Investors acquire Stocks for a variety of reasons. A widespread consideration in stock investing is whether the stock/company you are buying issues dividends. Suppose a Company is a regular dividend issuer. In that case, investors would like to know:
In its most simple form, a dividend is a cash payment made by a company to its shareholders. The payment is derived from a portion of the company's earnings, typically after covering its expenses.
Dividends are typically issued by large established corporations that are cash positive but limited in their opportunities to scale. These corporations seek to return value to their investors via cash rather than increasing their stock price.
Some of the most popular dividend stocks are well-known brands with strong, predictable cash flow or high dividend yield. As a general rule, the riskier the stock, the higher its dividend yield should be to compensate for the risk.
Keep reading to learn about some of the most popular dividend stocks in the US and other major stock markets.
Company: The Coca-Cola Company
Extra Note: The Coca-Cola Company's solid and dependable sales record and healthy profit margins make up for its dividends' relatively low yield compared to other stocks mentioned on this list.
Extra Note: Oligopolies such as US telecommunication companies make attractive dividend stocks for investors. The small pool of competition for these companies means the risks for investors is smaller than for companies that have to rely purely on competitive strengths.
Company: British American Tobacco
Extra Note: While a contentious and vilified industry, tobacco companies have a reputation for charitable dividends. This is why British American Tobacco and Imperial brands remain popular dividend stocks, even with reduced smoking rates in developing countries.
Company: Imperial Brands
Company: Deutsche Lufthansa
Extra Note: Deutsche Lufthansa has temporarily suspended its dividend payments due to global air travel receding to unsustainable levels since the beginning of the Covid-19 pandemic. Before 2020, Deutsche Lufthansa would distribute approximately 20% to 40% of net income in dividend payments to its shareholders.
Extra Note: The original Spanish branch of Telefónica issues dividends twice annually, in June and December of each year. Telefónica engages in several methods to return value to its shareholders, including cash and scrip dividends (i.e., issuing shares in place of a delayed cash dividend).
Company: Novo Nordisk
Extra Note: The Danish Pharmaceutical company's dividend yield is the lowest on this list, yet the company remains an attractive option for investors. The yield, while small, is not altogether inadequate for the industry in which it operates and is seen as tolerable due to the companies domination over diabetic therapies.
Company: BHP Group
Extra Note: Of course, as Australia dominant industry, two of the country's most popular dividend stocks are from companies operating in the mining industry. The attractive yields signify the sector's risk to commodity price movements beyond the control of the miners.
Company: Rio Tinto
Company: Japan Post Bank
Extra Note: One of Japan's favoured dividend stocks, Japan Post Bank seeks to return 50% to 60% of its retained earnings in the form of dividends. By Japanese standards, yields of ~5%, of which Japan Post Bank conforms, is higher than the market average.