High yield stocks can provide an investor with a steady stream of income.
Dividend payments are one way companies can share a portion of the company's profits with shareholders. The stocks in the Standard & Poor's -- S&P -- 500 stock index represent the 500 largest U.S. companies. The total return from stock investing involves both share price appreciation and dividend earnings. Some investors prefer high-yield, dividend-paying stocks to earn the majority of the investment return as dividends.
Stock Dividend Yield Considerations
The current dividend yield of a stock is valid for just a moment in time. As the stock share price goes up, the yield will decline; if the stock price falls, the current yield will increase. But the current dividend rate of a stock is not guaranteed. A company can elect to increase, decrease or eliminate the dividend at any time. Investors looking for high-yield stocks should study the dividend history and company dividend policy of any stocks considered for investment.
S&P 500 Dividend Facts
As of late April 2011, 338 of the 500 S&P 500 stocks were making regular dividend payments. The average dividend yield for all 500 stocks was 1.73 percent. The average yield of the stock that was paying dividends and not including the zero-dividend stocks was 2.23 percent. The data used to calculate the yield for each S&P 500 stock used the current share price and the projected dividend payout for the next 12 months.
Highest Dividend Yield Stocks
On the effective date of this data in late April 2011, the highest-dividend stock in the S&P 500 was Frontier Communications, yielding 9.36 percent. The rest of the top five stocks and their yields were:
Windstream: 7.97 percent.
Century Link: 7.36 percent.
Altria: 6.17 percent.
Reynolds American: 6.08 percent.
The top three yielding stocks are all domestic telephone service companies; numbers four and five are cigarette companies.
Other Dividend Stocks
Of the 500 stocks in the S&P 500, on the date of this data, 22 stocks had yields of more than 5 percent. Most of these companies were utility stocks such as telephone or power companies. Well-known names with high-dividend yields included AT&T at 5.7 percent, Verizon Communications at 5.37 percent, Merck at 4.43 percent and H.J. Heinz at 3.87 percent. Of the 388 dividend-paying stocks, 82 had listed dividend yields of less than 1 percent.
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