The Fed cut short-term rates again — making decent yields even more attractive. But there are some dividend gems to be found in the S&P 500.
Five S&P 500 stocks, including Altria Group, AT&T and TransDigm Group, all yield more than 4.5%, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. That tops the 4.34% yield on the 10-year Treasury.
All these stocks are also up 20% or more this year, too. That means all the stocks are mostly participating in the S&P 500's rally this year, on top on the rich yield.
"Investors are searching for equilibrium after reeling from such large moves in rates over the course of the last two months," said Jeffrey Roach, chief economist for LPL Financial.
Looking For Yield In S&P 500
Finding rising S&P 500 stocks with healthy yields is important given the market investors face.
Going for yield alone isn't enough. Hopes for economic growth are pushing stocks higher. Missing out on that part of total return would be costly.
And that's where a stock like tobacco firm Altria stands out. It yields an impressive 7.5%, topping the average 2.2% paid by other S&P 500 companies. But at the same time, the stock is up 33.1% this year, outpacing the S&P 500's 25% rise. Altria sports a 77 RS Rating and 64 Composite Rating.
Other High-Yield, High Performers
But tobacco isn't the only way to get stock gains on top of a big dividend.
Shares of telecom firm, long known for its dividend, are up 32% this year. That's enough to give it an RS Rating of 82. What's more, AT&T yields nearly 5% to boot. Similarly, industrial TransDigm yields even more than AT&T: 5.4%. And its shares gained 31% this year. It has an RS Rating of 83. Additionally, strong profit growth pushes TransDigm's Composite Rating up to 86.
To be sure, high dividends aren't etched in stone. Companies can cut them anytime. And yields fall when stocks rise — all things held equal. But for now, stocks like these offer opportunity as the Fed cuts rates.
High Yield, High Performance In S&P 500
Stocks yielding 4.5% or more up 20% or more this year
| Company | Ticker | Yield | YTD % Ch. | Sector |
|---|---|---|---|---|
| Altria Group | MO | 7.5% | 33.1% | Consumer Staples |
| AT&T | T | 4.9 | 32.0% | Communication Services |
| TransDigm Group | TDG | 5.4 | 31.0% | Industrials |
| Simon Property Group | SPG | 4.8 | 22.7% | Real Estate |
| Dominion Energy | D | 4.6 | 21.0% | Utilities |
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