Investing Investing Basics

18 Popular Stocks That Pay Dividends, and How to Invest in Them

Dividend stocks issue regular earnings payouts to shareholders. Here’s how and why to invest in them.

By Lance Cothern
and Mary Beth Eastman

Edited by Becca Borawski Jenkins

Updated Dec. 17, 2024

If you want to invest in stocks and earn an income from your selections, consider investing in stocks that pay dividends. You can buy shares of a dividend-paying stock and then receive regular payouts, typically on a monthly or quarterly basis. Dividend stocks and dividend funds are two types of securities you can invest in that will pay dividends.

Here’s what you need to know about dividend stocks to see whether they might be a good fit for your financial goals, as well as 18 popular, high-paying dividend stocks to explore.

How to invest in dividend stocks

Investing in dividend stocks can be as simple as opening a brokerage account and buying a share of dividend-paying stock. You’ll receive dividend payments according to the company’s dividend schedule.

A dividend reinvestment plan (DRIP) lets you buy shares directly through the company and automatically reinvests dividends into more company stock.

Brokerage firms may also allow you to automatically reinvest your dividends without having to go through a company’s official DRIP.

Some dividend investors use the payment of regular dividends as a form of passive income to fund their retirement or other needs. In these cases, they don’t reinvest the dividend income into the same stock, but instead deposit it into their brokerage accounts. In other cases, retirees may simply choose to receive an annual dividend check, for example.

What are dividend stocks?

Dividend stocks are stocks that pay a dividend, which is a monetary distribution from the company’s profits that is sent to its stockholders to reward them for owning the stock. Companies may pay dividends if they have excess earnings they don’t want to reinvest into the company itself.

People often like dividend stocks because they consider it a sign of strength that a company has the cash flow to make a payout to its shareholders.

Dividend stock investors often use a couple of terms to categorize certain companies that pay dividends. These include:

Dividend kings: Companies with a market cap (the total market value of all the company's shares of stock) of at least $3 billion that have increased their dividend payments each of the 50 past years.
Dividend aristocrats: S&P 500 companies that have increased their dividends without fail each of the previous 25 years.

What are dividend funds?

Dividend stocks aren’t your only option to earn dividends. There are also dividend funds, which are mutual funds that hold dividend stocks. For example, some real estate investment trusts (REITs) earn income from rental payments. They may pay out some of their earnings in the form of dividends. Then there are dividend-focused ETFs (exchange-traded funds), which can be traded throughout the day, unlike mutual funds which trade at the end of the day. Index funds can also hold stocks of companies that pay dividends.

Dividend funds and ETFs pay out the dividends they receive to their fundholders, and they can help if you are aiming for a diversified portfolio. On the downside, someone must manage these funds; the expense ratio shows how much fund management costs, and reduces the overall return you receive.

18 popular dividend stocks

Below is a list of 18 stocks that pay dividends, including their annual dividend and the dividend yield, which is the dividends paid out over a year divided by the share price.

Company	Symbol	Dividend	Dividend Yield
Altria Group	MO	$4.08	8.16%
Apple	AAPL	$1.00	0.44%
AT&T	T	$1.11	5.03%
BP	BP	$1.92	5.91%
Carlisle Companies, Inc.	CSL	$4.00	0.89%
Chevron Corp.	CVX	$6.52	4.31%
C.H. Robinson Worldwide	CHRW	$2.48	2.35%
Coca-Cola Co	KO	$1.94	2.75%
International Business Machines Corp	IBM	$6.68	3.0%
J.M. Smucker	SJM	$4.32	3.68%
Johnson & Johnson	JNJ	$4.96	3.09%
Microsoft Corp	MSFT	$3.00	0.72%
Nordson	NDSN	$3.12	1.22%
Pfizer Inc	PFE	$1.68	5.93%
Procter & Gamble Co	PG	$4.026	2.37%
U.S. Bancorp	USB	$2.00	4.55%
Verizon	VZ	$2.66	5.97%
WP Carey Inc	WPC	$3.50	5.74%

All rates and numbers are accurate as of October 4, 2024.

Advanced tips for investing in dividend stocks

Figuring out how to invest in dividend stocks takes time and research. Start by deciding what your goals are for investing in dividend stocks. Once you understand your goals, you can start evaluating investments that fit those goals.

Use technical analysis to evaluate selections

Using technical analysis can be a valuable way to identify and evaluate dividend stocks. Technical analysis relies on historical market data and statistics to predict future stock activity. Looking at a company’s dividend yield is also useful. A “good” dividend yield depends on your personal goals, the riskiness of the investment, and many other factors, so you might want to look beyond just a high dividend yield.

Other data to consider when evaluating dividend stocks include:

Dividend payout ratio (also known as payout ratio): Dividends paid per share divided by the earnings per share
Total return: Includes all forms of return to shareholders, such as price appreciation, dividends, and interest paid out
EPS: Stands for earnings per share and is measured by dividing a company’s earnings by its total shares outstanding
P/E ratio: Stands for the price-to-earnings ratio and is measured by dividing a company’s share price by its earnings per share

Narrow options with a stock screener

To help find stocks that fit your goals, consider using an investment screener tool such as finviz. You can use stock screeners to find stocks with specific dividend yields, P/E ratios, EPSs, and more. After identifying potential stocks to invest in, decide how much of each stock you want to add to your portfolio to meet your dividend investing goals while staying diversified.

Purchase with an investing app or brokerage account

You can use an investing app, such as Stash, to purchase the dividend stocks you want. Stash is helpful because it allows you to buy fractional shares if you don’t have enough cash to buy an entire share due to a high stock price.¹ Paid non-client endorsement. The paid partner received cash compensation of up to $150.00 (per cost per action) for providing this endorsement. Compensation creates an incentive for the individual to recommend Stash. Endorsements are not representative of the experience of all clients and are not guarantees of future performance or success. For a representative sample of client testimonials, refer to Apple App Store or Google Play reviews To begin investing on Stash, you must be approved from an account verification perspective and open a brokerage account (“Personal Portfolio”). Promotion offer is subject to <a href="https://lp.stash.com/personal-portfolio-5-first-deposit-offer-promoter/" target="_blank" rel="noopener noreferrer">Terms and Conditions</a>. This material is not intended as investment advice and is not meant to suggest that any securities are suitable investments for any particular investor. Investment advice is only provided to Stash customers. All investments are subject to risk and may lose value. All product and company names are trademarks ™ or registered ® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them. Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. What doesn’t count: Cash withdrawals, money orders, prepaid cards, and P2P payment. See full terms and conditions. Fractional shares start at $0.05 for investments that cost $1,000+ per share. You can also set up automated recurring investments if you want to add to your dividend stock position over time. You can also purchase dividend stocks in your regular brokerage account. Personally, I like to purchase dividend stocks in my Roth IRA account because it lets me avoid paying taxes on the distributions.

How dividends are paid out

There are three important dates to understand when it comes to receiving dividends:

Record date, which is the date you need to have purchased the stock by to be eligible for the dividend.
Ex-dividend date, which is the cutoff date for assigning the dividend to the previous owner of the share (usually either the record date or one business day before).
Dividend distribution date, which is the date the dividend is paid out.

The company defines the record date and dividend distribution date. Then the stock exchange the company is listed on uses that record date to create an ex-dividend date.

As long as you owned the stock before the ex-dividend date, you get that dividend payment as a shareholder. You can even sell the stock on or after the ex-dividend date but before the company pays out the dividend and still receive the payment.

Dividend payout example

Let’s say you own 100 shares of AT&T stock on June 1, 2024, and AT&T declared a dividend of 28 cents per share on June 26, 2024, with an ex-dividend date of July 10, 2024. Because you own the AT&T stock before the ex-dividend date, you receive the dividend payment on the distribution date of August 1, 2024. One hundred shares of stock would result in a dividend payment of $28.

How dividends are taxed

As with most types of income, dividends are usually taxable. The tax rate you pay depends on your overall income and the type of dividend you receive.

Qualified dividends, or dividends from stocks you have held unhedged for at least 61 of the 121 days of the period starting 60 days before the security’s ex-dividend date, may only be subject to the lower capital gains tax rates. Stocks that do not pass the test are considered ordinary dividends and these require you to pay the higher ordinary income tax rates.

Your brokerage should send you a 1099-DIV at the end of the year detailing your dividend payments and whether they’re qualified or ordinary dividends. If you use REITs for real estate investing, be aware the dividends these funds pay may be subject to taxation at ordinary income tax rates. These are usually higher tax rates than you pay on qualified dividends from other investments.

You can avoid or delay paying taxes on dividend payments if you hold your dividend-paying investments in a tax-advantaged account. Traditional IRAs and 401(k)s do not tax dividend payments as you receive them into the account and instead delay the taxation on those earnings until you withdraw the money. When you withdraw the money from the account, it is taxed at your ordinary income tax rate.

Roth IRAs and Roth 401(k)s don’t tax dividend payments at all because you contributed the initial funds to the account on an after-tax basis, which is why they’re my choice for dividend stocks. Qualifying withdrawals from Roth retirement accounts after age 59 1/2 do not result in any taxes.

FAQs

How do I make $500 a month in dividends?

If you want to receive $500 every month, you would need to own enough dividend stocks to have at least one that pays out dividends in every month of the year. Once you identify that list of stocks, then it’s a matter of some basic math and purchasing the proper number of shares.

First, look at the dividend payouts in a given month. Then take $500 and divide it by the dividend payout to figure out the number of shares you need of that stock to earn the $500 dividend that month. That’s how many shares you would need to purchase. You would need to repeat this process with each month of the year.

Is dividend investing a good strategy?

Dividend investing might be a good strategy if it fits your personal finance goals. Some people may choose to reinvest dividends to grow their portfolio while others use dividend payments as income.

However, all investing, including dividend investing, comes with risks. Companies are not required to pay out dividends and could stop their dividend payouts at any time. If you rely on those dividends as income, this could pose a significant risk to your investing strategy or financial situation.

How long do you have to hold a stock to get the dividend?

Figuring out if you should receive a dividend from a stock is straightforward. When a company announces a dividend date, it sets a record date. Then the stock exchange that the stock is traded on uses that record date to set an ex-dividend date. The ex-dividend date is usually one business day before the record date.

To receive a dividend payment from owning the stock, you must hold it before the ex-dividend date. If you purchase the stock on the ex-dividend date, you will not receive the current dividend payment. However, you should receive future dividend payments as long as you are still a shareholder before the next ex-dividend date.

Bottom line

Figuring out exactly how to invest money can be difficult when you have so many options to choose from. Whether they are short- or long-term investors, people looking for a stream of income may narrow down their options if they decide to invest in dividend stocks or dividend funds.

Before you decide to become an income investor and get into dividend stocks, make sure they help you meet your investing goals. If they do, then take the time to research the best dividend stocks or funds for those specific goals.