Interest rates may still be lingering near multi-decade lows hit just a few months back, and even starting to sink again. But, curiously, not all dividend-paying stocks are reflecting this low-rate environment with similarly low yields. A few income-oriented equities continue to pay above-average dividends. You just might have to venture off the beaten path to find them.
Here's a rundown of three top stocks with high dividend yields that may be at home in your portfolio.
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AT&T
Dividend yield: 6.9%
Yes, it's got its share of problems. The company's cable television brands shed another 620,000 paying customers last quarter, and for the first time since 2005 it didn't raise its dividend payment in the first quarter of the fiscal year. These headwinds, coupled with a long-term debt burden of $160 billion, has kept continual pressure on the organization's stock for years now.
Mostly obscured by all the negative narratives, however, is that AT&T (T -0.70%) is still an incredible cash cow.
Supported by its massive phone business and surprisingly healthy growth from its entertainment ventures, the company's first-quarter operating profit of $0.86 per share is not only $0.02 better than the year-ago figure, but easily more than enough to cover the current quarterly dividend payout of $0.52.
It wasn't a one-off, either. Sure, AT&T generated per-share earnings of $3.18 in 2020, which was down from 2019's total. Consider the circumstances, though. The COVID-19 pandemic was incredibly disruptive, and the company still managed to earn more than enough to cover its full-year dividend payments of $2.08 per share.
The Williams Companies
Dividend yield: 7%
Although investors typically treat stocks from the same industry like they're all in the same proverbial basket, this isn't always the case. For example, so-called pipeline companies may transport natural gas and crude oil from one place to another. Their bottom lines, however, aren't intrinsically linked to the price of oil and gas the way explorers' and services' bottom lines are. Pipeline companies are paid on a per-barrel or per-cubic-foot basis, and the prices being charged for delivery of these commodities don't change much simply because the consumption of these commodities is steady.
One only has to look at The Williams Companies (WMB 1.29%) -- one of the biggest and best natural pipeline companies -- to see how this dynamic holds up. Despite last year's suppressed oil and gas prices, service revenue of a little more than $5.9 billion essentially matched 2019's total. In this vein, the U.S. Energy Information Administration reports that the country's consumption of natural gas only fell 2% last year, and further predicts that usage will remain stable through 2022. This in turn suggests the need for Williams' transportation services will remain stable, regardless of changing gas prices.
This recurring revenue business model is an ideal one for income-seeking investors. More than that though, Williams Companies shares remain only priced at levels seen just before the pandemic took hold and well below its 2018 peak. This means newcomers are stepping in while the yield's quite strong.
PPL Corporation
Dividend yield: 5.7%
Finally, add PPL Corporation (PPL 0.28%) to your watch list of stocks with high dividend yields.
It's not the world's best-known utility name, nor the biggest. Those honors belong to names like Southern Company and Duke Energy.
What PPL lacks in size or notoriety, though, it makes up for in cash payments. Its trailing yield of 5.7% is the strongest among all the major U.S. utilities stocks. It's beefing up that payout too -- at least by utility standards. The current quarterly payment rate of $0.415 per share translates into annualized payout growth of around 2%, which isn't thrilling, but at least keeps pace with inflation. Perhaps more important, PPL hasn't failed to make a dividend payment for 301 consecutive quarters, and has upped its annual payout every year since 2000.
And if you're worried this smallish utility company isn't equipped to deal with the mainstreaming of clean, renewable energy production, don't sweat it.
See, PPL aims to reduce its carbon dioxide emissions to 80% of 2010's levels by 2050, and is taking steps toward that goal right. In January the company announced its Solar Share facility located in Simpsonville, Kentucky, is beginning the next phase of development that will double its power output. Earlier this month it installed sensors on a handful of power lines to identify potential congestion of electricity transmission. Although this dynamic line rating (DLR) technology didn't find any congestion that needed to be addressed, PPL will continue to test its lines in its search to improve infrastructure efficiency. These and other initiatives have allowed the power provider to already reduce 2010's levels of CO2 output by 60% as of 2020. Point being, this dividend-paying utility name is ready for the road ahead.
