Investing

The Highest-Yielding Dividends That Are Safe to Hold

1. FirstEnergy
> Dividend yield: 6%
> Annualized dividend: $2.20
> Share price: $36.93
> P/E ratio: 12.1

Utility company FirstEnergy Corp.’s (NYSE: FE) operations are currently providing a dividend yield of 6% to investors. At a share price of $36.93, its expected earnings per share of $3.00 generates a P/E ratio of just over 12. The consensus analyst price target is $40.03, and shares have traded in a range of roughly $35.46 to $46.77 over the past 52-weeks. FirstEnergy has a market value of $15.4 billion, and the company is expected to pay out 73% of its earnings to shareholders as dividends.

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2. AT&T 
> Dividend yield: 5.3%
> Annualized dividend: $1.80
> Share price: $34.06
> P/E ratio: 13.7

AT&T Inc. (NYSE: T) pays the highest dividend of the DJIA and manages to rank second in our large-cap safe dividends screens for the S&P 500. Its dividend yield is 5.3% and its expected P/E ratio is 13.7 for the year. The telecom giant is looking to have earnings growth in 2013 and 2014, and its $34.06 share price compares to a 52-week range of $32.71 to $39.00 and a consensus price target of $37.42. The company pays out just under 73% of its earnings as dividends. AT&T is worth roughly $180 billion in market value. Rival Verizon Communications Inc. (NYSE: VZ) was eliminated from this screen as it is in the midst of absorbing Vodafone’s share of Verizon Wireless following the largest corporate bond offering of all time.

3. Entergy
> Dividend yield: 5.2%
> Annualized dividend: $3.32
> Share price: $63.68
> P/E ratio: 12.9

Entergy Corp. (NYSE: ETR) is in the business of electric power production and retail electric distribution, and it comes with a 5.2% dividend yield. Its P/E ratio for 2013 is 12.9. Its shares are currently trading at $63.68, and its consensus analyst target price is $67.42. Shares have traded in a range of $61.09 to $72.98 over the past 52 weeks. The company pays out just over 67% of its expected earnings, which is more than manageable for these high dividend stocks.

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4. Reynolds American
> Dividend yield: 5.1%
> Annualized dividend: $2.52
> Share price: $49.22
> P/E ratio:15.2

Reynolds American Inc. (NYSE: RAI) managed to beat Altria Group Inc. (NYSE: MO) for the safest of the tobacco dividends because Altria pays more than 80% of expected earnings as dividends and Reynolds pays about 78%. Currently trading around $49, it has a consensus analyst price target of $49.67, versus a 52-week range of $39.70 to $52.93. Reynolds also trades with an expected P/E ratio of 15.2 and has a market value of more than $26 billion.

5. Southern Company
> Dividend yield: 4.9%
> Annualized dividend: $2.04
> Share price: $41.28
> P/E ratio: 15.1

Southern Company (NYSE: SO) is another public electric utility company, and it comes with a 4.9% dividend yield and a market value of roughly $36 billion. It has a consensus target price of $45.88 and has traded in a range of $40.63 to $48.74 over the past year. The company is expected to pay out 74% of its income as dividends, and its current year P/E ratio is 15.1.

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