10 High-Dividend Stocks for Yield Income in 2021
Interest rates are still near all-time lows, and with a run-up in stock prices, dividend yields have dropped as well. It’s a challenging time for income investors. Although, there is still a handful of high-dividend stocks that remain.
The list below includes some of the top high-yield dividend stocks. These are established companies that produce strong cash flows. And I’ll cover each one in a little more detail below.
Investors have beaten down some some of them, and they’re definitely not risk-free. I’ll go into more detail on that end, but first, let’s check out the list of dividend stocks with high yields.
Also, consider testing out our free Dividend Reinvestment Calculator. It shows how much your investments can grow over time. Picking the top investments can make a huge difference in your portfolio.
Top 10 Stocks With High Dividends
- Exxon Mobil (NYSE: XOM)
- AT&T (NYSE: T)
- AbbVie (NYSE: ABBV)
- Philip Morris International (NYSE: PM)
- IBM (NYSE: IBM)
- Altria (NYSE: MO)
- Prudential Financial (NYSE: PRU)
- Kinder Morgan (NYSE: KMI)
- Valero Energy (NYSE: VLO)
- Williams Companies (NYSE: WMB)
If you’re looking for high yields, these companies are good to consider. Let’s go ahead and take a closer look at each one…
Dividend Yield: 6.3%
Exxon Mobil is in a dying industry. Although, it’s not going away anytime soon. Renewables are chipping away at total energy production, but they’re likely a few decades out from replacing fossil fuels as the major source.
On top of that, Exxon isn’t sitting idle. It’s adapting with the market. The company plans to invest $3 billion into lower-emission energy solutions through 2025. So the existing and new cash flows on the horizon should help Exxon Mobil continue to reward shareholders.
To find more opportunities in the energy industry, here’s a list of some of the top oil stocks.
Dividend Yield: 6.9%
Sector: Communication Services
AT&T has positioned itself well within a growing industry. The telecom industry is competitive and requires a lot of upfront capital, but cash flows are solid. This makes AT&T one of the top high-dividend stocks to watch.
As more devices come online, this creates new opportunities for AT&T. New technologies such as 5G are creating new ways to find and engage with customers. On top of AT&T’s expanding cellular services, it’s also jumped into the content creation space. It acquired Time Warner a few years ago and now owns HBO.
Dividend Yield: 4.9%
AbbVie is one of the best stocks with high dividends. It’s a giant biotech company and currently just one drug, Humira, makes up the bulk of its sales. Although, it has a strong pipeline of drugs and research in the works.
AbbVie has also shown investors that it’s a reliable source of dividends. It’s a coveted Dividend Aristocrat. This means it’s increased its dividend consecutively over the past 25 years. AbbVie has continued to reward investors with higher dividends through thick and thin.
If you’re interested in more biotech opportunities, here’s a list of small cap biotech stocks. Small cap stocks tend to have higher risk but the potential for a higher reward.
Philip Morris International
Dividend Yield: 5.4%
Sector: Consumer Defensive
Philip Morris is considered a sin stock. For that reason, many investors won’t touch it. Although, sin stocks have performed well over the past few decades. So if you can get past those moral objections, it can produce steady income for your portfolio.
As a top tobacco company, Philip Morris has a reliable customer base. Its products are addictive, and the company has strong pricing power. Even though the number of smokers is dropping, these traits allow Philip Morris to continue producing solid cash flows. As a result, it continues to make my list of high-dividend stocks.
Dividend Yield: 4.9%
IBM is another one of the top stocks with high dividends. Also known as Big Blue, it’s been around much longer than some of the other tech giants (check out this list of the biggest tech stocks). It has struggled a bit to adapt but still has a strong pipeline of innovation.
In 2020, Arvind Krishna took the reigns as the new CEO. And going forward, it looks like management will be splitting IBM into two sperate companies. One company will contain more of the legacy infrastructure business, and that should continue to pay high dividends. With the second company, a dividend isn’t likely, but its share price should have higher growth potential.
Dividend Yield: 6.7%
Sector: Consumer Defensive
Altria is another top tobacco stock to consider. Similar to Philip Morris, it has a consistent consumer base and strong pricing power. This is great for high-dividend investors. This company has reward shareholders with big dividends over the years.
To adapt to changing markets, Altria invested $12.8 billion into Juul Labs. With hindsight, that was a big premium and it hasn’t panned out too well. Although, I wouldn’t consider this new segment down for the count. And Altria has also been making big moves into the cannabis industry. This might make Altria a high-dividend stock for many years to come.
Dividend Yield: 5.2%
Prudential Financial is another one of the best high-dividend stocks around. It provides a wide range of financial services, such as insurance and brokerage services. This dividend-paying company is well-diversified, with services available across the U.S. and 40 other countries.
This is the only financial company on this list of high-dividend stocks. And it can give you some good exposure to the industry. Financial companies have had a tough run, but it looks like they’re in a better position going forward. So it’s definitely worth considering for a high-income portfolio.
Dividend Yield: 6.7%
Kinder Morgan is one of the largest pipeline and terminal companies in the world. It has roughly 72,000 miles of natural gas pipelines. This helps it move about 38% of the natural gas consumed in the U.S.
As mentioned above, the fossil fuel industry is coming under pressure. Although, we’re still going to need this infrastructure for many decades. Oil and gas will continue to dominate our total energy production. As a result, Kinder Morgan will continue to produce steady cash flows and reward shareholders.
Dividend Yield: 5.6%
Investors have beaten down the energy sector. So it makes sense a few of them make this list of the top high-dividend stocks. Valero Energy is another diversified opportunity that’s looking to the future.
Valero Energy is continuing to make its refining and other operations more efficient. On top of that, the company is already the world’s second-largest producer for both renewable diesel and corn ethanol. Valero Energy is focusing on projects in high-growth, low-carbon markets. And these efforts should help support dividend payouts going forward.
Dividend Yield: 7.2%
Last but not least, Williams Companies is another one of the best high-dividend stocks to consider. It’s another pipeline company, and it focuses on processing and moving natural gas.
With one of the highest yields on this list, Williams Companies might be on the riskier side, and it’s cut its dividend in the past. Although, if you can stomach high volatility, it might be a great investment opportunity. Let’s now consider some of the risks when it comes to high-dividend stocks…
Risks of High-Dividend Stocks and New Opportunities
If you’re investing for the safest income, the stocks with high dividends above might not be the best bet…
For example, if you invest in Apple (Nasdaq: AAPL) stock instead, you’ll receive a much lower yield. Although, the probability of a dividend cut is much lower. It has higher free cash flow to support its payouts.
One clear risk that I’ve touched on above is the energy sector. Investors have beaten it down, and many companies in the industry have struggled. Some of their more recent payout ratios look unsustainable. If their financials don’t improve, we might see them slash their dividends.
This is always a risk, and it’s vital to consider. So if you decide to invest in high-dividend stocks, you might want to diversify. That way, if one drops, the others can help buoy your income stream.
For more income opportunities, consider signing up for Wealthy Retirement below. It’s a free e-letter that’s packed with tips and tricks. You’ll find insight for both beginner and advanced investors from Income Expert and bestselling author Marc Lichtenfeld.
And here’s one last useful resource… most stocks pay quarterly dividends. Although, some investors prefer more frequent sources of income. So here are some of the top monthly dividend stocks to consider buying.
About Brian Kehm
Brian Kehm double majored in finance and accounting at Iowa State University. After graduating, he went to work for a cryptocurrency company in Beijing. Upon returning to the U.S., he started working with financial publishers and also passed the CFA exams. When Brian isn’t researching and sharing ideas online, you can usually find him rock climbing or exploring the great outdoors.