15 High Dividend S&P 500 Stocks With Consistent Growth

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Includes: AEP, BMY, D, DUK, INTC, KMB, LMT, LO, MO, PCG, PEG, RAI, SO, T, VZ
by: Insider Monkey

Since the global financial turmoil had sunk share prices all over the world, the stock markets have rebounded almost 70% from the low point in March 2009. During this uptrend, many stocks took advantage of the dovish environment to raise their dividend payouts and provide steady returns to investors. Many of these dividend growth stocks become appealing to dividend investors as they have also increased their dividend yields in the last three years. Considering the fact that the recent disinflation period won't last forever, we believe many investors should play more defensively and pick such high dividend yielding stocks in near future.

Below, we compiled a list of 15 large-cap S&P 500 stocks with high dividend yields and a high dividend growth in the last three years. The market data are sourced from Fidelity. All companies in this list didn't cut their dividends in any single year since the end of 2008. These stocks have market capitalizations above $15 billion, annualized dividend yield of at least 4%, and three-year annualized dividend growth of at least 2%.

Dividend Yield

3 Year Annualized Div. Growth

YTD Return

Altria Group Inc.

MO

6.14%

8.61%

11.75%

AT&T Inc.

T

6.13%

2.44%

-0.39%

Reynolds American Inc.

RAI

5.72%

7.64%

17.01%

Verizon Communications

VZ

5.62%

2.82%

3.31%

Duke Energy Corp.

DUK

5.32%

2.82%

9.76%

American Electric Power Co.

AEP

4.84%

3.91%

9.67%

Lorillard Inc.

LO

4.72%

12.22%

39.56%

Southern Company

SO

4.59%

4.00%

11.64%

Bristol-Myers Squibb Co.

BMY

4.55%

2.11%

13.63%

PG & E Corp.

PCG

4.40%

5.27%

-11.72%

Intel Corporation

INTC

4.28%

14.47%

-4.15%

Lockheed Martin Corp.

LMT

4.20%

9.58%

5.13%

Public Service Enterprise Group

PEG

4.14%

2.03%

6.26%

Dominion Resources Inc.

D

4.11%

7.63%

15.89%

Kimberly-Clark Corp.

KMB

4.11%

6.47%

10.42%

AVERAGE

6.13%

9.18%

Click to enlarge

Since the end of 2008, these 15 large-cap S&P 500 stocks didn't reduce their dividend payouts in any single year and their three-year annualized dividend growth is 6.13% on average. Since the beginning of this year, the average return of these 15 large-cap stocks was 9.18% vs. -5.41% for the SPY. Three stocks in this group - T, PCG and INTC - had a negative return in 2011, while seven stocks – MO, RAI, LO, SO, BMY, D and KMB – provided double digit returns in the same period.

Here are the top 10, highest dividend-yielding, large-cap S&P 500 stocks on our list:

Altria Group Inc. (NYSE:MO): Altria Group Inc., formerly known as Philip Morris Companies Inc., is the parent company of five tobacco corporations. MO has a 6.14% dividend yield and returned 11.75% since the beginning of this year. MO raised its annualized dividend per share from $1.28 to $1.64 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 8.61%. MO has a market cap of $55.34B and P/E ratio of 16.29. Tom Russo holds the largest MO position among the 300-plus funds we are tracking (see Russo’s favorite stocks here).

AT & T Inc. (NYSE:T): AT&T is a leading telephone and television services provider. T has a 6.13% dividend yield and lost -0.39% since the beginning of this year. T raised its annualized dividend per share from $1.60 to $1.72 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 2.44%. T has a market cap of $166.22B and P/E ratio of 8.53. Phil Gross holds more than $300M of T. Jim Simons, Cliff Asness, George Soros and D.E. Shaw are also among T investors.

Reynolds American Inc. (NYSE:RAI): Reynolds American Inc. is a large U.S. tobacco company operating worldwide. RAI has a 5.72% dividend yield and gained 17.01% since the beginning of this year. RAI raised its annualized dividend per share from $1.70 to $2.12 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 7.64%. RAI has a market cap of $21.61B and P/E ratio of 16.12. Jim Simons, David Winters and Cliff Asness are prominent RAI investors.

Verizon Communications (NYSE:VZ): Verizon Communications is a large telecommunications company operating worldwide. VZ has a 5.62% dividend yield and returned 3.31% since the beginning of this year. VZ raised its annualized dividend per share from $1.84 to $2.00 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 2.82%. VZ has a market cap of $100.66B and P/E ratio of 15.88. Phil Gross' Adage Capital holds nearly $150 Million of VZ (check out Phill Gross’ other top holdings).

Duke Energy Corp. (NYSE:DUK): Duke Energy Corp. is a large energy company operating in the United States. DUK has a 5.32% dividend yield and returned 9.76% since the beginning of this year. DUK raised its annualized dividend per share from $0.92 to $1.00 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 2.82%. DUK has a market cap of $25.00B and P/E ratio of 12.19. Michael Messner holds more than $30 Million of DUK.

American Electric Power Co. (NYSE:AEP): American Electric Power Co is an electric utility company that generates and distributes electric power to retail clients in the United States. AEP has a 4.84% dividend yield and returned 9.67% since the beginning of this year. AEP raised its annualized dividend per share from $1.64 to $1.84 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 3.91%. AEP has a market cap of $18.32B and P/E ratio of 12.70. John A.Levin had more than $60 Million in AEP at the end of June 2011.

Lorillard Inc. (NYSE:LO): Lorillard Inc. is the third largest tobacco company in the United States. LO has a 4.72% dividend yield and gained 39.56% since the beginning of this year. LO raised its annualized dividend per share from $3.68 to $5.20 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 12.22%. LO has a market cap of $15.24B and P/E ratio of 15.06. Jim Simons had more than $300 Million in LO at the end of June 2011 (check out billionaire Simons’ other bullish stocks here).

Southern Company (NYSE:SO): Southern Company is a U.S. electricity utility company. SO has a 4.59% dividend yield and gained 11.64% since the beginning of this year. SO raised its annualized dividend per share from $1.68 to $1.89 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 4.0%. SO has a market cap of $35.30B and P/E ratio of 17.59. Phil Gross’ Adage Capital is the most prominent SO investor.

Bristol-Myers Squibb Co. (NYSE:BMY): Bristol-Myers Squibb Co. is a global pharmaceutical company. BMY has a 4.55% dividend yield and gained 13.63% since the beginning of this year. BMY raised its annualized dividend per share from $1.24 to $1.32 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 2.11%. BMY has a market cap of $49.48B and P/E ratio of 15.11. Jim Simons holds more than $200 million of BMY.

PG & E Corp. (NYSE:PCG): PG & E Corp. is a U.S. utility company providing electricity and natural gas mainly in California. PCG has a 4.40% dividend yield but lost -11.72% since the beginning of this year. PCG raised its annualized dividend per share from $1.56 to $1.82 in the past three years. The stock has a 3-Year Annualized Dividend Growth of 5.27%. PCG has a market cap of $16.63B and P/E ratio of 15.31. Jim Simons has the largest PCG position among 300-plus funds we are tracking.

Disclosure: I am long PEG, T.