Dividend stocks are much-loved among investors because of the stable income and potential for growth that they offer. For many, the higher the yield a stock has, the more attractive it is, although smart investors have also learned that they have to be careful with stocks that have extremely high yields. Although companies like CenturyLink and Seagate Technology have managed to remain stalwarts on the list of top-yielding S&P 500 dividend stocks, new entrants to the list show the volatility that such stocks can have.

The top 10 yields in the S&P 500

Here are the 10 highest-yielding stocks in the S&P 500 as of Oct. 10:


Dividend Yield



Seagate Technology




Iron Mountain


L Brands (NYSE:BBWI)


Kimco Realty




Helmerich & Payne






Data source: Yahoo! Finance. * Includes special dividend payment in January 2017.

You'll find several companies on the list that have held onto their positions among top dividend stocks for quite a while now. Notably absent is CenturyLink peer Frontier Communications, which fell off the list because it was removed from the S&P 500 due to its falling market cap. Adding insult to injury, Frontier subsequently cut its dividend by more than 60%, and only the fact that its stock has fallen even more precipitously explains how the stock has kept its sky-high yield.

A couple of trends are worth noting. The retail sector has remained weak, and that has led to L Brands showing up on the list. The company behind brands like Victoria's Secret and Bath & Body Works has seen its stock drop almost 40% over the past year, and a stable $0.60 per share quarterly dividend has resulted in L Brands' yield skyrocketing. In August alone, shares dropped more than 20% due to poor quarterly results and weak guidance. L Brands still sees itself earning $3 to $3.20 per share for the full year, which is enough to support its dividend for now. However, if the holiday season doesn't go as well as expected, then it could raise more questions about the sustainability of the payout.

Blue chart with word Dividends and sector symbols with differently shaded squares.

Image source: Getty Images.

Income-heavy sectors are showing up again

The other noteworthy trend on the current list is that traditional havens for income-producing investments have started to come back with top yields. Real estate investment trusts are required to pay out the vast majority of their income in order to keep favorable tax status, and that makes them sensitive to interest rate movements. Healthcare-industry REIT HCP has made some key strategic moves lately, including spinning off its skilled nursing properties last year. That resulted in a nominal dividend cut, but HCP has held onto an attractive yield. With the Fed moving to raise interest rates during 2017, investors have demanded more from income-focused investments like HCP and other REITs, and if that trend continues, more real estate investments could make the cut in the future.

The energy sector has also mounted a comeback, and that story is more attractive to investors. Improved outlooks for key players in the industry have led to some dividend increases, helping to bolster yields. ONEOK, for instance, has seen its stock stay relatively stable over the past year, but a sizable boost in distributions came about because of its decision to merge with its ONEOK Partners unit. Even after a more than 20% increase to its payout, ONEOK still has ample coverage for its dividend through its earnings.

Who's next to make the list?

Some companies are able to sustain high dividends year in and year out. Yet more often, you'll see dividend stocks move in and out of favor. By watching key trends, you can anticipate not just which high-yield companies will stay lucrative but also which new stocks could make the list in the years to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.