Investors acquire stocks for a variety of reasons. A widespread consideration in stock investing is whether the stock/company you are buying issues dividends. Suppose a company is a regular dividend issuer. In that case, investors would like to know:
- How stable is the company's income?
- How regularly do they issue dividends (quarterly, twice-annually, annually, unique one-offs)?
- What is the dividends' face value?
- How does the dividend's value compare to the stock price (also known as the dividend yield)?
What Exactly is a Dividend?
A dividend is a cash payment made by a company to its shareholder in its most simple forms. The amount is derived from a portion of the company's earnings, typically after covering its expenses.
Dividends are typically issued by large established corporations that are cash positive but limited in their opportunities to scale. These corporations seek to return value to their investors via cash rather than increasing their stock price.
Some of the most popular dividend stocks are well-known brands with strong, predictable cash flow or high dividend yield. As a general rule, the riskier the stock, the higher its dividend yield should be to compensate for the risk.
Here are some of the most popular dividend stocks in the US and other major stock markets.
Coca-Cola Co
- Industry: Beverages
- Stock ticker: KO
- Stock exchange: New York Stock Exchange (NYSE), USA
- Frequency of payment: Quarterly
- Average dividend value 2021: $0.42 (Total $1.68)
- Dividend yield: 2.98%
Coca-Cola's (NYSE:KO) solid and dependable sales record and healthy profit margins make up for its dividends' relatively low yield compared to other stocks mentioned on this list.
AT&T
- Industry: Telecommunications
- Stock ticker: T
- Stock exchange: New York Stock Exchange (NYSE), USA
- Frequency of payment: Quarterly
- Average dividend value 2021: $0.52 (Total $2.08)
- Dividend yield: 8.36%
Oligopolies such as AT&T (NYSE:T) make attractive dividend stocks for investors. The small pool of competition for these companies means the risks for investors is smaller than for companies that have to rely purely on competitive strengths.
British American Tobacco
- Industry: Tobacco
- Stock ticker: BATS
- Stock exchange: London Stock Exchange (LON), UK
- Frequency of payment: Quarterly
- Average dividend value 2021: £0.539 (Total £1.62 YTD, one quarter still to be announced)
- Dividend yield: 8.15%
While a contentious and vilified industry, tobacco companies have a reputation for charitable dividends. This is why British American Tobacco (NYSE:BTI) and Imperial brands remain popular dividend stocks, even with reduced smoking rates in developing countries.
Imperial Brands
- Industry: Tobacco
- Stock ticker: IMBBY
- Stock exchange: London Stock Exchange (LON), UK
- Frequency of payment: Issued annually (while interim dividends are calculated and announced quarterly)
- Average dividend value 2021: £0.304 (Total £0.901 YTD, Final dividend still to be announced)
- Dividend yield: 9.03%
Deutsche Lufthansa (DE:LHAG)
- Industry: Air travel
- Stock ticker: LHA
- Stock exchange: Deutsche Börse XETRA (ETR), Germany
- Frequency of payment: Twice-annually. However, dividends have been suspended until at least 2024.
- Average dividend value 2021: € 0.00. (Before 2019, the average dividend value equaled € 0.40)
- Dividend yield: 0.00%. Before 2019, the dividend yield of LHA equalled 8.96%
Deutsche Lufthansa (OTC:DLAKY) has temporarily suspended its dividend payments due to global air travel receding to unsustainable levels since the beginning of the Covid-19 pandemic. Before 2020, Deutsche Lufthansa would distribute approximately 20% to 40% of net income in dividend payments to its shareholders.
Telefónica
- Industry: Telecommunications
- Stock ticker: TEF
- Stock exchange: Bolsas y Mercados Españoles (BME), Spain
- Frequency of payment: Twice-annually
- Average dividend value 2021: € 0.174
- Dividend yield: 7.60%
The original Spanish branch of Telefonica (NYSE:TEF) issues dividends twice annually, in June and December of each year. Telefónica engages in several methods to return value to its shareholders, including cash and scrip dividends (i.e., issuing shares in place of a delayed cash dividend).
Novo Nordisk
- Industry: Pharmaceuticals
- Stock ticker: NVO Class B
- Stock exchange: NASDAQ OMX Copenhagen (CPH), Denmark
- Frequency of payment: Twice-annually
- Average dividend value 2021: DK Kr.0.468 (Total DK Kr.0.935)
- Dividend yield: 1.30%
Novo Nordisk's (NYSE:NVO) dividend yield is the lowest on this list, yet the company remains an attractive option for investors. The yield, while small, is not altogether inadequate for the industry in which it operates and is seen as tolerable due to the companies domination over diabetic therapies.
BHP Group (NYSE:BHP)
- Industry: Mining
- Stock ticker: BHP
- Stock exchange: Australian Securities Exchange (ASX), Australia
- Frequency of payment: Twice-annually
- Average dividend value 2021: AUD 2.01 (Total AUD 4.03)
- Dividend yield: 11.26%
Of course, as Australia dominant industry, two of the country's most popular dividend stocks are from companies operating in the mining industry. BHP Group (NYSE:BBL) 's attractive yields signify the sector's risk to commodity price movements beyond the control of the miners.
Rio Tinto
- Industry: Mining
- Stock ticker: RIO
- Stock exchange: Australian Securities Exchange (ASX), Australia
- Frequency of payment: Twice-annually
- Average dividend value 2021: AUD 6.39 (Total AUD 12.77)
- Dividend yield: 14.59%
Japan Post Bank
- Industry: Financial Services
- Stock ticker: 7182
- Stock exchange: Tokyo Stock Exchange (TYO), Japan
- Frequency of payment: Twice-annually
- Average dividend value 2021: ¥25 (Total ¥50)
- Dividend yield: 4.79%
One of Japan's favored dividend stocks, Japan Post Bank (T:7182), seeks to return 50% to 60% of its retained earnings in the form of dividends. By Japanese standards, yields of ~5%, Japan Post Bank conforms, are higher than the market average.