Defensive investors like investing in high dividend stocks as such stocks can protect them from inflationary risks. We are concerned about the Fed’s inflationary monetary policy and therefore we recommend investors to play defensively by purchasing stocks with high dividend yields. These stocks have outperformed the market so far this year and held up well during the sharp declines in August and September. We believe high dividend stocks are great alternatives to 10-year Treasuries which currently yield less than 2%.
Below we compiled a list of high dividend stocks with the highest dividend yields in their sectors. All companies have at least $10 billion market cap and over 4% dividend yield, and are among the top two in their sectors in terms of dividend yields. The market data is sourced from Finviz.
Ticker | Company | Sector | Dividend Yield | YTD Return |
SCCO | Southern Copper Corp. | Basic Materials | 8.24% | -34.29% |
KMP | Kinder Morgan Energy | Basic Materials | 5.74% | 22.40% |
MO | Altria Group Inc. | Consumer Goods | 5.49% | 26.85% |
RAI | Reynolds American Inc. | Consumer Goods | 5.46% | 33.11% |
NLY | Annaly Capital | Financial | 14.45% | 3.04% |
HCP | HCP, Inc. | Financial | 4.84% | 13.60% |
LLY | Eli Lilly & Co. | Healthcare | 4.77% | 23.86% |
MRK | Merck & Co. Inc. | Healthcare | 4.53% | 7.73% |
LMT | Lockheed Martin | Industrial Goods | 5.09% | 17.17% |
WM | Waste Management | Industrial Goods | 4.27% | -10.16% |
PAYX | Paychex Inc. | Services | 4.23% | 1.85% |
CTL | CenturyLink, Inc. | Technology | 8.08% | -16.25% |
T | AT&T, Inc. | Technology | 5.91% | 4.97% |
FE | FirstEnergy Corp. | Utilities | 5.07% | 23.35% |
EXC | Exelon Corporation | Utilities | 4.96% | 6.84% |
Southern Copper Corp. (SCCO): SCCO is an integrated copper producer. SCCO has a dividend yield of 8.24% and lost 34.29% since the beginning of this year. It has a market cap of $25.1B and a P/E ratio of 11.06. John Burbank’s Passport Capital invested $27.5 million in SCCO.
Altria Group Inc. (MO): Altria Group is the biggest cigarettes manufacturer in the world. MO has a dividend yield of 5.49% and returned 26.85% since the beginning of this year. It has a market cap of $61.4B and a P/E ratio of 17.88. Tom Russo’s Gardner Russo & Gardner had $190 million invested in MO shares.
Annaly Capital Management, Inc. (NLY): Annaly Capital Management manages a portfolio of real estate related investments. NLY has a dividend yield of 14.45% and gained 3.04% since the beginning of this year. It has a market cap of $16.1B and a P/E ratio of 8.65. Bill Miller’s Legg Mason Capital Management invested $117 million in NLY shares.
Eli Lilly & Co. (LLY): Eli Lilly and Company develops, manufactures and sells pharmaceutical products. LLY has a dividend yield of 4.77% and returned 23.86% since the beginning of this year. It has a market cap of $47.6B and a P/E ratio of 9.81. Jim Simons’ Renaissance Technologies invested $262 million in LLY stocks.
Lockheed Martin Corporation (LMT): Lockheed Martin Corporation designs and manufactures advanced technology systems and products. LMT has a dividend yield of 5.09% and gained 17.17% since the beginning of this year. It has a market cap of $25.4B and a P/E ratio of 9.85. Jean-Marie Eveillard’s First Eagle Investment Management had $274 million LMT stocks.
Paychex Inc. (PAYX): Paychex provides payroll, human resource, and benefits outsourcing solutions for small to medium-sized businesses. PAYX has a dividend yield of 4.23% and returned 1.85% since the beginning of this year. It has a market cap of $11.0B and a P/E ratio of 20.57. David Blood and Al Gore’s Generation Investment Management had $83 million invested in PAYX.
CenturyLink, Inc. (CTL): CenturyLink is a communications company. CTL has a dividend yield of 8.08% and lost 16.25% since the beginning of this year. It has a market cap of $22.2B and a P/E ratio of 20.17. Phill Gross and Robert Atchinson invested $83 million in CTL.
FirstEnergy Corp (FE): FirstEnergy holds eight principal electric utility operating subsidiaries. FE has a dividend yield of 5.07 % and returned 23.35% since the beginning of this year. It has a market cap of $18.1B and a P/E ratio of 18.07. Jean-Marie Eveillard’s First Eagle Investment Management invested $553 million in FE shares as well.
Disclosure: I am long T, CTL, FE.
There are some reasons to look at a stock’s dividend yield. To see how much money you’ll make by holding it. The higher the yield, the more money you will earn.
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