Today what I want to do is share with you the top ten stock that pays some huge dividends.
Before we get into these stocks and taking a look at them, you might be wondering the following.
What are dividends?
Dividends are a sum of money paid periodically. Typically it’s quarterly to its shareholders from its profits.
What does this mean in a simple way or simple terms?
It means that when you hold company stock, they pay you every three months for holding a share of that company. Not every company will pay dividends, so it’s essential you find dividend-paying stocks. Of course, if this is what you’re interested in.
In other words, it’s like they send you a check every three months for just owning a piece of their company. You get paid based on the number of shares that you own.
For example: If I had one share and the company paid $3 for every one share that you had, then you get $3. If you had ten shares and you get paid $3 for every share that you owned, you get $30.
The more shares that you have, the more money you get. And that’s the baseline behind dividends.
Why Investors Love Dividend Stocks?
A lot of investors love dividend stocks. That is because you’re able to put your money into something, let it sit, and completely forget about it.
That allows you to continuously get paid every three months or quarterly most of the time. Sometimes it’s a little quicker. Sometimes it’s annually. It depends on certain companies. But in general, it is quarterly, and you get paid this dividend.
You can take your $1000, you put it in, and you buy some shares of stocks. Then if they’re a dividend paying company, you’d receive a check for every share that you owned. It also can be cash.
Keep in mind that certain companies pay a higher dividend than other companies. That also may mean that they are at higher risk. That’s not always the case. Sometimes companies do pay an outstanding dividend (relative to a sector) even if it’s a good company.
But in other cases, you can have companies that are paying huge dividends or a high percentage on a per year. But the company is not worth that much. Or the dividend is not stable, or it could be taken away at any given time.
It’s essential when you’re looking at dividend-related companies or collecting dividends from dividend-paying stocks that you’re looking for stability. Companies that have been around for a while. And are they raising their dividend with time or are they lowering it with time?
That’s one thing to keep in mind as you’re looking for dividend stocks. I want to share with you some ten fairly good dividend holding companies (in 2017).
Things may change. The company may be less stable in the future. The dividend may change and so forth. You also have to remember that you’re not only getting paid from the dividend.
Note: You’re also looking for stock appreciation. Combining this (dividend payouts with stock appreciation) is the ideal best of both worlds.
A Bad Example That Can Open Your Eyes
You can have a company that has enormous dividends, but maybe their stock price is horrible. What’s more, perhaps it’s not appreciating. That’s one of the reasons why they may pay out a huge dividend to compensate for that. Or to attract some people into their company.
In this example, I want to show you a company where sometimes people get tricked into the dividend. When you look at this website (divident.com), you can see that the share price for this company is $1,67dollar.
When you start looking at the dividend yield, you can see the dividend yield is 26,35%. That means that you’re getting paid out $0,44 annualized. It’s not that much.
You can see the growth over the last year has not much has happened to that dividend. Look at this company quarterly or even a monthly basis. This stock in 2007 was doing quite well.
It opened up $30 a share, sold off a bit then came back into that $36 a share. And now it’s been heading lower, and the stock price is right around $1,67. That tells us it’s a cheap company and it hasn’t been that stable.
Here’s the other problem. Go to the Nasdaq.com, and you type in the symbol there. You can also start looking at their payout. You can see recently you’re getting 11 cents. And that’s why if you multiply that times four quarterly, you’re getting 44 cents per year.
If you look back what the dividend used to be you can see that the dividend is depreciating. You used to get 52 cents. Then you went to 53 cents, and then you went down to 45, 53, 56, and now 11.
Sometimes you get suckered into these things based on a percentage or a dividend yield. The main reason is it looks attractive on the dividend yield basis. But the reality is they’re not paying out that much, and the dividend isn’t growing.
Dividend Paying Stock #1 – AT&T
When it comes to stable companies, I want to mention one right now. It pays good dividends, and it has a pretty good history.
First one is AT&T, and you can see the dividend yield for this stock is 5,14%. Dividend growth 32 years and the payout 67.1%. The main thing that I look at is they get a yield 5,14%. If you’re looking at the annualized that’s $1,96, that’s per year.
You can also see the share price is $38,15. What you want to do is you also want to look for a stock appreciation. That’s the other thing you have to pay attention to. It’s because even if you’re getting a small dividend but the stock is depreciating it’s going to cost you much more in the long run.
You’re losing money from that depreciation effect. You can also pull up the Nasdaq website you can see the history since 2013. This stock has been paying out. You can see 45 cents, 46 cents, 47, 48, 49 cents. And what’s important it’s reasonably consistent and stable.
Some important questions:
- The main point here is, do they have money on the balance sheet?
- Do they have enough cash to be able to pay those dividends out for an extended period?
AT&T is a huge company’s. It has been around for a while, and they do have the money. In other words, that’s one way to backcheck it. I’m not going to go through this for every stock, but it does give you an idea.
Dividend Paying Stock #2 – P&G
The second one I want to mention is P&G. You have a dividend yield of 3,09%. Annual payout is $2.76. That is again annual, not quarterly. Divide that by four if you want quarterly.
If we go to the Nasdaq site and take a look at the payout, you can look at 2013. It’s about 60 cents, 64, 66, and 69 cents. The payout has been quite good.
Dividend Paying Stock #3 – General Motors
The next one is GM. It’s a slow moving company. It doesn’t move around too much. So you have a 4,45% dividend yield. Again, it’s an annual basis. Then you have $1,52 on a yearly payout.
If we look at GM on Nasdaq, you’ll see 38 cents or 30 cents back in 2015, 2014. But overall reasonably stable large company.
Dividend Paying Stock #4 – IBM Corp
We’re looking at the next stock IBM. Another huge one. If you’re looking at the dividend yield, your dividend yield is right around 3,9% or annualized $6. Pretty good when you look at that, but the stock price is a little bit higher.
If we take a look at IBM, we’ll see $153 per share. Whereas if you look at T-mobile, it’s $38 per share. You can get more shares of AT&T; then you can think of IBM. Those are the things to think about. That’s why people often look at the percentage or the dividend yield.
Take a look at Nasdaq. The payout is $1,5 for every share that you have. If you want to take a calculator: You have ten shares multiplied times $1,5, and you get your number. The same principle is when you have a hundred shares.
Dividend Paying Stock #5 – Apple
Apple is the next one I want to mention. This is also another reasonably good growth company. That’s why the dividend yield is not that great. So if you’re looking at this dividend yield, it appears to be only 1,7%. The percentage doesn’t seem that great. And the annualized payouts it’s only $2,52.
When you look at Apple in Nasdaq, you can see it’s 63 cents. That is about half of what IBM was. They know they can do that since people are looking at their stock for appreciation. This is the reason they do that.
If you’re looking at Apple, you’re also looking for it to appreciate. And that’s what’s been going on with this company. Whereas if you look at IBM, the growth is a little more slumpy.
I mean it’s still since the 90s (there has been growing), but relatively recently it hasn’t been growing that much. It’s in its mature stage. That’s why Apple can afford to pay how less since you’re looking for appreciation as well.
Nobody’s going to give you free money. They try to save money by not paying out as much on the dividend if they can think of course. That’s what Apple can do. It’s because it has a lot of other advantages to the company.
Dividend Paying Stock #6 – Wells Fargo
Here’s a dividend yield of 2.87% or a $1,52 if you look at Wells Fargo on the payout you will see 38 cents per share. These are all stable companies doing very well as far as dividends go.
Dividend Paying Stock #7 – Coca Cola Co.
Here is the situation – 3.27%. I believe Buffett invest in this one $1,48. A handful of these he also invested. That’s because he’s into dividends. When you have a lot of money, you can take a lot of that cash, and put it into dividend-paying stocks.
Then they return that money. The more money that you have, the more you’re making on a per share basis. You can get 37 cents for every share that you have.
Dividend Paying Stock #8 – Deere & Co.
The next one is Deere or Dee, and this one is 1,92% with an annual payout of $2,4.
When you’re looking at it to see the stability, you’re checking the cash flow. Look at the balance sheet. But in reality, if the dividend has been fairly stable here recently, then it’s going to be stable more than likely in the future.
Fifty-one cents, 60 cents that’s what you’re looking for. It seems pretty good, and the stock price is around $124. You can see this one a dividend shot clock this one is coming up. In six days three hours, they also tell you the declared date, the ex-dividend date, the record date, the payout date and so on.
Dividend Paying Stock #9 – Verizon
Here is another one with a 5.09% dividend or quarterly $2.31. That one’s also paying out quite well.
Dividend Paying Stock #10 – Wal-Mart Stores
Finally, the last one is Walmart. Walmart’s a big huge company. You have a dividend payout of 2,68% or $2,04 for every year.
Divide that by four, and you get about 51, 52 cents every quarter. Anyways, this one has about 48 days to go.
Final Ideas
Those are some of the popular dividend stocks. Keep in mind that you’re looking for appreciation as well. That’s because there’s no sense for getting a dividend on a stock right here that keeps heading down.
If you bought 10,000 shares around this region and even though you’re getting a dividend the stock continues to head lower. Why would you want that? Makes no sense because you’re losing much more on the depreciation value of the stock than you are making on a dividend.
Choosing both is important. Evaluating the future growth of the company and the dividend payout.
Conclusion
I hope you learned a lot about dividend stocks. You’ve seen some of the popular ones. Also, you’ve seen some that are a little more stable.
Go ahead, research and learn more about these. All of this is not a recommendation to buy any of these stocks. It’s a starting point to get your feet wet and to move you in the right direction on where to research.
Everybody’s risk tolerance and goals are different; Do your research, do your homework, and then choose an investment vehicle that’s right for you.
