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High Dividend Stocks: A Good Way to Generate Passive Income

High-dividend stocks can be a good investment option for investors looking for a source of income, diversification, and the potential for capital appreciation.

What are dividend stocks?

Dividend stocks are shares of companies that pay a portion of their profits to shareholders in the form of dividends. Dividends are typically paid out quarterly, but they can also be paid out monthly, semi-annually, or annually.

The amount of a dividend payment is determined by the company's board of directors, and it can vary from quarter to quarter. Some companies pay a fixed dividend, while others pay a dividend that is based on their earnings.

Dividend stocks are often popular among investors who are looking for a source of income, as they can provide a steady stream of cash flow. Dividend stocks can also be a good way to grow wealth over time, as the dividends can be reinvested to purchase more shares of the company's stock.

List of High Dividend Stocks

We have consolidated a list of the highest dividend yield shares listed in the US with at least 5% dividend yield, based on a combination of factors including dividend yield, financial performance, and growth potential:

  1. Altria Group (MO:US)
  2. Verizon Communications (VZ:US)
  3. AT&T (T:US)
  4. Energy Transfer LP (ET:US)
  5. Ares Capital Corporation (ARCC:US)

Source: Bloomberg

All five of these companies have a history of paying high dividends, and their dividend yields have been relatively stable over the past 3 years. It is important to note that past performance is not indicative of future results, and investors should always do their own research before making any investment decisions.

Investing for Income: Dividend stocks or Dividend funds?

Dividend stocks and dividend funds are both ways to invest for income. However, there are some key differences between the two.

Dividend stocks are shares of companies that pay a portion of their profits to shareholders in the form of dividends. Dividends are typically paid out quarterly, but they can also be paid out monthly, semi-annually, or annually.

Dividend funds are mutual funds or ETFs that invest in a basket of dividend-paying stocks. Dividend funds can provide investors with a more diversified way to invest in dividend-paying stocks than investing in individual dividend stocks.

Here is a table that compares dividend stocks and dividend funds:

Source: CMC Markets

Which is better for you?

Whether dividend stocks or dividend funds are better for you depends on your individual investment goals and risk tolerance.

If you are looking for a more diversified and less risky way to invest in dividend-paying stocks, then a dividend fund may be a better option for you. However, if you are willing to take on more risk in order to potentially earn higher returns, then investing in individual dividend stocks may be a better option for you.

It is also important to consider your investment fees. Dividend funds typically have management fees, while investing in individual dividend stocks does not – and over time, these management fees can potentially erode your long-term capital gains.


Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.