Our Favorite Dividend Stocks

In a wacky year, payouts from our income picks held steady.

- NELLIE S. HUANG

THE PAST YEAR WASN’T A GREAT ONE FOR dividends, but in the end, it wasn’t horrible, either. Early on, when the pandemic shut down the economy and uncertainty reigned, a slew of companies suspended or trimmed their dividends. So far this year, 42 firms in the S&P 500 index have suspended dividends and 25 have trimmed payouts.

As the economy reopened, albeit in fits and starts, some companies reinstated their dividends—either in part or level with previous payout amounts—including Foot Locker and La-Z-Boy. “I’m not losing sleep about something terrible happening to dividends,” says John Buckingham, editor of the investment newsletter The Prudent Speculator. In fact, Buckingham predicts that the total dividend payout in 2020 for the S&P 500 will come in at $58.78, slightly ahead of the benchmark’s payout of $58.69 in 2019. “We just went through Armageddon, and for the S&P 500, there was no reduction in dividends,” Buckingham says.

Not one of the Kiplinger Dividend 15, our favorite dividend stocks, suspended or cut its payout this year, though the pandemic posed challenges for some of the firms. In fact, nearly all of our companies increased their payouts over the past 12 months. And, as a group, the Dividend 15 stocks yield an average of 3.4%—roughly double the yield of the S&P 500.

On a total-return basis, however, the stocks were a mixed bag. Over the past 12 months, the Dividend 15 returned 13.5%, on average, compared with a 21.4% gain in the S&P 500. Air Products & Chemicals, Home Depot, and AbbVie, among others, beat the broad market. Enterprise Products Partners and Realty Income were major drags.