The U.S. is home to some of the world’s largest and finest companies. For instance, 148 firms in the Fortune Global 500 for 2014 are based in the USA. From technology to entertainment to consumer goods, American multinationals dominate the global marketplace with companies such as Coca Cola(KO), Starbucks(SBUX), McDonald’s(MCD), Pepsi(PEP), Colgate-Palmolive(CL) becoming household names across the world. Despite some failings, American firms continue to lead in innovation relative to their developed world peers in many sectors. With their leadership positions, they are also able to generate huge profits both in the domestic and overseas markets.
From an investment point of view, the U.S. provides a fertile hunting ground for investors looking for growth and income opportunities. Thousands of companies in the small, medium and large-cap categories trade on the exchanges.
Every quarter companies pay billions of dollars in dividends to their shareholders. In fact, according to one study, a record 415 companies in the S&P 500 index currently pay a dividend. Last year, 339 of the S&P 500 companies raised their dividend payments with an average increase of 15%.
The current dividend yield on the S&P 500 is 2.07%. However investors can find plenty of stocks that have dividend yields higher than this. The table below shows the Top 10 Companies by Total Common and Preferred Dividends Paid on a Trailing Twelve Months basis as of September 15, 2014:
|S.No.||Company||Ticker||Sector||Dividends Paid in $ Millions (Trailing Twelve Months)||Payout Ratio (Annual)||Dividend Yield as of Oct 17, 2014|
|1||Exxon Mobil Corporation||XOM||Energy||$11,218||33.40%||3.03%|
|2||Apple Inc.||AAPL||Information Technology||$11,066||28.70%||1.92%|
|3||AT&T Inc.||T||Telecom Services||$9,550||53.40%||5.40%|
|4||Microsoft Corporation||MSFT||Information Technology||$8,879||40.70%||2.84%|
|7||Johnson & Johnson||JNJ||Health Care||$7,569||53.80%||2.84%|
|8||Wells Fargo & Company||WFC||Financials||$7,551||29.60%||2.88%|
|9||Procter & Gamble||PG||Consumer Staples||$6,911||61.00%||3.09%|
|10||JPMorgan Chase & Co.||JPM||Financials||$6,689||33.10%||2.85%|
Source: Dividend Quarterly, September 15, 2014, FactSet
Technology hi-flier Apple(AAPL) started paying a dividend just recently in 2012. However the company also spends billions in share buybacks instead of sharing the mountain of cash it holds in the form of dividends to shareholders. Similarly Exxon Mobil(XOM) is also another company that is conservative with its dividend payouts but does not mind spending billions in buying back its own shares. Exxon has spent billions of dollars in the past few years in share buybacks. Income investors can avoid investing for the long-term in Apple and Microsoft since they are still technology companies that depend on growth. Instead Chevron Corporation, Johnson & Johnson, Procter & Gamble and AT&T are better options for the long-term as they offer a decent dividend and steady growth.
Note: Dividend yields noted above are as of Oct 17, 2014. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.
Disclosure: No Positions