Dividend stocks have been hot, hot, hot lately. More than 80 percent of the companies in the S&P 500 are now paying dividends. And the dividend payouts for that index are 30 percent higher now than they were at the market’s previous high back in October 2007.
With the Barclays Aggregate Bond Index — the equivalent of the S&P 500 for fixed-income investors — paying out about 3 percent annually and actually declining in value for the first quarter of this year, investors have realized that a stock throwing off even a modest dividend can offer as much income as a bond along with the capital appreciation of equities.
Some stocks, though, are paying a dividend that is anything but modest. With American corporations sitting on more than $1 trillion in cash or cash equivalents but still reluctant to make capital improvements, they’re struggling to find uses for all that money. The answer: massive dividends. These are the stocks currently offering investors the highest payouts:
10. Kinder Morgan Energy Partners (KMP)
Annual dividend rate: 5.16
Business: Pipeline transportation and energy storage limited partnership
Kinder Morgan is a way to play the natural-gas export boom. It’s well-positioned with existing pipelines to Mexico, which has been turning to natural gas as a way to limit its horrible pollution problems. Kinder Morgan’s profit margins are a solid 25 percent — and it now owns one-time pipeline rival El Paso, whose profit margins are closer to 50 percent.
9. BlackRock (BLK)
Annual dividend rate: 6.72
Headquarters: New York City
Business: Investment management
The biggest money manager in the world in terms of assets, BlackRock has benefited from record inflows into ETFs, which it markets under the iShares brand, in the first quarter of 2013. Earnings have been growing at about 25 percent per year over the past five years. BlackRock went public in 1999 at $13.50 a share; it’s now trading at more than $250.
8. CNOOC Ltd. (CEO)
Annual dividend rate: 7.42 percent
Headquarters: Hong Kong
Business: Oil & gas exploration, primarily around China
CNOOC made 21 new discoveries off the shore of China in 2012; it also bought up Canadian oil firm Nexen in July of that year, and has a working partnership with ConocoPhilips. The Nexen purchase forced CNOOC to cut its dividend by 40 percent, but at the end of March, it announced a special dividend of $4.12, with an ex-dividend date (the latest date at which you can buy the stock and still receive the dividend) of May 28th.
7. Westpac Banking Corp. (WBK)
Annual dividend rate: 8.70
Headquarters: Sydney, Australia
Business: Banking services in Australia, New Zealand and the Pacific Islands
Australian banks have recently had the reputation for paying sizable dividends, but Westpac has also been slashing costs, cutting and offshoring jobs for what the CEO recently called “an efficiency dividend.” The stock itself is up nearly 50 percent over the past year.
6. Great Northern Iron Ore Properties (GNI)
Annual dividend rate: 9.00
Headquarters: Saint Paul, Minn.
Business: Trust that owns mining interests in the Mesabi Range in northern Minnesota
Great Northern’s profit margins are now a staggering 77 percent, and that’s actually down from a year ago. One reason this trust is paying out so much right now is that it will cease to exist on April 6, 2015, at which point the value of the shares will go to zero. The wind-down payout looks to be a little more than $8 a share, so it’s important to get as much as you can before then.
5. BP Prudhoe Bay Royalty Trust (BPT)