Back on the subject of investing for income, here are the latest dividend stock recommendations from U.S. News Invested.
InvestedAdvice, rankings and stock market news for investors. |
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TODAY'S FEATURED STOCK STORY The last decade of very low interest rates, plus stock gains that outstripped increases in dividend payments, made it harder for retirement investors to live off income from dividends and interest. The dividend yield of the S&P 500 index is now just 1.5%, down from about 2% for much of the 2010s.
Is there a way to position yourself to reap dividends in this environment? Of course there is.
"Just buying the top yielders is not a good idea," said Sam Stovall, chief investment strategist at CFRA Research. "You need to look at percentage of profits the company pays as dividends, and the S&P Earnings & Dividends Quality Rankings."
That doesn't necessarily mean the top yielders are bad plays, though. Here's a look at the top nine dividend-paying stocks of the S&P 500, in reverse order of dividend yield:
Lincoln National Corp. (ticker: LNC). Shares of Lincoln tanked after the Philadelphia-area insurer announced third-quarter results that included a $2 billion write-down it blamed on "updated guaranteed universal life insurance lapse assumptions in response to emerging experience, combined with recently validated external industry perspectives." In other words, it had to change assumptions about a series of issues in its life insurance business, including how long policyholders would retain their universal life coverage as they aged and how long they might live.
The company's net income, let alone its cash flow, used to easily cover the $300 million-plus it spent on dividends annually. But then, its yield used to be much lower when the stock price was at $75 a share in 2021, compared with around $26 now. With losses continuing into the first quarter of 2023, and the company cutting costs and suspending share buybacks, the dividend could land on a future list of cuttable expenses if Lincoln doesn't right its ship. On the bright side, the stock has risen since the first-quarter earnings, as executives express confidence in Lincoln's ability to raise fresh capital, and ride its profitable annuities unit as it refocuses its life insurance business.
Dividend yield: 6.9%
Diamondback Energy Inc. (FANG). This oil and gas producer from Texas' Permian Basin focuses primarily on fracking along the Wolfcamp and Spraberry shale formations within Midland basin and the Wolfcamp and Bone Spring formations of the Delaware basin. While the boom-and-bust of the oil and gas industry can lead to volatile payouts, Diamondback also owns midstream assets (the picks and shovels) including 770 miles of crude oil and natural gas gathering pipelines along with an integrated water system.
Diamondback has an elevated trailing dividend due to special dividends paid out as oil and gas prices rose in 2022. It's also been growing its quarterly dividend from a 40-cent quarterly payout in the first half of 2021 to 80 cents per share in its most recent quarter. The company has been on the rise in July as it approaches its anticipated second-quarter earnings release on July 31.
Dividend yield: 7%
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| TRAILING DIVIDEND YIELD (AS OF JULY 12) | | Lincoln National Corp. (ticker: LNC) | 6.9% | | Diamondback Energy Inc. (FANG) | 7% | | AT&T Inc. (T) | 7.3% | | Verizon Communications Inc. (VZ) | 7.5% | | Coterra Energy Inc. (CTRA) | 7.9% | | KeyCorp (KEY) | 8% | | Altria Group Inc. (MO) | 8.2% | | Devon Energy Corp. (DVN) | 8.8% | | Pioneer Natural Resources Co. (PXD) | 10.7% |
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