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These 11 Stocks Spend the Most on Dividends

By Dan Caplinger - Apr 7, 2013 at 11:30AM

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Shareholders in each of these companies received more than $5 billion in dividends last year.

Investors want dividend stocks for their solid income, dependable returns, and relative stability in the face of an increasingly shaky stock market. With the S&P 500 (^GSPC 0.17%) near record highs, the fact that dividend stocks can provide some ballast against overall market declines looks more attractive than ever.

But looking at raw dividend yield can mislead you into buying stocks that aren't as stable as you might think. As a better alternative, let's instead look at the 11 stalwart blue-chip companies that paid more than $5 billion in dividends to shareholders during 2012, according to figures from S&P Capital IQ.

Rank

Company Name

Amount Paid in Dividends

1

AT&T (T -0.69%)

$10.24 billion

2

ExxonMobil (XOM 0.51%)

$10.09 billion

3

General Electric

$7.19 billion

4

Microsoft 

$6.97 billion

5

Chevron (CVX -0.18%)

$6.84 billion

6

Johnson & Johnson 

$6.61 billion

7

Procter & Gamble

$5.88 billion

8

Philip Morris International 

$5.40 billion

9

Wal-Mart

$5.36 billion

10

Verizon (VZ -0.28%)

$5.23 billion

11

Merck

$5.12 billion

Source: S&P Capital IQ.

Looking at these 11 stocks, you can see some general trends. Certain industries are better represented than others, as their business models lend themselves more to generous dividend payouts than those of other companies. Perhaps the most obvious example is the telecom industry, in which both AT&T and Verizon have spent massive amounts of capital building out their respective wireless networks. Yet despite having to service extremely high levels of debt to repay what they borrowed to build those networks, dependable monthly income from millions of subscribers provides more than enough cash flow both to pay interest and principal on their debt and to return capital to shareholders. As long as their services remain in demand, Verizon and AT&T should remain near the top of this list.

Energy stocks ExxonMobil and Chevron also appear near the top of the list, and although the energy industry involves much different operational aspects from telecom, oil and gas companies have some of the same business-model characteristics. Finding reserves and drilling wells require substantial upfront capital investment, but once production begins, the profits are substantial enough to more than make up for the carrying cost of those upfront capital expenditures. Even with natural gas prices being far from ideal from a profitability standpoint, great conditions in the refining business have helped these integrated oil giants produce even more free cash flow to return to shareholders.

Get your share of dividends
If you want income from your investments today, dividend-paying stocks are your best bet. These stocks pay billions to their investors, and they're among the most solid prospects in the market. That's a powerful combination that you should consider closely for your portfolio.

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Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,930.24 (0.17%) $6.56
AT&T Inc. Stock Quote
AT&T Inc.
T
$20.09 (-0.69%) $0.14
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$91.11 (0.51%) $0.47
Chevron Corporation Stock Quote
Chevron Corporation
CVX
$167.75 (-0.18%) $0.31
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$48.76 (-0.28%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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