14 High Dividend Stocks With Sustainable Payments

|
 |  Includes: CTL, DUK, EPD, HCP, LO, MO, PAYX, PPL, RAI, SCCO, SO, T, TRI, VTR
by: Insider Monkey

High-yielding stocks are investors’ best friends. The extra payout helps increase a stock’s returns or offsets losses. As such, they make great defensive stocks. We expect that they will outperform 10-year Treasuries over the next 10 years. And, that’d be great if dividends were the only important criteria – but, it’s a little more complicated than that. After all, if you choose a dividend-yielding stock, you probably want to be able to depend on the fact that the stock will keep paying out.

We compiled a list of mega-cap U.S. stocks with high current dividend yields. The market data are sourced from Finviz. All companies in this list have market capitalizations above $10 billion, 12-month dividend yields of at least 4% and positive EPS growth. Some of these companies have more than 100% payout ratios, however these companies are expected to increase their earnings. Their payout ratios are expected to fall below 100% over the next few years.

Ticker

Company

Dividend Yield

Payout Ratio

52-Week Return

SCCO

Southern Copper Corp.

8.15%

80.87%

-33.58%

CTL

CenturyLink, Inc.

7.80%

223.16%

-13.25%

T

AT&T, Inc.

5.82%

87.00%

9.01%

MO

Altria Group Inc.

5.53%

93.12%

27.64%

RAI

Reynolds American Inc.

5.41%

90.96%

34.44%

EPD

Enterprise Products Partners

5.28%

138.50%

17.78%

PPL

PPL Corporation

4.76%

54.40%

17.54%

TRI

Thomson Reuters

4.65%

72.73%

-25.81%

HCP

HCP, Inc.

4.63%

125.82%

18.61%

LO

Lorillard, Inc.

4.56%

67.51%

46.29%

DUK

Duke Energy Corporation

4.55%

71.75%

30.18%

PAYX

Paychex, Inc.

4.25%

84.03%

1.41%

VTR

Ventas, Inc.

4.17%

192.16%

9.45%

SO

Southern Company

4.08%

75.53%

26.93%

Click to enlarge

Southern Copper Corp. (NYSE:SCCO) is a copper company. SCCO has an 8.15% dividend yield and returned -33.58% during the past 12 months. SCCO had a dividend payout ratio of 80.87% in 2011 and has 13.04% EPS growth expected over the next five years. The stock has a market cap of $25.38B and forward P/E ratio of 10.82. John Burbank’s Passport Capital had $27.48 million at the end of September after increasing its position in the company by +180% during the third quarter. Ken Fisher’s Fisher Asset Management and Jim Simons’ Renaissance Technologies also own significant positions in SCCO.

CenturyLink, Inc. (NYSE:CTL) is a domestic telecom services company. CTL has a 7.80% dividend yield and returned -13.25% during the past 12 months. CTL had a dividend payout ratio of 223.16% in 2011 and has 6.15% EPS growth expected over the next five years. The stock has a market cap of $22.98B and forward P/E ratio of 14.31. Phill Gross and Robert Atchinson’s Adage Capital Management had $82.84 million in CTL at the end of the third quarter. Louis Bacon’s Moore Global Investments is also a fan.

AT&T, Inc. (NYSE:T) is a large telecommunications company providing telephone, internet and TV services. T has a 5.82% dividend yield and returned 9.01% during the past 12 months. T had a dividend payout ratio of 87.00% in 2011 and has 3.82% EPS growth expected over the next five years. The stock has a market cap of $179.20B and forward P/E ratio of 12.29. Phill Gross and Robert Atchinson’s Adage Capital had $237.95 million in T at the end of the third quarter. Cliff Asness’ AQR Capital Management and D.E. Shaw’s D E Shaw each had large positions in T at the end of the third quarter.

Altria Group Inc. (NYSE:MO) is a cigarette company. MO has a 5.53% dividend yield and returned 27.64% during the past 12 months. MO had a dividend payout ratio of 93.12% in 2011 and has 7.78% EPS growth expected over the next five years. The stock has a market cap of $60.97B and forward P/E ratio of 13.54. Tom Russo’s Gardner Russo & Gardner had $190.46 million in MO at the end of the third quarter. Phill Gross and Robert Atchinson’s Adage Capital, Cliff Asness’ AQR Capital Management and David Dreman’s Dreman Value Management are also fans of the company.

Reynolds American Inc. (NYSE:RAI) is a large U.S. tobacco company operating worldwide. RAI has a 5.41% dividend yield and returned 34.44% during the past 12 months. RAI had a dividend payout ratio of 90.96% in 2011 and has 6.00% EPS growth expected over the next five years. The stock has a market cap of $24.14B and forward P/E ratio of 13.95. David Winters’ Wintergreen Advisors had $55.61 million in RAI at the end of September after increasing its stake in the company by +21% in the third quarter. Jim Simons’ Renaissance Technologies, Cliff Asness’ AQR Capital Management and Louis Navellier’s Navellier & Associates also own significant positions in the company.

Enterprise Products Partners LP (NYSE:EPD) is an independent oil and gas company. EPD has a 5.28% dividend yield and returned 17.78% during the past 12 months. EPD had a dividend payout ratio of 138.50% in 2011 and has 7.56% EPS growth expected over the next five years. The stock has a market cap of $41.10B and forward P/E ratio of 20.61. John Osterweis’ Osterweis Capital Management had $63.91 million in the company at the end of the third quarter. Jim Simons’ Renaissance Technologies and Chuck Royce’s Royce & Associates are also fans of EPD.

Disclosure: I am long T, CTL.