Income investors love dividend stocks for their regular payouts; any stock-price appreciation is just gravy. The Kiplinger Dividend 15, the list of our favorite dividend-paying stocks, delivers on the first front, yielding 3.7%, on average, compared with a 1.9% yield for Standard & Poor's 500-stock index and a paltry 0.7% yield for the 10-year Treasury bond.
However, after a long string of outperformance, our list has come up a little shy over the past 12 months. While several of our Kiplinger 15 components have put up double-digit returns despite the bear market, the overall 3.4% average total return is roughly 3 percentage points behind the S&P 500. Moreover, chaos in the energy patch has prompted us to jettison one member.
But there is some good news.
For one, none of the members of the Kiplinger Dividend 15 has cut or suspended its dividend this year. In most years, that wouldn't be news. But in response to the pandemic, more than 60 S&P 500 firms and dozens of other companies have shored up cash by cutting or suspending their dividends.
Also, many of our stocks – which were richly valued when we discussed them last fall – have lost some of their froth. And perhaps most salient for dividend investors looking for new holdings, drops in price help bolster a stock's yield; as a result, several yields in the Dividend 15 are well above 4%.
Let's take a look at the Dividend 15. We divide these payers into three categories: stocks with a long history of stable dividends, stocks with the potential for rapid growth in their payouts, and high yielders. Find a dividend stock that suits your needs, or select a mix.