AT&T Inc. (T), Chevron Corporation (CVX), Verizon Communications Inc. (VZ): These Eleven Stocks Spend the Most on Dividends

Investors want dividend stocks for their solid income, dependable returns, and relative stability in the face of an increasingly shaky stock market. With the S&P 500 near record highs, the fact that dividend stocks can provide some ballast against overall market declines looks more attractive than ever.

AT&T Inc.

But looking at raw dividend yield can mislead you into buying stocks that aren’t as stable as you might think. As a better alternative, let’s instead look at the 11 stalwart blue-chip companies that paid more than $5 billion in dividends to shareholders during 2012, according to figures from S&P Capital IQ.

Rank Company Name Amount Paid in Dividends
1 AT&T (NYSE:T) $10.24 billion
2 ExxonMobil $10.09 billion
3 General Electric $7.19 billion
4 Microsoft $6.97 billion
5 Chevron (NYSE:CVX) $6.84 billion
6 Johnson & Johnson $6.61 billion
7 Procter & Gamble $5.88 billion
8 Philip Morris International $5.40 billion
9 Wal-Mart $5.36 billion
10 Verizon (NYSE:VZ) $5.23 billion
11 Merck $5.12 billion

Source: S&P Capital IQ.

Looking at these 11 stocks, you can see some general trends. Certain industries are better represented than others, as their business models lend themselves more to generous dividend payouts than those of other companies. Perhaps the most obvious example is the telecom industry, in which both AT&T Inc. (NYSE:T) and Verizon Communications Inc (NYSE:VZ) have spent massive amounts of capital building out their respective wireless networks. Yet despite having to service extremely high levels of debt to repay what they borrowed to build those networks, dependable monthly income from millions of subscribers provides more than enough cash flow both to pay interest and principal on their debt and to return capital to shareholders. As long as their services remain in demand, Verizon Communications Inc (NYSE:VZ) and AT&T Inc. (NYSE:T) should remain near the top of this list.

Energy stocks ExxonMobil and Chevron Corporation (CVX) also appear near the top of the list, and although the energy industry involves much different operational aspects from telecom, oil and gas companies have some of the same business-model characteristics. Finding reserves and drilling wells require substantial upfront capital investment, but once production begins, the profits are substantial enough to more than make up for the carrying cost of those upfront capital expenditures. Even with natural gas prices being far from ideal from a profitability standpoint, great conditions in the refining business have helped these integrated oil giants produce even more free cash flow to return to shareholders.

The article These 11 Stocks Spend the Most on Dividends originally appeared on

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Chevron, Johnson & Johnson, and Procter & Gamble and owns shares of General Electric, Johnson & Johnson, Microsoft, and Philip Morris International.

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