For decades, mature, established companies that pay consistent dividends have been relied on to provide investors with a steady stream of income. Utility companies and industrial conglomerates are often placed in this category, but almost any large-cap company that has paid a sizable dividend consistently over the years can probably be counted on to continue doing so. (To learn more about the benefits of dividends, check out Dividends Still Look Good After All These Years.)

IN PICTURES: Top 10 Solutions For A Big Tax Bill

Dividends or Growth
Investing in dividend-paying stocks definitely has its advantages. After all, stocks with high dividend yields generally offer more downside risk protection than growth stocks. In this economy maybe you should be looking for growth stocks if you could take on a little more risk.

If you are not looking for growth, these dividend stocks provide investors peace of mind when the going gets rough. Dividend-paying stocks typically do not fall as fast or as far as high-flying growth stocks (that typically lack a regular dividend payout) when the market turns south. (For more on this, check out How Dividends Work For Investors.)

Ups and Downs
By extension, a portfolio of stocks with high dividend yields may experience less price volatility than a portfolio built entirely of sexy growth stocks, for example.

But it is important to note that a regular dividend will only help to keep a stock's price stable as long as the dividend payment keeps getting paid out. If a company decides to decrease its regular dividend amount, or cease it altogether, a stock that was once considered solid can easily take a nasty tumble. So, if you are looking to beef up your portfolio with some stocks that pay out a portion of their earnings, usually the best place to start hunting is with stocks that have paid out increasing dividends consistently over a period of years. Generally speaking, the longer a company has paid out a high dividend yield, the more likely it is to continue doing so in the future.

With that in mind, here are five financial stocks with sizable current dividend yields:

Company Current Dividend Yield Market Cap
Apollo Investment Corporation (Nasdaq:AINV) 9.3% 2.15B
Banco Santander, S.A. (NYSE:STD) 4.8% 121B
Fidelity National Financial, Inc. (NYSE:FNF) 4.3% 3.23B
New York Community Bancorp, Inc (NYSE:NYB) 6.0% 7.13B
People\'s United Financial Inc. (Nasdaq:PBCT) 3.9% 5.5B

Each of the above financial stocks pays a significant dividend, but People's United Financial Inc. and New York Community Bancorp, Inc both have high payout ratios of 203% and 88% respectively.

Investment Trusts

Company Current Dividend Yield Market Cap
Annaly Capital Management Inc. (NYSE:NLY) 16.3% 10B
Chimera Investment Corporation (NYSE:CIM) 17% 2.68B
Equity Residential (NYSE:EQR) 3.5% 10.6B
HRPT Properties Trust (NYSE:HRP) 6.6% 1.66B
MFA Financial, Inc. (NYSE:MFA) 15.2% 2B

What Are REITS?
A real estate investment trust (REIT) is a real estate company that offers common shares to the public. In this way, an REIT stock is similar to any other stock that represents ownership in an operating business. But a REIT has two unique features: its primary business is managing groups of income-producing properties and it must distribute most of its profits as dividends.

Annaly Capital Managemant was downgraded by JPMorgan Securities from a Market Outperform to a Market Perform and MFA Financial was downgraded from a Buy to a Hold. This could be a precursor for the others, but it is also not a surprise. Housing sales and construction are dipping. Existing Home Sales were down 7.3% in January to 5.05 million units, compared to December's numbers.

Dividends for the Long Haul
You certainly have to appreciate the staying power dividend-paying stocks can add to your portfolio over the long haul.(To learn more about the compound nature of dividend returns, check out The Power of Dividend Growth.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!