Special Report

10 Safest High-Yield Dividends

Chevron
> Dividend yield: 3.6%
> Annualized dividend: $4.28
> Share price: $118.09
> P/E ratio: 11.18
> Industry: Oil and Gas

Chevron Corp. (NYSE: CVX) is one of the nation’s largest energy companies, with a market cap above $220 billion. Chevron reported $220 billion in revenue in 2013, lower than in 2012 and 2011, but the company’s net income of $21.4 billion offers a solid base for dividend payments. Chevron keeps adjusting its portfolio of projects, and it has more than $40 billion between its cash and long-term investments. The company has been increasing its efforts in shale and other projects, and its payout is only 40% of expected earnings per share. Chevron’s dividend yield of 3.6% is much higher than the sub-3% yield of rival ExxonMobil. Despite the drop in oil prices after summer, Chevron has the ability to grow its dividend while even buying back stock if it wishes. At $118, shares are down from a 52-week high of above $135, which is also what analysts think the fair value price is.

Cisco Systems
> Dividend yield: 3.05%
> Annualized dividend: $0.76
> Share price: $25.01
> P/E ratio: 11.63
> Industry: Networking Equipment

Cisco Systems, Inc. (NASDAQ: CSCO) has become the king of dividends among technology giants that led the industry in the 1990s and much of the last decade. Despite frequently reporting disappointing earnings since the recession, Cisco has been restructuring and downsizing less productive aspects of its overall business. Last year, Cisco spent $3.76 billion on dividends and bought back some 420 million common shares worth $9.54 billion. It also still had $52.1 billion in cash. Cisco can likely keep raising its dividend, as its payout ratio is under 37% of adjusted earnings.

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Duke Energy
> Dividend yield: 4.20%
> Annualized dividend: $3.18
> Share price: $75.25
> P/E ratio: 16.32
> Industry: Energy

Duke Energy Corporation (NYSE: DUK) is the king of utilities with a $53 billion market cap. So far, 2014 seems like a good year for Duke Energy, as investors have pushed the company’s valuation more in line with its peers. Its payout ratio was 73% of 2013 earnings, and is under 70% of expected 2014 earnings — relatively safe coverage for a utility. The company recently committed $500 million to a major expansion in solar power, and it recently struck a deal with Dynegy to sell its Midwest power generation business, including 11 power plants, for $2.8 billion in cash. It is also part of an $8 billion renewable energy project proposal to supply Los Angeles. Duke Energy has paid a dividend on its common stock for 88 consecutive years.