High dividend stocks are supposed to be a safe stock option.
So why don’t I like these high-yield dividend stocks?
I’ll get into that later. First, I want to give you a quick overview of what these stocks actually are.
Table of Contents
- 1 What Are High Dividend Stocks?
- 2 What Is a Dividend?
- 3 Defining High Dividend Stocks
- 4 Why I Don’t Invest in High Dividend Stocks
- 5 18 High-Dividend Stocks
- 5.1 High Dividend Stock #1. Ares Capital Corp. (NASDAQ: ARCC)
- 5.2 High-Dividend Stock #2. Chevron Corp. (NYSE: CVX)
- 5.3 High Dividend Stock #3. GlaxoSmithKline plc (NYSE: GSK)
- 5.4 High Dividend Stock #4. Hess Midstream LP (NYSE: HESM)
- 5.5 High Dividend Stock #5. IBM Common Stock (NYSE: IBM)
- 5.6 High Dividend Stock #6. Kinder Morgan Inc. (NYSE: KMI)
- 5.7 High Dividend Stock #7. Lumen Technologies Inc (NYSE: LUMN)
- 5.8 High Dividend Stock #8. Altria Group (NYSE: MO)
- 5.9 High Dividend Stock #9. Annaly Capital Management (NYSE: NLY)
- 5.10 High Dividend Stock #10. New York Community Bancorp (NYSE: NYCB)
- 5.11 High Dividend Stock #11. ONEOK (NYSE: OKE)
- 5.12 High Dividend Stock #12. Owl Rock Capital Corp. (NYSE: ORCC)
- 5.13 High Dividend Stock #13. PPL Corp. (NYSE: PPL)
- 5.14 High Dividend Stock #14. SL Green Realty Corp. (NYSE: SLG)
- 5.15 High Dividend Stock #15. AT&T Inc. (NYSE: T)
- 5.16 High Dividend Stock #16. Valero Energy Corp. (NYSE: VLO)
- 5.17 High Dividend Stock #17. Williams Cos. Inc (NYSE: WMB)
- 5.18 High Dividend Stock #18. Exxon Mobil Corp. (NYSE: XOM)
- 6 See the Stocks on My Radar
- 7 Conclusion
What Are High Dividend Stocks?
This one’s pretty easy. A high dividend-yielding stock is a stock that produces high dividends.
As for the harder question…
What Is a Dividend?
Dividends are typically paid quarterly. They may also be issued in conjunction with one-time events, such as a big merger.
A dividend’s value is figured by something called a yield. In the context of the stock market, yield is a way of measuring the dividend relative to the share price.
There are quite a few high dividend blue-chip stocks. Why? Since large-cap companies tend to be stable, their stock prices don’t move a ton. Dividends are a nice perk to entice and retain shareholders. It’s the company’s way of showing they notice and appreciate you.
As the shareholder, it’s like you’re receiving a little bonus based on the company’s profits. Dividends are more geared to long-term investors than to traders.
Defining High Dividend Stocks
High-dividend stocks are just that: stocks that pay high dividends.
There isn’t one rate that’s a cutoff for high versus low dividend stocks. It’s because they’re relative to the market. A yield that might be considered high today might have seemed low a decade or two ago.
Most say that 4% or greater is a high-yielding dividend stock. Some might count it from 3%, and some might say 5% or higher.
To get a better idea, you can view a list of the highest dividend stocks on the Nasdaq.
But I don’t think you waste time on stocks with the highest dividends! If a stock is paying a super-high dividend, it’s typically not the safest high-dividend stock. Yes, the yield is higher, but so is the risk level.
Stocks aren’t the only option for high dividends. You can also explore high-dividend stock ETFs. These offer a different way into the dividend-giving world.
Why I Don’t Invest in High Dividend Stocks
Investing in stocks is fine for some people. Maybe they want to profit from market growth without putting in much effort. There are some perfectly nice and relatively safe stocks that would serve that purpose.
Investing in high dividend-paying stocks can be part of this strategy.
The thought is that the best stocks have the best profits. And stocks with the highest dividend yields are the best at sharing these profits.
You get to take profits, and you don’t have to keep tabs on the market — what’s the problem?
Well, there are a few.
First, this ‘set it and forget it’ mindset doesn’t always work.
Take a company like General Electric (NYSE: GE). For years, GE was one of the safest high-yield dividend stocks. It paid a high dividend and was also a growth stock, outside of a few market disruptions.
That all changed a few years ago. As GE’s stock started to dive in 2017, its near-4% dividend held up … for a while. But eventually, it crashed too. And investors were left with a devalued stock with a 0.3% dividend.
Even if there were such a thing as a safe high-dividend stock, I probably still wouldn’t trade it. That’s because stock value is no longer exclusively tied to profits. It’s tied to a company’s future value.
18 High-Dividend Stocks
This high dividend stocks list features some of the highest dividend stocks from 2020 and 2021.
That won’t matter much for most short-term traders. Most of these high-yield shares are quarterly, not monthly, dividend stocks. And even if you stick around for the dividend’s pay date, chances are the stock’s value will decline after.
I think these are some of the best high dividend stocks, but it’s not because of their dividends. Check the price action on these stocks. Most are movers, regardless of the amount they pay out.
That makes them the kind of stocks we look for in my Trading Challenge. We’re not interested in steady and predictable stocks. We want stocks that move on news catalysts. And dividend payments can be good catalysts.
Read on for a trader’s view on stocks with high dividend yields. And remember: this is only a list of stocks to watch. This list is in no way a recommendation to trade. Always do your own research and due diligence.
(The definition of ‘best high dividend stock’ is subjective and may differ depending on your trading strategy, knowledge, goals, and circumstances.)
High Dividend Stock #1. Ares Capital Corp. (NASDAQ: ARCC)
- Latest quarterly dividend: 40 cents/share
- Dividend yield: 8.20%
Like much of the market, ARCC took a nosedive in March 2020. But after it fell by half, it started to climb.
Now it’s almost back at its pre-pandemic highs. And it’s stayed one of the higher-paying dividend stocks.
ARCCl finances companies in a variety of sectors, including some that have struggled in the past year. I guess it’s smart about its financing because all this exposure didn’t hurt it.
High-Dividend Stock #2. Chevron Corp. (NYSE: CVX)
- Latest quarterly dividend: $1.29
- Dividend yield: 5.11%
CVX’s turbulent 2020 hasn’t hurt its dividend. The stock’s price fell sharply twice and spiked three times. But the dividend yield is as high as it’s ever been.
CVX is active in both upstream and downstream energy. The upstream part of its business is the exploration and production of energy products. The downstream part includes its chain of gas stations.
This all made this high-yield dividend stock the 61st-largest public company in the world in 2020.
High Dividend Stock #3. GlaxoSmithKline plc (NYSE: GSK)
- Latest quarterly dividend: 64 cents
- Dividend yield: 5.60%
Pharma was a hot sector in 2020, and GSK has a few moves it can look back on. But now it’s back in the $30s, close to its March 2020 lows.
GSK has a strong dividend history that looks to be headed for a reversal. The company’s recent announcement that it would revise its dividend policy is a bit of a turn-off … Using the cash for acquisitions wouldn’t show great confidence in GSK’s house brands.
High Dividend Stock #4. Hess Midstream LP (NYSE: HESM)
- Latest quarterly dividend: 45 cents
- Dividend yield: 8.03%
Hess has had a fairly boring year after its climb out of the March trenches.
Even though its growth has been tame, the dividends keep creeping up. In October 2020, it reached 9.98%, which is a high for recent years.
Hess Midstream does midstream energy business, transporting and storing oil and gas.
High Dividend Stock #5. IBM Common Stock (NYSE: IBM)
- Latest quarterly dividend: $1.63
- Dividend yield: 4.61%
IBM is another stock that chopped its way through the past year. Not too exciting.
Its dividends have seen some growth, though. It’s had some recent highs…
IBM is as blue chip as tech stocks get. In recent years, it’s been moving into growth sectors like the Internet of Things and blockchain.
High Dividend Stock #6. Kinder Morgan Inc. (NYSE: KMI)
- Latest quarterly dividend: 27 cents
- Dividend yield: 6.60%
Another energy stock makes the list…
Energy stocks target retirees and other income-oriented investors. These types are looking for the safest high-dividend stocks…
As for KMI, it’s paying out at relatively high levels compared to the past few years. And it’s not the most boring stock out there.
High Dividend Stock #7. Lumen Technologies Inc (NYSE: LUMN)
- Latest quarterly dividend: 25 cents
- Dividend yield: 7.69%
This telecom stock has one of the highest historical dividends on our list. It’s stayed near 10% for most of the past four years — hitting as high as 14.61%.
LUMN was one of the stocks targeted by the Reddit crowd … Its short interest was close to 10% as it headed into its January spike.
Regardless of the spike, I like this chart. It’s been following a pretty clear stair-stepper pattern since November. That’s when news of a collaboration with Zoom Video Communications Inc. (NASDAQ: ZM) broke.
High Dividend Stock #8. Altria Group (NYSE: MO)
- Latest quarterly dividend: 86 cents
- Dividend yield: 7.40%
2020 wasn’t a good year for MO’s legacy tobacco business. This shouldn’t surprise anyone, given the focus on respiratory health. The company diversified enough to chop its way through the year.
With a more cannabis-friendly government, this diversifying has started to pay off. Since the November elections, the stock is up 37%. And its dividends are as high as ever.
High Dividend Stock #9. Annaly Capital Management (NYSE: NLY)
- Latest quarterly dividend: 22 cents
- Dividend yield: 10.05%
March 2020 was the cruelest month for this formerly stable real estate stock. It was down over 60% by the time its slide was done…
It ground its way back up over the following year. And its dividends have stayed above 10%.
High Dividend Stock #10. New York Community Bancorp (NYSE: NYCB)
- Latest quarterly dividend: 17 cents
- Dividend yield: 5.81%
This is a bank holding company stock. It isn’t too exciting, except for a recent multi-day run.
Some see it as a cash cow — for traders who are interested in that kind of thing. It pays out around 88% of its earnings in dividends.
High Dividend Stock #11. ONEOK (NYSE: OKE)
- Latest quarterly dividend: 94 cents
- Dividend yield: 7.33%
This energy stock had one of the steepest falls from its February 2020 highs. Over the course of the following month, it fell by 73%.
That means more to investors in this Fortune 500 company than to us traders … but the recovery has been good for trading, too.
The stock is up about 150% since its 2020 lows, on a multi-month run that started in November.
High Dividend Stock #12. Owl Rock Capital Corp. (NYSE: ORCC)
- Latest quarterly dividend: 31 cents
- Dividend yield: 8.68%
Owl Rock Capital is a business development company that invests in mid-sized companies.
The stock sloped down from a December 2019 high to its March 2020 low. Except for a couple of spikes since then, its recovery has been fairly static.
Through it all, it’s continued to deliver high yields.
High Dividend Stock #13. PPL Corp. (NYSE: PPL)
- Latest quarterly dividend: 42 cents
- Dividend yield: 5.73%
PPL is a high dividend utility stock. It’s an electricity and natural gas company.
This is another boring, consistent stock. It crashed hard in March 2020. Ever since it’s mostly stayed within its May-to-June recovery range.
High Dividend Stock #14. SL Green Realty Corp. (NYSE: SLG)
- Latest monthly dividend: 30 cents
- Dividend yield: 5.23%
SLG is Manhattan’s largest office landlord … Not great in the work-from-home era. It’s still managed a few multi-day runs post-March 2020.
Dividends have been a different story. The company made a bundle selling a midtown office building in the last quarter of 2020.
Then they had to distribute this cash influx to shareholders. Part of it went toward a switch from a quarterly to a high monthly dividend for this stock. At one point, dividends topped 37%!
High Dividend Stock #15. AT&T Inc. (NYSE: T)
- Latest quarterly dividend: 52 cents
- Dividend yield: 6.63%
Why should you care about this range-bound blue-chip stock?
It’s a low-cost high dividend stock in the 5G sector, for one. And its HBO Max streaming business might provide a bump at some point in the future.
High Dividend Stock #16. Valero Energy Corp. (NYSE: VLO)
- Latest quarterly dividend: 98 cents
- Dividend yield: 5.72%
This is yet another energy stock climbing out of the March 2020 trenches. Valero’s chart has cleanly followed multi-month trends … It’s had a few spikes and multi-day runs in there too.
It’s a stock paying a high dividend, but its price point may be high for dividend traders.
High Dividend Stock #17. Williams Cos. Inc (NYSE: WMB)
- Latest quarterly dividend: 41 cents
- Dividend yield: 7.06%
Another energy stock with a high dividend yield…
This one has been a fairly consistent stock since its recovery from the March 2020 depths. It shot up over 150% between March and June and has been somewhat choppy ever since.
High Dividend Stock #18. Exxon Mobil Corp. (NYSE: XOM)
- Latest quarterly dividend: 87 cents
- Dividend yield: 6.30%
XOM’s dividend is under threat from a new activist investor … if a recent shareholder letter is to be believed.
Its dividend yield has only grown in recent years. And the stock has had a decent year for swing traders, with clean trends lasting several months.
See the Stocks on My Radar
I’ll be honest (again) … These stocks don’t do much for me. But even if I traded high-dividend stocks, I’d never tell you which ones to buy.
Never follow my picks. I want you to learn how to make your own picks…
You can learn this by seeing what goes into other people’s watchlists. I update several regularly:
- Sign up for my no-cost weekly watchlist here.
- Get my weekly top penny stocks to watch here.
- Love sectors? Check out the top biotech penny stocks on my list.
And here’s a video with top Trading Challenge trader Tim Grittani.* In it, he shares some of his tricks for building watchlists.
Use these resources to make your own watchlists. There’s a lot you can learn about the process.
We study how the market’s moving, what to look for in charts, and so much more. And we do it every day. I share my trades and watchlists to help traders like you learn the process.
The Challenge isn’t about ‘hot’ stock picks. I never recommend anyone follows alerts — mine or anyone else’s.
What do you think about high-dividend stocks? Do you think they’re good for traders? Let me know in the comments — I love hearing from my readers!
*Please note that these kinds of trading results are not typical and do not reflect the experience of the majority of individuals using our products. From January 1, 2020, to December 31, 2020, typical users of the products and services offered by this website reported earning, on average, an estimated $49.91 in profit. This figure is taken from tracking user accounts on Profit.ly, a trading community platform. It takes years of dedication, hard work, and discipline to learn how to trade. Individual results will vary. Trading is inherently risky. Before making any trades, remember to do your due diligence and never risk more than you can afford to lose. I’ve hired Tim to assist in my education business.