Three Dividend Paying Giants of the S&P 500
An equity investment portfolio should be well-diversified. It
means you need to hold a combination of blue-chip, growth, and
dividend stocks that will help you beat the broader indexes such as
the S&P 500.
While it’s easier said than done,
dividend stocks remain attractive to investors as they provide
investors to derive a steady stream of recurring income as well as
benefit from long-term capital gains.
Investors should note that a dividend payout is not guaranteed,
and the company can roll back or entirely suspend these payments at
any time. Further, a high dividend yield may also be a value trap
if the stock continues to remain rangebound or deliver negative
returns over time.
Here, we look at three stocks part of the S&P 500 that
have attractive dividend yields.
One of the
largest energy companies in the world, Chevron (NYSE: CVX)
provides investors with a tasty dividend yield of 5.3%. The energy
sector was decimated in 2020 due to the ongoing pandemic that drove
fuel demand lower at an accelerated pace. However, the reopening of
several economies has allowed the energy stocks to mount a
In the last 12-months, Chevron stock has gained 21% in market
value. In the last five years, it has gained over 25% after
adjusting for dividends.
In May 2021, Chevron increased its quarterly dividend payout to
$1.34 per share, up from $1.29 per share. Its dividends have
increased at an annual rate of 4.6% since August 2016.
Despite being part of the highly volatile energy sector, Chevron
has increased dividends for 34 consecutive years. Its low debt to
capital ratio of 25% allows the company to generate predictable
cash flows due to lower interest payments, making a dividend cut
A utility holding company, PPL Corp. (NYSE: PPL)
delivers electricity and natural gas in the U.S. and the U.K. It
operates via three primary business segments that include Kentucky
Regulated, U.K. Regulated, and Pennsylvania Regulated.
PPL serves 425,000 electric and 332,000 natural gas customers in
Louisville as well as 536,000 electric customers in central,
southeastern, and western Kentucky. It also provides electric
delivery services to 1.4 million customers in Pennsylvania and
operates electricity distribution networks in the U.K.
PPL is part of the highly regulated utility sector which is
considered recession-proof. It does not have to contend with
competition but rates are generally monitored and controlled by the
government. Growth investors might avoid PPL but this stock
provides you with predictable earnings and cash flows.
PPL stock offers investors a dividend yield of 5.9% and it has
generated less than 10% in dividend-adjusted returns in the last
The final stock on my list is Dow Inc. (NYSE: DOW), a company
with an enterprise value of $61 billion and a dividend yield of
4.5%. Dow Inc. is a chemicals company with a diversified base of
operations and a presence in several countries.
In case the global economy recovers going ahead, Dow Inc is well
poised to benefit from it as it will benefit from demand for
packaging, coating, performance materials as well as specialty
In the first quarter of 2021, Dow Inc. explained demand and
pricing improved across multiple operating segments and this trend
is likely to continue in the near term. The company aims to reduce
costs by $300 million each year and its capacity expansion for the
materials solutions business will hold it in good stead if the
macro-economic recovery continues.
adjusting for dividends, Dow Inc.U+02019s stock has returned
over 20% in just over two years.
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