- So in this video today,
we're gonna be talking about some of the best
high-yielding dividends stocks in 2020.
We're gonna look at a list of the top five
highest-paying dividend stocks
that are currently on a list of stocks
known as dividend aristocrats.
Now, if you're not familiar, a dividend aristocrat
is a company that has not only been paying dividends
for 25 consecutive years or more,
but they have been growing them every single year as well.
So it's companies that have paid
and grown their dividends every single year
for 25 years or more.
Because when it comes down
to looking for a high dividend yielding stock,
you wanna make sure that that dividend is relatively safe.
Becausee at the end of the day,
dividends can be cut, restructured,
or eliminated at any point in time.
But by solely looking at these dividend aristocrats
and looking for these companies
that have a long track record
of paying and growing dividends,
you can mitigate some of that risk
of them yanking the rug out from under you
and eliminating that dividend.
However, that being said, there's still no guarantee
that a dividend aristocrat won't still cut their dividend,
it just is a lower chance
than a company that isn't on that list.
So there's about 60 companies
on this list of dividend aristocrats.
And in particular, we're going to focus
on the five companies
currently paying the highest dividend yield.
And we're gonna talk about
whether or not this may be a good investment.
Now that being said, guys,
I just have to make this quick disclaimer here
that I am not a financial advisor.
This is not financial advice.
And you should always do your own due diligence
before doing any kind of investments on your own.
That being said, guys,
let's jump into the number one high-yielding dividend payer
on the dividend aristocrats.
And that is none other than ExxonMobil.
So ExxonMobil trades under the symbol XOM,
and they currently have a dividend yield of around 8.3%,
which is significantly higher
than what you typically find among dividend stocks.
So for example, if you look at the S&P 500,
which is the 500 largest publicly traded US companies,
the average dividend yield sits around 2%.
So ExxonMobil is currently paying
roughly four times that of the average
of a publicly traded US company.
But what I want you to keep in mind here
is that the higher the dividend yield is,
the greater the risk factor is as well.
So when you see a company paying a dividend yield
of six, seven, 8%,
understand that is because there is a significant
amount of risk at play with the current business operations,
which is of course the case here with ExxonMobil.
Now, ExxonMobil does have an impressive track record here
of 37 consecutive years
of paying and growing their dividends,
but here's the current situation with them.
So right now, due to this global pandemic,
oil prices and oil demand has plummeted.
And this is a company that derives a lot of their revenue
related to the price of oil and other commodities.
Now they currently have said they have a goal
of doubling their earnings and doubling cashflow
by the year 2025, which is a very ambitious goal.
But their current situation financially is just not good.
In fact, as far as their dividend goes,
if you look at the payout ratio, it is currently over 200%,
which essentially means ExxonMobil is currently paying
twice their current earnings
out in the form of dividend payments to shareholders,
which anybody could tell you
that is not sustainable long-term
unless their earnings increase.
So I would say due to this oil crisis going on right now,
and also just less people being interested in fossil fuels
and more interest in renewable technologies,
the risk factor for ExxonMobil is very high
and there is definitely a good chance here
that they will have to pause the growth of that dividend
or cut the dividend.
As much as they would not like to do that,
it is still a possibility,
and the current dividend is not sustainable long-term
without an increase in their earnings.
That being said,
seeing as they have increased their dividend for 37 years,
they have weathered many storms in the past.
However, recently it was announced
that they have suspended 401k matches for employers,
clearly a sign of cost cutting efforts,
which could mean there are more to follow,
such as a dividend restructuring.
All right, so coming in at number two on list here
is none other than AT&T, the telecom and media giant
that trades under the symbol T.
They have an impressive 35-year dividend growth streak.
And their current yield sits at around 7%,
which again is much higher
than your average dividend payers on the S&P 500.
Now, I would say AT&T has moderate risk,
but not as much risk at play as ExxonMobil
based on their current situation.
So most people are familiar with the telecom business
associated with AT&T as a leading wireless carrier,
but they're also a massive media company,
primarily through their acquisition of WarnerMedia,
and they own business units,
such as HBO and Warner Brothers.
And another popular business segment
that they own and operate is DirecTV.
So they reach hundreds of millions of customers
through their wireless business
and through their media business.
However, what I don't like about AT&T
is they have massive investments in old media,
which are losing subscribers left and right
due to the overall trend of cord cutting.
Now, they are involved in the streaming business
with streaming services such as HBO Max and AT&T TV NOW.
But nobody really talks about these services.
I don't know anybody who has them,
and they're certainly not up there
in the likes of Hulu, Netflix, and Disney Plus.
So they're heading in the right direction,
but they haven't quite executed in a way
where they have gained meaningful market share
in the streaming segment.
And another problem with AT&T
is all of these media acquisitions
have led to a sizeable debt load.
So this company does have a substantial amount of debt,
which could inhibit their ability
to pay dividends down the road,
or at least grow them at the pace that they have.
So right now their payout ratio sits at around a 126%,
which means they are paying more in dividends
than they are currently earning.
Again, not sustainable
unless earnings increase significantly.
However, that being said,
the bullish perspective here is that with the rollout of 5G,
they should be able to derive more revenue
from their wireless segment,
which is still growing at a healthy rate.
So there's definitely some level of risk here with AT&T
but I would say not as much as ExxonMobil.
The main thing is that
if you look at AT&T stock over the last couple of years,
it's been basically flat with pretty much no growth.
So it significantly underperformed the overall stock market.
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All right, so coming in at number three on the list here
is a much lesser known company
called People's United Financial,
trades under the symbol PBCT.
They have consecutively grown their dividend for 26 years,
making them a newer addition
to that list of dividend aristocrats.
And the current dividend yield is sitting at around 6.7%.
Now this is a banking company
involved with commercial, retail and business banking,
as well as a variety
of different wealth management services.
However, this is a much smaller bank
than many people are used to.
So their current market cap sits at around $5 billion
compared to Wells Fargo, a massive bank
with a market value of around $100 billion.
So this bank is like 1/20 the size of Wells Fargo,
making them a much smaller operation.
Now the current payout ratio is sitting at 62%.
So basically current earnings,
they should reasonably be able to pay that dividend
and hopefully continue to grow it
at a reasonable rate over time.
But this is definitely a stock
you're gonna wanna do some more research on.
And oftentimes when trying to research smaller companies,
there's less information available.
And it's hard to get a good idea
of the bullish thesis and the bearish thesis
of a given company.
It's much easier to research companies
with, you know, larger market capitalizations
since there's more people publishing research
and documents about them.
The financial sector was hit pretty hard here
due to this global pandemic because people were fearful
of consumers and businesses defaulting on their obligations.
And while that is still a significant risk factor,
I would say a lot of those fears
may be in the rear view mirror,
and we'll have to see how the next six months play out
in terms of people getting back to work
and businesses resuming.
All right, so coming in at number four on the list here
is another massive oil giant referred to as Chevron
that trades under the symbol CVX.
They have a 32-year dividend growth streak,
and they currently pay a yield of around 6.2%.
So the yield is not as high as ExxonMobil,
but neither is the risk factor
associated with that investment.
What I want you to keep in mind, as mentioned earlier,
the higher the dividend yield,
the greater the risk factor becomes.
So Chevron is basically having the same exact struggles
as ExxonMobil.
They're involved in an industry that is kind of dying out
in terms of people's interest.
And we're focused more on green renewable energy
and companies like Tesla,
and not so much, you know, investing in fossil fuels.
And just like with ExxonMobil,
weak commodity prices have crushed their margins.
And there's really no signs of recovery anytime soon
due to the slowdown of travel
associated with this global pandemic.
Now on the bullish side of things here for Chevron,
a lot of bulls have said that they have done a great job
at buying quality assets over time
and not overpaying for them, which is something
that a lot of their peers have done in the past,
overpaying for oil assets and other commodity assets.
But on the other hand, one risk factor here
is that a lot of Chevron's business
is involved in upstream segments,
such as oil financing and exploration,
making them more susceptible
to the price fluctuations of commodities.
And not to mention, there was a huge move
in the oil segment recently when a key competitor, BP,
announced that they were slashing their dividend
and pivoting their focus away from oil and fossil fuels
and into renewable energies.
So that kind of shook people and got them scared
that a similar path is going to happen
with Chevron and ExxonMobil.
So there is a significant amount of risk at play here
in the oil industry.
It's not one I have personally ever invested in,
and I don't think I ever would.
However, the yields on these stocks
are still significantly higher
than most other dividend payers out there.
And finally, guys, coming in at number five
is a company you may or may not have heard of before,
and that is Franklin Resources,
trading under the symbol BEN.
Now, based on the name,
you might think this is an energy company,
but it's actually a financial company
involved in asset managers.
This company has an impressive 38-year
dividend growth streak,
and they currently pay a yield of 4.94%,
just under 5% yield.
So this is a massive investment management company,
most well known for Franklin Templeton.
So they are a provider of mutual funds
and other fixed income investments
and different financial products like that.
As of 2018, they had around $700 billion
in assets under management.
However, recently they just acquired
another asset management company called Legg Mason,
which now brings their total assets under management
to around $1.4 trillion.
The way this company makes money is pretty simple.
They manage assets for other people
and they collect a management fee in the process.
And that is where 2/3
of their total revenue is derived from.
Now while that is a great business model
that works really well during economic prosperity,
there is a significant risk factor here
because when the market tanks, as it did earlier this year,
a lot of people pull out of the market.
And when 2/3 of your revenue
is derived from management fees,
and you have lower assets under management,
well, all of a sudden your revenue plummets as well.
Not to mention, there's also less overall interest
in the mutual funds
and some of these more traditional investments
as more people pivot towards low-fee index funds,
robo-advisers and things like that.
However, their current payout ratio is sitting at just 39%,
which makes this a relatively safe investment
with very low risk of that dividend being cut
or restructured in the near future.
So, anyways, guys, there you have it.
Those are five high yielding dividend stocks
to keep an eye on and consider in 2020.
And again, we're focused solely on the dividend aristocrats
because these companies have the greatest likelihood
of continuing to grow and pay those dividends going forward.
Sure, you can find 10 to 12% yield or more,
but the risk of that company cutting
or eliminating that dividend is sky high.
And for a long-term investment,
that's just way too speculative.
So anyways, guys, I hope you enjoyed this video.
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