When it comes to investing in dividend-paying stocks, sometimes bigger is better. Any company that can afford to spend billions on dividend payments each year must have a solid business model. Otherwise, it would never promise to share so much wealth with its shareholders.
So which companies are the biggest dividend payers on the market today? Here's a closer look at eight companies that have spent at least $8 billion on dividend payments over the past year.
This company has turned into a dividend monster
Sporting a market cap of around $765 billion, tech giant Apple (NASDAQ:AAPL) has become one of the world's largest publicly traded companies. Long-term shareholders can credit the company's phenomenal run to the tremendous popularity of the iPhone, while other products such as the iPad, Apple TV, the Apple Watch, and Mac computers, have helped round out the company's ecosystem.
Over the past four quarters, Apple's suite of products has cranked out more than $45 billion in total profits. With so much cash coming in, Apple's management team has made a commitment to return a huge amount of its excess capital to shareholders. Part of that plan calls for regular dividend payments, and over the past 12 months, Apple has put more than $12 billion directly into shareholders' pockets. While Apple's 1.7% yield might not seem all that high, that $12 billion makes Apple the largest dividend payer on this list.
This big oil stock is on the rebound
The enormous plunge in oil and gas prices has hit every energy company hard over the past few years. That includes energy giant Chevron (NYSE:CVX), as the integrated oil company's financial statements are sensitive to big commodity price swings. From peak to trough, Chevron's revenue plunged nearly 50% through the downturn, while profits fell even harder.
Despite the pain, Chevron remained committed to paying out its strong dividend. That's quite an accomplishment, as its total dividend payments of more than $8 billion have dwarfed the company's net income of $2.9 billion over the past four quarters. Chevron has largely relied on asset sales to help fund the difference between the two numbers.
The company's recent results are starting to paint a rosier picture. Production and energy prices are climbing, while costs are on the decline. If this trend holds up, then Chevron's profitability should start to bounce back.
A conglomerate in transition
General Electric (NYSE:GE) has reinvented itself several times since its founding more than a century ago. In recent years, GE has been focused on returning to its industrial roots and has been selling off a variety of business units. Investors also recently learned that longtime CEO Jeff Immelt is stepping aside and being replaced by industry veteran John Flannery to keep the transition going.
In spite of all of the changes, GE has remained committed to using its huge financial resources to reward its shareholders. Over the past 12 months, GE has spent more than $8.5 billion on dividend payments. At current prices, GE's stock yields more than 3.4%. If Flannery's changes can get the company's profit engine humming, then shareholders should be able to expect ever more dividend bumps in the years ahead.
The Band-Aid maker has been rewarding shareholders for decades
Johnson & Johnson (NYSE:JNJ) has been an acquisition machine for decades and now counts more than 250 operating companies in its empire. Its companies sell products in three broad product categories: consumer products, medical devices, and pharmaceuticals. While all three divisions churn out predictable profits, the company is counting on its pharmaceutical division to deliver revenue and profit growth over the next few years.
One big benefit of selling healthcare products is that demand tends to be very stable. That has afforded Johnson & Johnson will the luxury of being able to pass along regular price increases and provide its shareholders with regular dividend bumps. In fact, J&J has grown its dividend for 54 years in a row.
Over the past year, J&J has paid out more than $8.6 billion in dividends to its investors, which gives its stock a yield of more than 2.5%. That's impressive, but since its dividend payment consumes only about half of net income, there appears to be plenty of room left for dividend increases down the road.
Moving to the cloud
Microsoft (NASDAQ: MSFT) was slow to embrace the cloud-computing revolution, but all of that changed when CEO Satya Nadella took the reins in 2014. The company has since invested aggressively to move its iconic Office suite of products into the cloud. In addition, Microsoft's Azure web-services platform is growing quickly and currently holds the second-place spot behind Amazon.com. When combined with the success of its Surface products, Mr. Softy's profits have trended in the right direction over the past few years.
With a growing pile of profits, Microsoft has used its ample cash hoard to reward shareholders with regular dividend increases. Over the past year, Microsoft has spent more than $11.6 billion on its dividend payments, and that generous payout represents only about two-thirds of the company's $17.8 billion in total net income. With profits expected to increase as the company's move to the cloud continues to takes hold, investors should be able to expect more dividend bumps from here.
A megamerger is under way
AT&T (NYSE: T) has enjoyed surging demand for wireless data as consumers have raced to get their hands on the largest and greatest smartphone. However, the market now appears to be saturated, and wireless prices are falling, so the company is looking for a new avenue to drive profit growth from here. That's why the company is pushing hard to complete its $108 billion acquisition of Time Warner. If the deal goes through, the company will be far more diversified and should have an easier time retaining customers by offering more attractive packaged deals.
AT&T's investors should have their fingers crossed that the deal goes through, since the company's payout ratio is getting uncomfortably high. In the past year, AT&T has spent more than $11.7 billion on dividend payments, which is awfully close to the $12.5 billion in net income the company pulled in. While AT&T's 5% dividend yield is enticing, there isn't a whole lot of wiggle room should profits take a dip. That could happen if regulators choose to block the Time Warner transaction and wireless prices continue to fall. And that could put the company's 32-year-long history of consecutive dividend increases in jeopardy.
Pumping out profits during the downturn
ExxonMobil is another energy giant that's been a bankable long-term investment. The company has paid out a growing dividend for 35 consecutive years, which includes its recent 2.7% bump earlier this year. Exxon's enviable track record has been driven by its management team's knack for using capital effectively. The company places an emphasis on funding projects that have high returns on capital, which helped to keep its profit engine humming throughout the recent downturn.
Over the past year, Exxon has churned out more than $10 billion in net income, which is impressive given the energy slump. While that wasn't enough to fully cover the $12.7 billion spent on dividends, Exxon's profits are on the upswing thanks to cost-cutting measures and stronger commodity prices. With plenty of growth projects waiting in the wings, it might not be long before ExxonMobil's earnings fully cover the 3.7% dividend yield.
Connecting you to income
Verizon Communications (NYSE: VZ) is another dominant telecommunications giant that cranks out huge amounts of profits each year. While the company is also experiencing pricing pressure in the wireless space, the company's recent move to offer unlimited data is helping keep its customers loyal. Like AT&T, Verizon has gone on a spending spree as of late, as a way to drive future profit growth. The company recently bought out both AOL and Yahoo! in an effort to build out its digital advertising business.
Verizon has increased its dividend each year for more than a decade and currently offers a 5% yield. Over the past year, its dividend has consumed $9.2 billion, but that's only about 75% of the $12.2 billion in net income it pulled in. If the company's big bets on digital advertising pay off, the company's streak of dividend increases shoulnd be able to continue from here.
Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Brian Feroldi owns shares of Amazon and Apple. The Motley Fool owns shares of and recommends Amazon, Apple, Johnson & Johnson, and Verizon Communications. The Motley Fool owns shares of General Electric. The Motley Fool recommends Chevron and Yahoo. The Motley Fool has a disclosure policy.