Bonds aren't yielding much of anything, but investors may find some solace and income in dividend-paying stocks.
However, the highest yielding stocks aren't necessarily the best income investments over time. Sprinkled within this list of big dividend payers are some companies whose income generating capabilities will persist, while others may be value or yield traps, where yields are rising because of a downward trend in stock price.
Can investors really tell which is which? Or would investing in one of these big dividend payers be like catching a falling knife?
Here, according to FactSet, are the top Nasdaq 100 dividend payers in 2021 as of Dec. 7.
No. 9 (tie) – PepsiCo – 2.6%
Harrison, N.Y.-based PEP has raised its dividend for 49-straight years. If it raises the dividend again in 2022, it becomes an official “dividend king” for growing its payout for half of a century.
No. 9 (tie)– Cisco Systems – 2.6%
Not only does San Jose, Calif.-based CSCO pay a relatively attractive dividend,, but its price has appreciated nearly 25% since the beginning of 2021.
No. 8 – Intel – 2.7%
There are a few true tech giants that double as dividend stocks—count INTC among them. Perhaps that is in part because it’s price/earnings ratio is currently hovering around 10, making it a rare value stock in the sector.
No. 7 – Xcel Energy – 2.8%
Minneapolis-based XEL offers power generation and natural gas services to customers throughout the Midwest, from Texas to Minnesota. Like many regulated utility holding companies, it continues to pay a steady dividend to its investors.
No. 6 – Exelon – 2.9%
EXC, a Chicago-based energy provider, is one o the U.S.’s leading nuclear plant operators. Like many utilities, it has been a reliable dividend payer over the years.
No. 4 (tie) – Amgen – 3.7%
Based in Thousand Oaks, Calif., AMGN has developed drugs to treat cancer, arthritis, anemia, osteoporosis and other serious ailments. The company’s robust product line and active pipeline of new treatments ensures its healthy annual cash flows and supports the dividend.
No. 4 (tie) – American Electric Power – 3.7%
Columbus, Ohio-based AEP provides electricity to more than five million customers in 11 states. Like many utilities, it is a dividend stalwart.
No. 3 – Walgreens Boots Alliance – 4%
Based in Deerfield, Ill, WBA’s stock price is hovering around half of its 2016 peak. The company is considered one of the “dividend aristocrats,” as it has increased its dividend for 45 consecutive years.
No. 2 – Gilead – 4.1%
As Amgen showed us, attractive yields can occasionally be found in the biotech sector. Though remdesivir did not turn out to be the Covid-19 treatment of choice, California-based GILD has enjoyed recent successes from its HIV and Hepatitis drugs.
No. 1 – The Kraft Heinz Company – 4.7%
Chicago-based KHC has the highest dividend yield of any Nasdaq 100 stock. Perhaps that’s because the stock is now down nearly 65% from its 2017 peak.