The S&P 500 index tracks the performance of the 500 biggest companies in the United States. It is considered a top indicator of the U.S. stock market’s health. The venerable index is market-capitalization-weighted and tracks the 500 leading publicly traded companies in the U.S. Typically, larger companies have a significant impact on the index. The roaring success of the mega-cap Magnificent 7 stocks over the past few years is a testament to that. While the equal-weighted index may make more sense now, some of its individual stocks are incredible back-to-school bargains.
We screened the S&P 500 for high-yielding dividend stocks trading at attractive valuations across metrics including price-to-earnings and free cash flow. Five stocks caught our attention as strong ideas for growth and income investors looking to enter the fall months with less risk in their portfolios, generate dependable passive income, and deliver solid total returns over the long haul. All five are rated Buy by the top Wall Street firms we cover.
Why Do We Cover the High-Yielding S&P 500 Dividend Stocks?
Since 1926, dividends have accounted for approximately 32% of the S&P 500’s total return, while capital appreciation has accounted for 68%. Therefore, sustainable dividend income and the potential for capital appreciation are essential to total return expectations. A study by Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past 50 years (1973 to 2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
AT&T
AT&T (NYSE: T | T Price Prediction) is the world’s fourth-largest telecommunications company, measured by revenue. The legacy telecom has been undergoing a lengthy restructuring process while maintaining its core operations. Eleven analysts rate the stock a Buy, indicating broad support from Wall Street. With a forward P/E near 10x, a dividend yield of 4.52%, and a moderate payout ratio of 37.19%, it has room to keep paying.
AT&T was a long-time Dividend Aristocrat before structural corporate changes and spinoffs altered its payout strategy.
AT&T provides telecommunications, media, and technology services worldwide. Its Communications segment offers wireless voice and data communications services. Through its company-owned stores, agents, and third-party retail stores, it sells:
- Handsets
- Wireless data cards
- Wireless computing devices
- Carrying cases
- Hands-free devices
AT&T also provides:
- Data
- Voice
- Security
- Cloud solutions
- Outsourcing
- Managed and provided professional services
- Customer premises equipment for multinational corporations, small and mid-sized businesses, and governmental and wholesale customers
This segment also provides residential customers with fiber broadband and legacy voice telephony services. It markets its communications services and products under:
- AT&T
- Cricket
- AT&T PREPAID
- AT&T Fiber
The company’s Latin America segment provides wireless services in Mexico and video services throughout the region. This segment markets its services and products under the AT&T and Unefon brands.
Argus has a Buy rating with a $30 target price.
General Mills
With products that never go out of style and a strong 6.55% dividend yield, this is a rebound story that will reward patient investors. General Mills (NYSE: GIS) is a global manufacturer and marketer of branded consumer foods and has a P/E ratio of 9.23, suggesting it may be undervalued relative to the consumer staples sector average. The company generates strong free cash flow, typically over $2 billion annually, which supports the current dividend even amid softer sales.
Its segments include:
- North America Retail
- International
- North America Pet
- North America Foodservice
The North America Retail segment includes a variety of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar, and discount chains, convenience stores, and e-commerce grocery providers.
The International segment consists of retail and foodservice businesses outside the United States and Canada. Its product categories include super-premium ice cream and frozen desserts, meal kits, salty snacks, snack bars, dessert and baking mixes, and shelf-stable vegetables.
The North America Pet segment includes pet food products sold in the United States and Canada in national pet superstore chains, e-commerce retailers, and grocery stores. The North America Foodservice segment product categories include ready-to-eat cereals, snacks, and baking mixes.
Piper Sandler has an Overweight rating and a $45 target price.
Kinder Morgan
Kinder Morgan (NYSE: KMI), one of North America’s largest energy infrastructure companies, has a solid 3.72% dividend yield. This is one of the top energy stocks and remains a Wall Street favorite, paying a solid, dependable dividend. This large-cap energy/midstream name is often grouped as a “cheap yield” pick, benefiting from steady pipeline cash flows rather than commodity price swings.
The company operates the largest natural gas transmission network in the U.S., with about 66,000 miles of pipeline that transport 40% of the country’s gas production. It serves 20% of U.S. power demand, positioning it to benefit from the projected 15% to 20% of electricity demand from AI data centers by 2030. The company’s extensive gas storage capacity (15% of U.S. total) and fee-based revenue model provide stability and growth potential as gas volumes rise.
Kinder Morgan operates through four segments. The Natural Gas Pipelines segment:
- Owns and operates the interstate and intrastate natural gas pipeline and underground storage systems
- Natural gas gathering systems and natural gas processing and treating facilities
- Natural gas liquids fractionation facilities and transportation systems
- Liquefied natural gas liquefaction and storage facilities
The Products Pipelines segment owns and operates refined petroleum products, crude oil, and condensate pipelines, associated product terminals, and petroleum OKE pipeline transmission facilities. The Terminals segment owns and operates liquids and bulk terminals that store and handle various commodities, including:
- Gasoline
- Diesel fuel
- Chemicals
- Ethanol
- Metals
- Petroleum coke
- Owns tankers
Lastly, the CO2 segment produces, transports, and markets CO2 to recover and produce crude oil from mature oil fields. It owns interests in/or operates oil fields, gasoline processing plants, and a natural gas pipeline system in West Texas. It owns and operates about 83,000 miles of pipelines and 144 terminals.
UBS has a Buy rating on the shares, with a $38 target price.
PepsiCo
This top consumer staples stock reported surprisingly solid second-quarter earnings and will continue supplying goods for upcoming football tailgates and parties. PepsiCo (NASDAQ: PEP) is a global food and beverage company that pays a notable 4.09% dividend yield. The company’s low volatility (beta of 0.375) makes it a steady, defensive holding, which makes it a perfect holding while waiting for a comeback.
Its Frito-Lay North America segment offers:
- Lays and Ruffles potato chips
- Doritos, Tostitos, and Santitas tortilla chips
- Cheetos cheese-flavored snacks, branded dips
- Fritos corn chips
The company’s Quaker Foods North America segment provides:
- Quaker Oatmeal
- Grits
- Rice cakes
- Natural granola and oat squares
- Pearl Milling mixes and syrups
- Quaker Chewy granola bars
- Cap’n Crunch cereal
- Life cereal
- Rice-A-Roni side dishes
PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups, and finished goods under these brands:
- Pepsi
- Gatorade
- Mountain Dew
- Diet Pepsi
- Aquafina
- Diet Mountain Dew
- Tropicana Pure Premium
- Sierra Mist
- Mug
VICI Properties
VICI Properties (NYSE: VICI) is a New York City-based real estate investment trust that specializes in casino and entertainment properties. It offers a stellar dividend yield of 6.83% and is one of Wall Street’s top picks in the net lease group. It is ideal for more conservative investors seeking gaming exposure and a substantial dividend. The stock is frequently flagged, alongside other stocks in this post, in dividend screens as a “safer” S&P 500 dividend dog with an attractive yield backed by long-term triple-net leases.
VICI Properties has one of the largest portfolios of market-leading gaming, hospitality, and entertainment destinations, including three iconic entertainment facilities on the Las Vegas Strip:
- Caesars Palace Las Vegas
- MGM Grand
- The Venetian Resort Las Vegas
VICI Properties owns 93 experiential assets across a geographically diverse portfolio of 54 gaming properties and 39 other experiential properties across the United States and Canada. The portfolio comprises approximately 127 million square feet and features approximately 60,300 hotel rooms, as well as over 500 restaurants, bars, nightclubs, and sportsbooks. Gaming revenue has proven remarkably resilient in recent downturns, and its triple-net lease structure means it collects rent regardless of swings in tenant profitability.
VICI Properties has a growing array of real estate and financing partnerships with leading operators in other experiential sectors, including:
- Bowlero
- Cabot
- Canyon Ranch
- Chelsea Piers
- Great Wolf Resorts
- Homefield
- Kalahari Resorts
VICI Properties also owns four championship golf courses and 33 acres of undeveloped and underdeveloped land adjacent to the Las Vegas Strip.
Barclays has an Overweight rating with a $31 price objective.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks