Nearly 14 percent of the companies in the S&P 500 are paying more in dividends than the average yield being offered in the bond markets. One reason for this is that companies went into cost-cutting measures during the Great Recession cutting headcount and minimizing inventories. As a result many companies are sitting on piles of cash and are issuing dividends to distribute the cash out.
Some notable mentions here include Altria Group Inc which has a yield of 6.48%, AT&T, which has a yield of 6.02%, Verizon Communications which has a yield of 6.31%, Lorillard Inc. which has a yield of 5.53%, Qwest Communications, Entergy Corporation which has a yield of 4.17%, Waste Management Inc. which is boasting a yield of 3.69% and Chevron Corp. (CVX) which has a yield of 3.63%. These are all companies that appear to have relatively sound strategies and are likely to continue to issue healthy dividends.
In addition to providing an income stream, dividends are known to be used as a recession safety net and an inflation hedge in times of economic recovery.
Disclosure: I own Altria and Verizon.
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