The Biggest Dividend Payers 2021
The Biggest Dividend Payers 2021. Investors who read Dividend Power are aware of the magnitude of dividend cuts, omissions, suspensions, and freezes in 2020. The statistics show that the number of dividend decreases and omissions was the most going back to 2004. The number of increases dropped too. However, dividends are roaring back in 2021 after a brutal 2020. The largest companies are increasing dividends quickly, and 2021 will be a record year for cash used for dividends. The biggest dividend payers in 2021 were minimally affected by the pandemic and continue to increase their dividends, and cash returned to shareholders. However, investors should note that dividend yields are shrinking due to rising price-to-earnings (P/E) ratio valuations and more cash used for share buybacks.
Biggest Dividend Payers Globally in 2021
Dividends are rising around the world. The Janus Henderson Global Dividend Index is a good source of information about dividends for the 1,200 largest companies in the world. On an annual basis, dividends will likely reach a record in 2021 after a drop in 2020.
Most sectors with lower dividends in 2020 will have higher dividends in 2021. The significant recoveries are in mining and basic materials companies. The annual dividends tracked by this Index are not yet published. But in Q3 2021, the number one company is BHP Group (BHP). The number two company is China Construction Bank Corp, number one in five of the past seven years. Microsoft (MSFT) is the first U.S. company on the global list for Q3 2021. Microsoft started paying a dividend in 2003. The top 10 biggest global dividend payers in 2021 paid about $69.1 billion in dividends. This list will probably be similar to the final list since oil, natural gas, and commodity prices will be high in 2021.
Biggest Dividend Payers in the U.S. in 2021
Focusing on listing on U.S. stock exchanges, there are over 4,000+ companies with a market capitalization of at least $250 million. We use the screener function on Stock Rover* to generate the list. We create a function for dividend cash flow > $10,000 million. Only 0.2% or ten companies pass this screen. Microsoft is the number one company on the list of biggest dividend payers in 2021, at $16,781 million. Microsoft was on the list of biggest dividend payers in 2020 but at number three. Last year, Novartis (NVS) was the number one company at $20,961 million.
The other companies on the list in order include AT&T(T), Exxon Mobil (XOM), Apple (APPL), Vale (VALE), JPMorgan Chase (JPM), PetroChina Co (PTR), Johnson & Johnson (JNJ), Verizon Communications (V.Z.), and Chevron (CVX).
AT&T’s dividend will be cut in 2022 as part of the divestment strategy. Hence, the stock will probably not make this list next year. Currently, AT&T’s dividend has been frozen for the past eight quarters.
Both Microsoft and Apple would not have been on the list a decade ago. Apple only started paying a dividend again in 2012. However, both companies are very profitable and generate a significant free cash flow. Both will likely become the top two biggest dividend payers in the U.S. and globally in a few years.
Both Microsoft and Johnson & Johnson are two of the best dividend growth stocks. In addition, the dividend safety of both Microsoft and Johnson & Johnson are outstanding with ‘AAA’-rated balance sheets.
Performance of the Biggest Dividend Payers in the U.S. in 2021
How have the biggest dividend payers performed? In the past 1-year, the biggest dividend payers of 2021 have returned +24.2%, while the S&P 500 has returned +25.4%. Some of the stocks on this list have performed exceptionally well in 2021 with double-digit returns. However, AT&T, Vale, and Verizon have been down in the past year.
Which stock has the highest yield? Let’s look at the data in a watch list, and you can do your research from that point. I am long both Apple and Microsoft on this list.
Final Thoughts on the Biggest Dividend Payers in 2021
Which of the biggest dividend payers in 2021 are undervalued? The broader market is trading at an elevated valuation, but there are always hidden values. In my opinion, the two undervalued stocks are AT&T and Verizon. AT&T’s stock price has dropped due to the new strategy and impending dividend cut. Verizon is more focused on cellular and broadband and is currently undervalued with a ~5% dividend yield.
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Chart or Table of the Week
Today I highlight Verizon Communications (V.Z.), number 10 of the biggest dividend payers in 2021. The stock price is down year-to-date, and some technical indicators are unfavorable. The 50-day EMA is below the 200-day EMA, and it may be time to buy the dip. However, the dividend yield is about 5% and is well covered by earnings and cash flow. Verizon continues to add cellular and FiOS subscribers. In addition, the company completed its acquisition of Tracfone for $6 billion, adding 20 million pre-paid cellular subscribers. This time may be a good entry point for investors seeking safe and growing income from a Dividend Contender. The screenshot below is from Stock Rover*.
Dividend Increases and Reinstatements
I have created a searchable list of dividend increases and reinstatements. I update this list weekly. In addition, you can search for your stocks by company name, ticker, and date.
Dividend Cuts and Suspensions List
I updated my dividend cuts and suspensions list at the end of November 2021. The number of companies on the list has risen to 541. Thus, we are well over 10% of companies that pay dividends, having cut or suspended them since the start of the COVID-19 pandemic.
There were three new companies added to the list this past month. The three companies were Hoegh LNG Partners L.P. (HMLP), Sturm, Ruger & Company (RGR), and Compass Minerals (CMP).
Dow Jones Industrial Averages (DJIA): 34,580 (-0.91%)
NASDAQ: 15,086 (-2.62%)
S&P 500: 4,538 (-1.22%)
The S&P 500 is trading at a price-to-earnings ratio of 28.6X, and the Schiller P/E Ratio is about 38.3X. These two metrics were down the past three weeks. Note that the long-term means of these two ratios are 15.9X and 16.8X, respectively.
I continue to believe that the market is overvalued at this point. I view anything over 30X as overvalued based on historical data. The S&P 500’s valuation came down as the index companies reported solid earnings for the second consecutive quarter.
S&P 500 PE Ratio History
Shiller PE Ratio History
Stock Market Volatility – CBOE VIX
The CBOE VIX measuring volatility was up ~two points this past week to 30.67. The long-term average is approximately 19 to 20. The CBOE VIX measures the stock market’s expectation of volatility based on S&P 500 index options. It is commonly referred to as the fear index.
Fear & Greed Index
I also track the Fear & Greed Index. The Index is now in Fear at a value of 20. The Index is down 11 points this past week. This Index is a tool to track market sentiment. There are seven indicators in the Index measured on a scale of 0 to 100. The Index is calculated by taking the equally-weighted average of each indicator.
These seven indicators in the Index are Put and Call Options, Junk Bond Demand, Market Momentum, Market Volatility, Stock Price Strength, Stock Price Breadth, and Safe Haven Demand.
Junk Bond Demand indicates Greed.
Market Momentum indicates Extreme Fear.
Stock Price Breadth indicates Extreme Fear.
Stock Price Strength is signaling Extreme Fear.
Market Volatility is set at Extreme Fear.
Safe Haven Demand is in Extreme Fear.
Put and Call Options are signaling Extreme Fear.
The National Association of Realtors (NAR) Pending Home Sales Index, which tracks the number of homes contracted to be sold, rose 7.5% in October to 125.2, a meaningful reversal from September’s 2.3% decline. However, home-buying activity shows signs of slowing as pending sales are down (-1.4%) year-over-year. Pending home sales increased in all four regions – signings rose in the Midwest (+11.8%) and South (+8.0%), followed by the Northeast (+6.9%) and the West (+2.1%) in comparable periods. As a result, total 2021 existing home sales are set to be over 6 million, a 15 year high.
The Conference Board’s Consumer Confidence Index declined in November to 109.5 and followed a 111.6 value for October. The reading is the fourth decline in the past five months and the lowest value since February’s 95.2. The Present Situation Index, based on consumers’ sentiment of current business conditions and the labor market, dropped to 142.5 from 145.5 in October. This value is the lowest level since April. The proportion of consumers planning to purchase homes, automobiles, and major appliances decreased. The share of consumers that said jobs are currently plentiful increased to 58%, up from 54.8%.
The U.S. Bureau of Labor Statistics reported a weaker than expected 210,000 jobs were added in November following an upwardly revised October jobs figure of 546,000 from 531,000. September and October totals were revised up by a combined 82,000 jobs. The unemployment rate dropped to 4.2%, down 0.4% from October to a post-pandemic low. Leisure and hospitality reported (+23K) additional jobs. Gains were reported in professional and business services (+90K), transportation and warehousing (+50K), construction, and manufacturing (+31K). Retail declined (-20K), and motor vehicle and parts were down (-10K).
Thanks for reading The Biggest Dividend Payers 2021 – Week in Review!
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.