $6.77 vs. $6.42 in the prior year. The company has also beat analysts' EPS expectations in six of the last seven quarters, despite underperforming on revenue.
ETR's dividend yield of 4.4% is respectable, especially in light of the company's low valuation metrics. The PE ratio of 9.3 compares favorably to ETR's five-year average PE of 17.3 and the peer group PE of 24.0.
8. Federal Realty (FRT)
- Market cap: $8.3 billion
- Stock price: $99.80
- Annual dividends: $4.36
- Dividend cadence: Quarterly
Why FRT Is A Top Choice
Federal Realty is a REIT that specializes in mixed-use properties combining spaces for living, working, shopping and dining.
FRT has the elite title of Dividend King, meaning it has increased its dividend annually for the most recent 50 years. With 56 consecutive years of dividend increases, FRT has the longest-running dividend growth record of any REIT.
Federal Realty's dividend performance to date doesn't guarantee future results, of course. It does, however, demonstrate leadership discipline and the ability to manage through all economic cycles. FRT currently has a 4.4% yield.
9. Ventas VTR
- Market cap: $17.1 billion
- Stock price: $42.61
- Annual dividends: $1.80
- Dividend cadence: Quarterly
Why VTR Is A Top Choice
Ventas is a REIT that owns and leases senior living communities, medical buildings and hospitals.
VTR's normalized funds from operations, a REIT-specific cash flow measure, remained steady from 2022 to 2023. Nareit FFO, a standardized measure, grew 15.6%.
More compelling than recent performance is VTR's outlook. CEO Debra A. Cafaro expects to see "unprecedented" demand for senior housing in 2024 and beyond. That demand, driven by an aging population, creates a huge growth opportunity for VTR. Analysts agree. On average, they see about 20% upside in VTR's share price. Ventas has a yield of 4.2%.
10. Chevron CVX
- Market cap: $288.7 billion
- Stock price: $155.51
- Annual dividends: $6.52
- Dividend cadence: Quarterly
Why CVX Is A Top Choice
Chevron is an integrated oil and gas company based in California.
CVX has a solid balance sheet and a long history of returning value to shareholders. The company has increased its dividend annually for more than 35 years. In the last three years, Chevron's annualized dividend growth amounts to 5.4%. That history, combined with a conservative payout ratio of 57.4% sets the stage of relatively reliable and growing dividend income going forward. Chevron has a current yield of 4.2%.
Bottom Line
Through careful research, you can earn impressive dividend yields from market-leading companies. That has to be more satisfying than a great-tasting light beer, right? Remember to keep an eye on your sector diversification and consider reinvesting those dividends to ramp up your income-earning portfolio faster.
For more investing ideas, see this list of the best stocks for 2024.
Frequently Asked Questions (FAQs)
What Is The S&P 500?
The S&P 500 is an index of 500 top publicly traded companies in the U.S. The index is weighted by market capitalization and the constituents must meet minimum requirements for size, liquidity and profitability.
Are Dividend Stocks A Good Inclusion Into A Retirement Portfolio?
For investors who can accept volatility associated with stocks, dividends can be effective within retirement portfolios. The cash income dividend stocks produce reduce a retiree's dependence on liquidations to fund retirement distributions.
Are Dividend Stocks Appropriate For All Investors?
Dividend stocks are not appropriate for investors who need to limit their taxable income. Within taxable accounts, dividends incur a tax liability in the year they are earned.
What Risks Are Associated With Dividend Stocks?
The main risk associated with dividend stocks is a negative change to the company's dividend policy. A reduction, pause or cancellation of the dividend would prompt a decline in the stock's value alongside the loss of income.
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The brain trust at Forbes has run the numbers, conducted the research, and done the analysis to come up with some of the best places for you to make money in 2024. Download Forbes' most popular report, 12 Best Stocks To Buy for 2024.
