The Top 10 Highest Yielding S&P 500 Stocks

The S&P 500 is the most widely-followed index of large-capitalization U.S. equities. For this reason, it is an excellent place to look for potential investment ideas. High yield investors will naturally be mostly interested in the highest-yielding stocks in the S&P 500.

With this in mind, today’s article covers the 10 highest yielding S&P 500 stocks in detail.

High Yield S&P 500 Stocks #10: Ventas (VTR)

Dividend Yield: 6.0%

Market Capitalization: $18.9 billion

Sector: Real Estate

VTR Ventas Dividend Yield History

Source: YCharts

Ventas is a diversified real estate investment trust (REIT) with a portfolio of more than 1,200 buildings in the senior housing, healthcare, and healthcare research space. The trust owns property in the United States, Canada, and the United Kingdom.

Ventas is known for delivering excellent total returns over long periods of time. The trust has delivered an industry-leading compound annual return to shareholders of more than 20% since January 1, 2000.

Looking ahead, the trust’s dividend appears safe for the foreseeable future as its per-share profit distributions to shareholders are well-supported by underlying business operations.

With the release of Ventas’ first quarter financial results on April 27, 2018, Ventas updated its 2018 fiscal guidance. The trust is now expecting to generate normalized funds from operations between $3.99 and $4.07 for the twelve-month reporting period.

For context, the bottom of this guidance band implies a dividend payout ratio of 79%, which implies that the trust’s dividend is quite safe despite Ventas’ position as one of the 10 highest-yielding stocks in the S&P 500.
 

High Yield S&P 500 Stocks #9: PPL Corporation (PPL)

Dividend Yield: 6.0%

Market Capitalization: $19.2 billion

Sector: Utilities

PPL Corporation Dividend Yield History

Source: YCharts

PPL Corporation is a regulated gas and electric utility headquartered in Allentown, Pennsylvania. The company serves approximately 10 million customers in the United States and the United Kings through three operating segments: Kentucky Regulated, Pennsylvania Regulated, and U.K. Regulated.

Surprisingly, the majority of PPL’s business is actually generated in the United Kingdom. This is intentional. The business environment for regulated utilities in this market is far more favorable. Regulatory agencies are willing to allow PPL to operate with higher margins and returns on invested capital than their peers in the United States.

Looking ahead, PPL’s future appears bright. The utility has plans to invest $15 billion in infrastructure through fiscal 2022. This investment will be focused on developing smarter, more secure energy grids with the specific goal of advancing the clean energy future.

Until these outcomes materialize, it is important to recognize that the company’s dividend is safe despite its exceptionally high yield. PPL is forecasting for 2018 earnings-per-share from continuing operations between $2.20 and $2.40. Using the midpoint of this guidance band ($2.30) combined with PPL’s current quarterly dividend payment of $0.41, which implies a payout ratio of 71%. This conservative payout ratio leads us to believe that PPL is likely to continue raising its dividend even in the event that earnings growth stalls temporarily.
 

High Yield S&P 500 Stocks #8: AT&T (T)

Dividend Yield: 6.1%

Market Capitalization: $201.1 billion

Sector: Telecommunications

T AT&T Dividend Yield History

Source: YCharts

AT&T is the largest telecommunications company in the United States as measured by market capitalization. Its only competitor of similar size is fellow telecommunications giant Verizon Communications (VZ). AT&T offers a variety of telecommunications services, including wireless and cable TV, as well as satellite television through its subsidiary DirecTV. AT&T does business through four reporting segments: Business Solutions, Entertainment Group, Consumer Mobility, and International.

We believe that AT&T is one of the safest securities available today with a yield above 5%. This is due to the company’s size, stability, and revenue mix, which is primarily composed of recurring revenue with low churn.

In addition, AT&T has a very conservative payout ratio in the context of its outstanding dividend yield. The company is on pace to deliver adjusted earnings-per-share of around $3.50 for fiscal 2018 and currently pays a quarterly dividend of $0.50, which implies a payout ratio of just 57%. For risk-averse investors looking for current income, AT&T has wide appeal.
 

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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