An investor makes an investment in a specific company’s stocks with the anticipation of generating future returns in the form of dividends and capital gains (increase in the market price of a company’s share over time). In this article, we look into some of the highest dividend-paying stocks in the US stock market. The list of companies is prepared based on the dividend yield of that particular company. The dividend yield of a company can be defined as the ratio which indicates, on average, the amount that the company pays out in the form of dividends. It is expressed in the form of percentage and can be calculated by using the following formula:
Dividend yield= Dividend per sharePrice per share ×100
Now let us look into the complete list of top 10 companies listed on the US stock market that pay out the highest dividends to their shareholders.
Note: The list below is curated based on data available on 1st July 2022.Serial no.Name of the CompanyDividend yield (%)1Mesabi Trust16.922Newtek Business Services Corporation15.853Camping World Holdings Inc.10.424Southern Copper Corporation10.045Altria Group Incorporated8.626Artisan Partners Asset Management Incorporated8.557Pioneer Natural Resources Company7.568Franchise Group Incorporated7.139ONEOK Incorporated6.7410Devon Energy Corporation6.53
Let us now briefly look into the industries in which each of the above-stated companies operates.
Mesabi Trust: The Company is a royalty trust, operating in the iron ore mining segment. The income for the company is driven by the iron mine near Babbitt, Minnesota. Newtek Business Services Corporation: This Company operates in the financial services sector. Camping World Holdings Incorporated: It deals with offering leisure products related to the repair and maintenance of vehicles along with financing and insurance planning of motor vehicles. Southern Copper Corporation: This Company operates in the mining industry and has its production facilities in Peru and Mexico. Altria Group Incorporated: It deals in the manufacture and selling of tobacco products (both oral and smoking). Artisan Partners Asset Management Incorporated: They offer investments and portfolio management services. Pioneer Natural Resources Company: This Company operates in the Oil and Gas industry and is involved in the drilling, exploring, and production of oil and gas in the United States. Franchise Group Incorporated: This Company deals with providing a suitable platform for the big franchises worldwide to operate and manage their business all over the world. They also master in providing strategic advice to franchise owners so they can step up their business at a global level. ONEOK Incorporated: This Company acts as an essential mid-level market player in providing natural gas liquid systems all over the country in the United States. It aims at connecting every demand and supply point of the natural gas systems. Devon Energy Corporation: As the name suggests, this independent company operates in the oil and gas industry. It deals in the exploration and production of natural gas and oil all over the geographical area of the United States.
Can dividend yield be a parameter to invest in a company?
The answer to this question lies in the fact that it completely depends on the mindset, behavior, and individual tastes and preferences of the investors. However, it must be noted that only the ‘Dividend Yield’ shall not be considered an effective parameter to analyze and further invest in a given company’s stock. The investor shall perform a thorough analysis of the company and its products.
Do dividends act as a passive income for investors?
Yes, dividends can act as a passive income for the investors. An investor invests in a company’s shares to generate returns, in the form of dividends and capital gain (increase in the market price of the share). When your investment is large at a given company, and if that company generates good revenue as per their estimates and declares a handsome amount as a dividend, you might just be able to secure yourself a good amount which you may further invest in some other securities and get rewarded.
Conclusion
Here we have seen how dividends distributed by the companies can be a great source of passive income for investors. However, the dividends declared by companies may not always be in the form of cash dividends and may be in other forms like a stock split, where an investor would get extra shares for that particular company without paying any extra sum of money. The basic steps of investing in a stock with a good dividend yield can be summarized as follows:
Finding a dividend stock – This can be easily performed by using a dividend screener. Evaluation of the company – The investor must look at and evaluate the fundamentals, revenue model, and business model of the company before making any investments. Make the final decision – Once the investor has thoroughly looked into the company’s fundamentals and other essentials, they may or may not decide to put their money into that company.
However, it must be noted that an investor must not only invest in a company’s shares by looking over the dividend yield. They must evaluate the company’s business profile properly before investing.
