The 50 Highest Dividend Paying Stocks [2021 Update]We scan the market daily to find awesome stocks with high dividend yields, earnings per share growth, strong liquidity, and low payout ratios.
High Dividend Paying Stocks With Strong Fundamentals
High dividend yielding stocks can add a source of income to your stock portfolio. But a high dividend yield doesn’t guarantee that a stock is a good investment.
Finding great stocks that pay high dividends can be a difficult task.
Stocks with high growth potential generally reinvest earnings, rather than pay out dividends, and high dividend yield stocks aren’t always safe.
High quality dividend paying stocks provide both dividend income, and the potential for stock price growth.
If you’re interested in buying stocks with increasing dividends that are poised for long-term growth, you’ll love this list of the 50 highest dividend paying stocks with strong fundamentals.
We’ll also cover the key metrics to consider before buying in more detail below.
Why the highest dividend paying stocks can be risky
You want to be selective about investing in companies that pay high dividends.
Some struggling companies that don’t produce enough operating cash flow use high dividends to attract new investors to finance their operations. This can spell disaster for investors down the road if access to capital decreases.
At best, the Company is forced to cut its dividend, but is still able to finance operations through ongoing cash flows. At worst, the Company becomes insolvent and shuts down operations.
At the end of the day, it’s crucial to do your homework and make sure you understand the Company’s business, and financial position.
How to avoid falling into a dividend trap
Financial leverage measures a company’s debt and preferred equity load.
With a high degree of financial leverage, a company generally pays more interest, and is impacted more by overall economic changes. Which means, the investment likely carries more risk.
To avoid trouble down the road, it’s important to understand the financial leverage of a high dividend paying company before investing.
Dividend Payout Ratio
When companies generate positive income they have two options: (1) reinvest the money, or (2) distribute the money to shareholders.
As an investor who loves dividends, it’s always nice to get some cash in your bank account. But what if the company pays 100% of their excess cash in dividends? Or more than 100%?
This can be a leading indicator that the company’s growth will stall, as they aren’t reinvesting their operating income.
And no company can sustain a dividend payout ratio over 100% for long...
Dividend payout ratios can fluctuate depending on the industry, but below are general industry averages to use as a guide.
|Industry||Average Payout Ratio|
Industry averages can be a good sanity check when evaluating a company’s dividend payout ratio.
A dividend payout ratio well above the industry average could be a warning sign.
The 50 Highest Dividend Paying Stocks With Strong Fundamentals
In this list, we analyzed and screened for companies with potential for growth, strong leverage models, and high dividend yields. To get this list, we used the DiscoverCI Stock Screener and scanned for stocks with the following metrics:
- Dividend yield greater than 3% (indicates high dividend payments),
- Dividend payout ratio less than 100% (indicates the Company isn’t paying more than 100% of its income in dividends),
- Marketcap over $200 million (more stable companies),
- EPS growth greater than 5% (continuing to grow operations),
- Altman Z Score greater than 2.75 (low risk of insolvency and bankruptcy).
The list is sorted by dividend yield from high to low, and our analysis is updated daily. Here are 50 of the highest dividend paying stocks with strong fundamentals.
We update this list daily. Last updated: October 2nd, 2023