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Dividend stocks are companies that pay out a portion of their earnings to a class of shareholders on a regular basis. These companies usually are well established, with stable earnings and a long track record of distributing some of those earnings back to shareholders. These distributions are known as dividends, and may be paid out in the form of cash or as additional stock. Most dividends are paid out on a quarterly basis, but some are paid out monthly, annually, or even once in the form of a special dividend. While dividend stocks are known for the regularity of their dividend payments, in difficult economic times even those dividends may be cut in order to preserve cash.
One useful measure for investors to gauge the sustainability of a company’s dividend payments is the dividend payout ratio. The ratio is a measure of total dividends divided by net income, which tells investors how much of the company’s net income is being returned to shareholders in the form of dividends versus how much the company is retaining to invest in further growth. If the ratio exceeds 100% or is negative (meaning net income is negative), this indicates the company may be borrowing to pay dividends. In these two cases, the dividends are at a relatively greater risk of being cut.
Below, we look at the top 5 dividend stocks in the Russell 1000 by forward dividend yield, excluding companies with payout ratios that are either negative or in excess of 100%. Each of the dividend stocks listed below significantly underperformed the Russell 1000’s total return over the past 12 months of 18.1%, as of January 18, 2021. All data below is as of January 18.
- Forward Dividend Yield: 8.75%
- Payout Ratio: 86.56%
- Price: $11.43
- Market Cap: $12.5 billion
- 1-Year Total Return: -4.1%
Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers various communications services, including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.
- Forward Dividend Yield: 7.73%
- Payout Ratio: 63.63%
- Price: $17.21
- Market Cap: $673.4 million
- 1-Year Total Return: -0.1%
Brookfield Property is a real estate investment trust (REIT) that owns, develops, builds, manages, and leases various commercial properties. Among the company’s portfolio of properties are restaurants, malls, entertainment facilities, and parking areas.
Brandywine Realty Trust (BDN)
- Forward Dividend Yield: 6.39%
- Payout Ratio: 43.84%
- Price: $11.90
- Market Cap: $2.0 billion
- 1-Year Total Return: -18.5%
Brandywine Realty Trust is a self-administered and self-managed REIT that owns, leases, develops, and manages primarily suburban office properties. It also has an ownership interest in and operates a commercial real estate management services company.
- Forward Dividend Yield: 6.21%
- Payout Ratio: 82.59%
- Price: $10.95
- Market Cap: $5.1 billion
- 1-Year Total Return: 0.9%
New York Community Bancorp is a holding company with $55 billion in assets and multiple banking subsidiaries, including Queens County Savings Bank, Roosevelt Savings Bank, Atlantic Bank, and others. Through these subsidiaries, New York Community Bancorp offers a full range of banking products and services to businesses and consumers. On December 28, the Board of Directors announced the appointment of Thomas R. Cangemi, senior executive vice president and chief financial officer, as president and chief executive officer of both the holding company and New York Community Bank effective December 31, 2020. Cangemi also became a director on both boards. Joseph R. Ficalora, his predecessor as CEO, retired.
- Forward Dividend Yield: 6.03%
- Payout Ratio: 78.41%
- Price: $39.83
- Market Cap: $9.1 billion
- 1-Year Total Return: -4.7%
Gaming and Leisure Properties is a self-administered and self-managed REIT engaged in the acquisition, financing, and ownership of casinos and other entertainment facilities. The company also leases properties to gaming operators through triple net lease arrangements. On January 7, the company announced the promotion of Steven Ladany to senior vice president, chief development officer. He previously was senior vice president of finance. In his new role, Mr. Ladany will lead the company’s ongoing merger, acquisition and development efforts.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
