Investors gained a new appreciation for S&P 500 dividend stocks this year. But few investors love dividends as much as people who haul in billions a year from them.
Sixteen individuals who are the top holders of S&P 500 companies, including Larry Ellison at Oracle, Phil Knight at Nike and Richard Kinder of Kinder Morgan, haul in $5 million or more a year in just dividends. Ellison tips the scale bringing in an astounding $1.5 billion annually in dividends from Oracle.
All together, these 16 people haul in $2.7 billion a year from dividends alone.
Such eye-popping dividend income is a reminder to investors of the wealth-making potential of dividends. But it also highlights companies where there's a least one person with an incentive to keep the dividend payments flowing.
The Power Of S&P 500 Dividends
Dividends might seem like inconsequential payments made every quarter. But as these investors can attest, they can really add up over time.
Dividends generated nearly a quarter of the S&P 500's 9.13% average annual total return since 2000, says S&P Dow Jones Indices. True, that means that stock gains account for three-quarters of investors' returns. Still, seeing a quarter from dividends is more than a rounding error.
What's more: Dividends are all the more important during down years for the S&P 500, like the one we're in now. The S&P 500's total loss this year through July is 12.6%, or 20.8% annualized. And that pain is partially reduced by the 0.76% dividend yield paid through July, or 1.2% annualized.
And it's not unheard of for dividends to be the only source of gains. It happened in 2018 when the S&P 500's total return was down 4.4%, lifted by the 1.85% dividend yield. But it also happened in five out of the years since 2000, or nearly a quarter of the time.
You can be sure the importance of dividends isn't lost on the people collecting millions of dollars a year from them. And investors seem to want them.
All 10 of the top major diversified ETFs this year target dividends, says Morningstar Direct. The top ETF of the year, up nearly 8%, is First Trust Morningstar Dividend Leaders.
Larry Ellison Loves S&P 500 Dividends The Most
Ellison, 78, is known for his high-tech chops, programming skill and for founding Oracle. But when it comes to the billionaire's money, old-fashioned dividends are where it's at.
Oracle's dividend yield isn't particularly high at 1.6%, compared with the S&P 500 at 1.3%. But that's some serious cash flow when you're the No. 1 owner of the company with a nearly 43% stake. Ellison's shares alone generate annual dividend income of $1.46 billion a year. That's more, by far, than any individual top owner of an S&P 500 company hauls in from dividends.
Ellison's dividend haul makes No. 2 Knight, founder of shoe giant Nike, look a size too small. Knight, 84, still owns 17.1% of Nike. And the company yields 1.05%. Lacing all that up kicks off an annual dividend income from dividends alone of $319.8 million. When you're pulling in that kind of dividend income, it's easier to sit out the stock's more than 30% fall this year so far.
Not Just A Boy's Club
Nearly all the 16 dividend billionaires are men. But not all.
Mary Malone, the 72-year-old heiress to the Campbell Soup empire, knows dividends well, too. She remains the top individual owner of the food company — holding nearly 18% of shares outstanding. That means she collects $78.9 million a year in just dividends. That's a nice bonus on top of the fact that the shares are up nearly 18% this year.
Still think dividends are inconsequential?
Dividend Multimillionaires
Top individual owners of S&P 500 stocks haul in massive annual dividends
| Company | Symbol | Top Shareholder | Top owner's annual dividends ($ millions) | Yield | Sector |
|---|---|---|---|---|---|
| Oracle | Ellison, Lawrence J. | $1,467 | 1.61% | Information Technology | |
| Nike | Knight, Philip H. | $319.8 | 1.05 | Consumer Discretionary | |
| Kinder Morgan | Kinder, Richard D. | $281.5 | 5.86 | Energy | |
| Franklin Resources | Johnson, Rupert Harris | $119.8 | 4.07 | Financials | |
| Paychex | Golisano, B. Thomas | $104.0 | 2.27 | Information Technology | |
| Campbell Soup | Malone, Mary Alice Dorrance | $78.9 | 2.91 | Consumer Staples | |
| FedEx | Smith, Frederick W. | $66.1 | 1.95 | Industrials | |
| Cintas | Farmer, Scott D. | $54.8 | 1.04 | Industrials | |
| Ralph Lauren | Lauren, Ralph | $54.5 | 3.02 | Consumer Discretionary | |
| Constellation Brands | Sands, Robert S. | $45.2 | 1.27 | Consumer Staples | |
| J.B. Hunt Transport Services | Hunt, Johnelle D. | $25.7 | 0.83 | Industrials | |
| W.R. Berkley | Berkley, William Robert | $19.0 | 1.32 | Financials | |
| News Corp.* | Murdoch, Keith Rupert | $16.0 | 1.09 | Communication Services | |
| Brown & Brown | Brown, J. Hyatt | $15.1 | 0.60 | Financials | |
| Marriott International | Marriott, David Sheets | $7.7 | 0.72 | Consumer Discretionary | |
| Universal Health Services | Miller, Alan B. | $6.0 | 0.73 | Health Care |
