"A billion here, a billion there, and pretty soon you're talking about real money."
Whether or not the late U.S. senator from Illinois Everett Dirksen actually every said those exact words, the sentiment is undeniable. Billions of dollars certainly qualify as real money by anyone's definition.
Many top companies give plenty of real money back to their shareholders in the form of dividends. Five of the biggest dividend payers are ExxonMobil (NYSE:XOM), AT&T (NYSE:T), Verizon Communications (NYSE:VZ), General Electric (NYSE:GE), and Johnson & Johnson (NYSE:JNJ). Each of these stocks pays out over $8 billion each year in the form of dividends. Are these smart dividend stocks for investors right now?
The biggest oil company in the world is also one of the biggest dividend payers. In 2016, ExxonMobil returned nearly $12.5 billion to shareholders through dividends. So far this year, the company has paid out more than $6.4 billion in dividends.
ExxonMobil's dividend yield currently stands at 3.84%. The company has increased its dividend for 34 consecutive years. Can that streak continue? Probably so.
Granted, ExxonMobil has been spending more to cover its dividend than it's make on the bottom line lately. However, the big oil company's massive cash flow should allow it to keep those dividend checks flowing for a long time to come. Smaller players in the oil and gas industry could be shaken out if oil prices dropped too much, but ExxonMobil has weathered plenty of tough times in the past and is well positioned to do so in the future.
Telecommunications giant AT&T paid out nearly $11.8 billion in dividends last year. The company returned a little over $6 billion in the first six months of 2017.
A&T's shareholders currently enjoy a dividend yield of 5.1%. Like ExxonMobil, the company is a member of the elite group of stocks known as Dividend Aristocrats. To make this list, a record of 25 consecutive years of dividend increases is required. AT&T has hiked its dividend 32 years in a row.
Although AT&T uses a higher portion of its earnings to fund the dividend program than is ideal, the company should be in good shape to keep its solid history of dividend increases going. AT&T's cash flow remains very strong. The company could also get a boost from its planned acquisition of Time Warner.
Another large telecommunications company is also a great dividend stock. Verizon Communications returned $9.3 billion to shareholders in the form of dividends in 2016. So far in 2017, the company has paid out $4.7 billion in dividends.
Verizon's current dividend yield of 4.72% looks quite attractive. The company doesn't have as impressive a track record of dividend increases as AT&T, however. Still, Verizon has upped its dividend payout for each of the past 10 years. Its payout ratio is less than 60%, which indicates flexibility for continued dividend hikes in the future.
The wireless industry is super competitive. However, Verizon has staying power. The company's good second-quarter performance shows that it can make the changes needed to survive and thrive.
Industrial conglomerate General Electric (GE) paid $8.5 billion in dividends during 2016. In the first half of this year, the company paid $4.3 billion in dividends.
GE's dividend currently yields 3.72%. Although the company claimed an impressive streak of dividend increases in the past few decades, GE cut its dividend in 2009. GE had a few years of dividend hikes after then, but held its dividend payout steady from 2015 to 2016.
Incoming CEO John Flannery will no doubt have his hands full. GE's last quarter was a big disappointment. Still, though, dividend-seeking investors shouldn't have significant reasons to worry. GE's cash flow remains solid. The company should be able to keep the dividends coming at least at current levels.
Johnson & Johnson
Johnson & Johnson returned more than $8.6 billion to shareholders as dividends last year. So far in 2017, the healthcare giant has paid out $4.4 billion in dividends.
J&J's dividend yield stands at 2.52%. While that's the lowest of the five dividend stocks on our list, the company has by far the best track record of dividend hikes. J&J has increased its dividend for a remarkable 54 consecutive years.
I expect that streak to continue for a long time to come. J&J's cash flow is exceptionally strong. The company also boasts one of the best pipelines in big pharma despite a recent setback with a U.S. Food and Drug Administration advisory panel recommending against approval of experimental rheumatoid arthritis drug sirukumab.