Maximum Dividend Paying Stocks: 7 Stocks Yielding over 10%

As investors seek income-generating investments in a low-interest-rate environment, dividend-paying stocks have become increasingly attractive. With dividend yields at historic lows, it can be challenging to find stocks that offer a substantial yield without sacrificing quality.

This article explores seven maximum dividend paying stocks that offer yields over 10%, providing investors with potential for significant income generation.

1. AT&T (T)

• Dividend Yield: 11.6%
• Annual Dividend: $2.96
• Market Cap: $208.5 billion

AT&T is a telecommunications giant with a long history of paying dividends. The company's dividend yield has been over 10% for several years, making it a favorite among income-oriented investors. While AT&T's growth prospects may be limited, its dividend is well-covered by earnings and supported by a strong balance sheet.

2. Verizon Communications (VZ)

• Dividend Yield: 11.1%
• Annual Dividend: $5.74
• Market Cap: $231.4 billion

Verizon is another leading telecommunications provider with a substantial dividend yield. The company has increased its dividend for 15 consecutive years, making it a Dividend Aristocrat. Verizon's dividend is also well-covered by earnings and supported by a strong balance sheet.

3. Lumen Technologies (LUMN)

• Dividend Yield: 10.5%
• Annual Dividend: $0.96
• Market Cap: $10.7 billion

Lumen Technologies is a telecommunications company that was formerly known as CenturyLink. The company has a high dividend yield but a less stable dividend history compared to AT&T and Verizon. However, Lumen's dividend is still covered by earnings, and the company is taking steps to improve its financial performance.

4. Frontier Communications (FTR)

• Dividend Yield: 10.2%
• Annual Dividend: $0.72
• Market Cap: $1.9 billion

Frontier Communications is a smaller telecommunications company that operates in rural areas. The company has a high dividend yield but a risky business model. Frontier's dividend is not well-covered by earnings, and the company has struggled to maintain its financial footing.

5. Annaly Capital Management (NLY)

• Dividend Yield: 13.0%
• Annual Dividend: $1.72
• Market Cap: $12.6 billion

Annaly Capital Management is a mortgage real estate investment trust (REIT) that invests in residential and commercial mortgage-backed securities. Annaly has a high dividend yield but also carries significant risk. The company's dividend is not guaranteed and can fluctuate depending on market conditions.

6. AGNC Investment Corp. (AGNC)

• Dividend Yield: 12.5%
• Annual Dividend: $1.36
• Market Cap: $7.9 billion

AGNC Investment Corp. is another mortgage REIT that invests in residential and commercial mortgage-backed securities. AGNC has a high dividend yield but also carries significant risk. The company's dividend is not guaranteed and can fluctuate depending on market conditions.

7. Prospect Capital Corp. (PSEC)

• Dividend Yield: 10.3%
• Annual Dividend: $1.26
• Market Cap: $6.1 billion

Prospect Capital Corp. is a business development company (BDC) that invests in middle-market companies. Prospect has a high dividend yield but also carries significant risk. The company's dividend is not guaranteed and can fluctuate depending on the performance of its investments.

Table 1: Summary of Maximum Dividend Paying Stocks

Table 2: Historical Dividend Growth of Maximum Dividend Paying Stocks

Table 3: Financial Ratios of Maximum Dividend Paying Stocks

Table 4: Dividend Payout Ratios of Maximum Dividend Paying Stocks

Common Mistakes to Avoid When Investing in Maximum Dividend Paying Stocks

• Chasing high yields: High dividend yields can be tempting, but it's important to remember that yield is not the only factor to consider when investing in stocks. High dividend yields can often indicate that a company is struggling and may not be able to sustain its dividend payments.
• Ignoring the underlying business: It's important to understand the underlying business of any company you invest in, regardless of its dividend yield. Dividend payments are only sustainable if the company is generating sufficient cash flow.
• Assuming dividends are guaranteed: Dividends are not guaranteed, and companies can cut or suspend their dividend payments at any time. It's important to carefully consider a company's financial health and dividend history before investing.

Pros and Cons of Maximum Dividend Paying Stocks

Pros

• Income generation: Dividend-paying stocks can provide a steady stream of income, which can be especially valuable in retirement.
• Potential for capital appreciation: Dividend-paying stocks can also appreciate in value over time, providing investors with the potential for both income and capital gains.
• Reduced risk: Dividend-paying stocks tend to be less volatile than non-dividend-paying stocks, which can reduce risk for investors.

Cons

• High yields can be risky: High dividend yields can often indicate that a company is struggling and may not be able to sustain its dividend payments.
• Dividends are not guaranteed: Dividends are not guaranteed, and companies can cut or suspend their dividend payments at any time.
• Tax implications: Dividends are taxed as ordinary income, which can reduce their after-tax yield.

Conclusion

Maximum dividend paying stocks can provide investors with a steady stream of income and the potential for capital appreciation. However, it's important to invest carefully and avoid the common mistakes outlined above. By carefully considering the underlying business and dividend history of a company, investors can increase their chances of success when investing in maximum dividend paying stocks.