Advertisement
investing

How to Pick the Best S&P 500 Dividend Stocks

The index is home to multiple companies with attractive yields.

Looking for decent income while you wait (and wait) for the Federal Reserve to start raising interest rates? Consider dividend-paying stocks. You don’t have to wander far to find attractive dividend payers. Just look at Standard & Poor’s 500-stock index. Of its 500 member companies, 84% pay dividends, up from 75% a decade ago. On top of that, many of the index’s constituents are rewarding shareholders by boosting their payouts.

Advertisement - Article continues below

Broadly speaking, you can divide dividend stocks into two groups. The first group consists of high-yielding stocks. The S&P 500 itself yields about 2%, but you can find a number of solid S&P 500 members that yield at least double that; in other words, stocks that yield 4% and up.

When looking at high-yielding stocks, the key is identifying companies that have the financial resources to keep paying those generous dividends. Among well-known names that fit the bill and that we consider attractive are tobacco giant Altria Group (MO), General Motors (GM) and Verizon Communications (VZ).

The second group consists of companies that are rapidly increasing their dividends. Their stocks typically yield less than the S&P 500, but these companies have better opportunities for capital appreciation. To find great dividend boosters, we looked for companies that had raised their payouts by at least 10% annualized over the past five years. Beyond that, we wanted firms with solid growth prospects, figuring that those companies were most likely to boost their disbursements.

Advertisement
Advertisement - Article continues below

The list of some of our favorite dividend-growth stocks is both eclectic and surprising. Among our choices are diesel engine maker Cummins (CMI); Principal Financial Group (PFG), a financial-services company with a growing asset-management business; and consulting and technology-services firm Accenture (ACN), which through a quirk of history is in the S&P 500 even though the company today is headquartered in Ireland.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020

Recommended

13 Dividend Stocks That Have Paid Investors for 100+ Years
stocks

13 Dividend Stocks That Have Paid Investors for 100+ Years

Here are 13 dividend stocks that each boast a rich history of uninterrupted payouts to shareholders that stretch back at least a century.
May 21, 2020
20 Dividend Stocks to Fund 20 Years of Retirement
stocks

20 Dividend Stocks to Fund 20 Years of Retirement

These 20 high-quality dividend stocks yield roughly 4% or higher and should grow their payouts even more -- a powerful 1-2 combo for retirement income…
March 9, 2020
3 Municipal Bond Funds for Rich, Tax-Friendly Yields
Investing for Income

3 Municipal Bond Funds for Rich, Tax-Friendly Yields

Municipal bond funds allow you to enjoy the benefits of tax-exempt income. By investing in CEFs, you can sweeten the pot even further.
July 13, 2020
Closing Bell 7/10/20: Gilead Gives Stocks a Booster Shot
Markets

Closing Bell 7/10/20: Gilead Gives Stocks a Booster Shot

Stocks rallied out of negative territory Friday after Gilead announced that remdesivir helped reduce COVID-19 mortality risk in a clinical trial.
July 10, 2020