Which Stocks Pay The Highest Dividends? [December 2023]

Written By Ben Broadwater

Updated December 8, 2023

Investors around the world are asking, “which stocks pay the highest dividends?” Dividends are a great way to generate income from your investments. When a company pays a dividend, it is distributing a portion of its profits to its shareholders. Dividends can be paid weekly, monthly, quarterly, semi-annually, or annually.

There are many different factors to consider when choosing dividend stocks. Some investors look for stocks with high dividend yields, while others focus on companies with a long history of paying dividends. It is also important to consider the company’s financial health and its future prospects.

Which Stocks Pay The Highest Dividends?

Which Stocks Pay The Highest Dividends?

Before we get into our list, let’s go over some of the basics surrounding dividends.

Why Some Stocks Pay High Dividends

  • Company maturity: More mature companies are more likely to have higher dividends than younger companies. This is because mature companies have a longer track record of profitability and are more likely to have a steady stream of cash flow.
  • Industry: Some industries are more likely to have higher dividends than others. For example, real estate investment trusts (REITs) and utilities are required to pay out a certain percentage of their profits as dividends.
  • Dividend policy: Some companies have a policy of paying out a higher percentage of their profits as dividends than others. This is often done to attract investors who are looking for income.

What Are Dividends?

Dividends are payments made by a company to its shareholders out of its profits. Dividends can be paid in cash, stock, or other property. Companies typically pay dividends on a quarterly basis, but some companies pay dividends semi-annually or annually.

Why Do Companies Pay Dividends?

Companies pay dividends for a variety of reasons. Some companies pay dividends to reward their shareholders for investing in the company. Other companies pay dividends to attract new investors or to keep existing shareholders invested in the company.

What Are the Benefits of Dividend stocks?

There are a number of benefits to investing in dividend stocks. One benefit is that dividend stocks can provide a steady stream of income. This is especially beneficial for investors who are retired or who are nearing retirement.

Another benefit of dividend stocks is that they can help to reduce portfolio volatility. This is because dividend stocks typically have lower beta coefficients than non-dividend stocks. Beta is a measure of a stock’s volatility relative to the overall market.

What Are the Risks of Dividend Stocks?

The main risk of dividend stocks is that the company may reduce or eliminate its dividend. This can happen if the company’s profits decline or if the company needs to conserve cash for other purposes.

Another risk of dividend stocks is that the company’s stock price may decline. This can reduce the overall return on your investment. 

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Here are some specific examples of why some stocks have higher dividends:

  • REITs: REITs are required by law to pay out at least 90% of their taxable income as dividends. This is because REITs are designed to provide investors with income from real estate investments.
  • Utilities: Utilities are natural monopolies, which means that they have little competition. This gives them a steady stream of cash flow, which they can use to pay dividends to shareholders.
  • Consumer staples: Consumer staples companies sell products that people need to buy regardless of the state of the economy. This gives them a predictable stream of revenue, which they can use to pay dividends to shareholders.
  • Telecom companies: Telecom companies have a large customer base and a high level of recurring revenue. This gives them a steady stream of cash flow, which they can use to pay dividends to shareholders.

How To Choose Dividend Stocks

When choosing dividend stocks, there are a number of factors to consider. Some of the most important factors include:

  • Dividend yield: The dividend yield is the annual dividend divided by the current stock price. It is a measure of how much income you can expect to generate from your investment.
  • Dividend growth rate: The dividend growth rate is the average annual percentage increase in the dividend over time. It is a measure of how much your income is likely to grow in the future.
  • Company financial health: It is important to consider the company’s financial health before investing in any stock, including dividend stocks. Look at the company’s balance sheet and income statement to get a sense of its financial strength.
  • Company future prospects: It is also important to consider the company’s future prospects before investing in any stock. Look at the company’s industry and its competitive landscape.

Also, it is good to remember that dividend investing is a long-term strategy. Dividend stocks can be a good way to generate income and reduce portfolio volatility over the long term. However, it is important to be patient and to reinvest your dividends to maximize your returns.

Which Stocks Pay The Highest Dividends? – Here Are 8 To Consider

Here is a list of some of the stocks with the highest dividends as of October 3, 2023:

  • Big 5 Sporting Goods Corp (BGFV): 14.06%
  • Apollo Commercial Real Estate Finance Inc (ARI): 14.04%
  • Blue Ridge Bankshares Inc (VA) (BRBS): 13.73%
  • Chicago Atlantic Real Estate Finance Inc (REFI): 13.50%
  • Physicians Realty Trust (DOC): 7.62%
  • AT&T (T): 7.40%
  • Enterprise Products Partners (EPD): 7.29%
  • Leggett & Platt (LEG): 7.26%

It is important to note that dividend yields can fluctuate over time, depending on the stock price and the company’s dividend policy. Before investing in any stock, including high-dividend stocks, make sure the company is financially healthy and has good prospects for the future.

Tips For Investing in Dividend Stocks:

Diversify your portfolio

Don’t put all your eggs in one basket. Invest in a variety of dividend stocks from different industries and sectors.

Reinvest your dividends

Reinvesting your dividends is one of the best ways to grow your wealth over the long term. When you reinvest your dividends, you are essentially buying more shares of the company. This can help you to increase your dividend income over time.

Keep a long-term investment horizon

Dividend investing is a long-term strategy. It takes time to build a dividend portfolio and to generate meaningful income from your investments. Don’t expect to get rich quick with dividend investing. Be patient and stay invested for the long term.

Additional tips for investing in dividend stocks

  • Consider investing in dividend ETFs. Dividend ETFs can be a good way to diversify your portfolio and invest in a basket of dividend-paying stocks.
  • Don’t panic sell. When the market is volatile, it is important to stay calm and avoid panic selling. Dividend stocks can help to weather the storm during market downturns.
  • Rebalance your portfolio regularly. Rebalancing your portfolio regularly can help to ensure that you are still on track to meet your investment goals.

Which Stocks Pay The Highest Dividends – Conclusion

Dividend investing is a great way to generate income and reduce portfolio volatility over the long term. By following the tips above, you can increase your chances of success as a dividend investor.

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