Special Report

10 Safest High-Yield Dividends

AT&T
> Dividend yield: 5.30%
> Annualized dividend: $1.84
> Share price: $35.50
> P/E ratio: 13.65
> Industry: Telecommunications

AT&T Inc. (NYSE: T) is the top dividend payer among major telecom players, with a 5.3% yield. AT&T is also the highest-yielding stock in the Dow Jones Industrial Average. Some may wonder about its dividend’s health following the DirecTV (NASDAQ: DTV) acquisition, but it seems unlikely that the deal will lead to any cuts in payments. AT&T had more than $18 billion in earnings in 2013. It paid out nearly $10 billion in dividends and used about $13 billion on share buybacks last year. AT&T should be more than able to keep its dividend safe, despite laying out cash for the merger, and should still be able to raise its dividend ahead.

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Altria
> Dividend yield: 4.50%
> Annualized dividend: $2.08
> Share price: $46.51
> P/E ratio: 18.10
> Industry: Tobacco

Altria Group Inc. (NYSE: MO) is perhaps the most recognizable tobacco giant, and it has a market cap north of $90 billion. The stock has hit several new highs in 2014, and the current $46.40 share price is actually above the consensus analyst target price. Altria recently bumped up its dividend to $0.52 from $0.48 per quarter, which has kept its yield up around 4.5%. Cigarette sales volumes have been shrinking. U.S. adult smoking rates, too, have dropped — from 42.4% in 1965 to just 19% in 2011, according to the Centers for Disease Control and Prevention. Despite this, Altria has still grown its earnings per share, and it maintains a profitable stake in beer maker SABMiller. With rivals involved in mergers, Altria is the easiest dividend to analyze of any major tobacco stock — even if it has been slow to push aggressively into the e-cigarette market.

Consolidated Edison
> Dividend yield: 4.40%
> Annualized dividend: $2.52
> Share price: $57.05
> P/E ratio: 15.09
> Industry: Energy

ConEd is an electric utility company supplying power to much of New York City. As a regulated utility, ConEd has to receive state approval to increase billing rates to customers. Still, the utility beat earnings expectations and lifted the lower-end of its earnings guidance with its August earnings report. ConEd has also been managing its costs better at a time when future rate hikes are likely to be rejected or limited. Its dividend yield of about 4.4% has ample coverage, as its current payout ratio is just a 66%. This is an important consideration given that earnings are expected to be basically flat in 2014 and up only marginally in 2015.