Readers of my articles should know by now that I'm always on the lookout for good dividend-paying ideas. There's no better way to get a dependable source of income and save for retirement than dividend stocks -- especially high yielders. The best-yielding stocks tend to be concentrated in a select group of industries and sectors. That's because businesses characterized by reliable demand are more likely to produce the predictable cash flow needed to support a generous dividend payout. And that's why utilities and telecommunications stocks, for instance, are well known for having rich dividend yields. Within the energy sector, pure oil and gas players rarely pay much of a dividend, while integrated producers and energy pipeline operators frequently offer attractive high yields.

I've put together a list of the eight major dividend-paying industries and each industry's top-three dividend payers. This list may serve as a good starting point for investors who desire above-average yields and diversification across many industries.

1. Telecommunications -- average dividend yield: 5%
Highest-yielding stocks
  • France Telecom (NYSE: FTE): 13.6%
  • NTELOS Holding Corp (Nasdaq: NTLS): 12.3%
  • Consolidated Communications (Nasdaq: CNSL): 10.3%

Experts expect the U.S. telecommunications industry to benefit from a major uptick in data consumption in 2013. Consumers are looking beyond their monthly bill and extracting more value from the features, functionality and applications of their devices. The rollout of fourth-generation (4G) technology and other new technologies that enhance broadband access are expected to cause data usage to expand exponentially.
The outlook for overseas telecoms is less bright, though. European operators are bracing for a swath of cuts in mobile termination rates next year, with voice and data-roaming charges likely to be next in line for deep reductions.
Consolidated Communications is my favorite of the three stocks mentioned above. The company expects to realize at least $20 million of savings annually as a result of its merger with SureWest Communications earlier this year.

2. Real estate -- average dividend yield: 4.9%
Highest-yielding stocks
  • American Capital Agency Corp. (NYSE: AGNC): 16.1%
  • Western Asset Mortgage Capital (NYSE: WMC): 16.4%
  • Apollo Residential Mortgage (NYSE: AMTG): 15.7%

If the fiscal cliff occurs and tax rates on dividends rise, then the entire real estate investment trust (REIT) industry should benefit. REITs differ from other companies in that they pay no taxes at the corporate level. In addition, REIT dividends have always been taxed as ordinary income and never qualified for the lower 15% dividend rate. A portion of the REIT dividend also includes a return of capital, which is tax-deferred until the investment is sold.
American Capital is my favorite of this high-yielding group. Although expectations for earnings growth are modest at only 2% a year, the company has more than $2.5 billion of cash on hand and strong cash flow exceeding $500 million a quarter -- more than enough for the $384 million quarterly dividend.

3. Utilities -- average dividend yield: 4.4%
Highest-yielding stocks
  • Suburban Propane Partners (NYSE: SPH): 8.8%
  • Amerigas Partners LP (NYSE: APU): 8.1%
  • Exelon Corp. (NYSE: EXC): 7.1%

The outlook for the U.S. utilities industry in 2013 is stable. Cheap energy costs have contributed to low customer rates, which provide headroom for utilities to seek rate increases next year, according to Fitch Ratings. Low borrowing costs, strong access to capital markets and ample liquidity further support the positive outlook.
Electric utility giant Exelon is my top pick because of the company\'s exceptional record for dividend growth showing increases averaging 6% a year during the past 20 years.

4. Pharmaceutical -- average dividend yield: 3.8%
Highest-yielding stocks
  • PDL Biopharma (Nasdaq: PDLI): 7.9%
  • PetMed Express (Nasdaq: PETS): 4.9%
  • Bristol Myers Squibb (NYSE: BMY): 4.1%

Moody\'s recently upgraded its 2013 outlook for the global pharmaceutical industry, noting that the multi-year wave of drug patent expirations that squeezed profits should subside and allow earnings to rebound next year. But the industry still faces headwinds from worldwide efforts to limit health care spending.
Bristol Myers is my favorite of these three stocks. The company has one of the industry\'s most innovative new drug pipelines, is set to generate more than $5 billion in of free cash flow in 2012 and recently raised its dividend by 3% to a new annualized rate of $1.40 per share.

5. Energy -- average dividend yield: 3.5%

Highest-yielding stocks
  • Northern Tier Energy LP (NYSE: NTI): 25.5%
  • Whiting USA Trust II (NYSE: WHZ): 19.7%
  • MV Oil Trust (NYSE: MVO): 12%

Energy trusts and master limited partnerships (MLPs) are pure plays on the underlying commodity they produce. The energy outlook for the next two years is for high-priced oil and cheaper natural gas.
Northern Tier announced an initial distribution of $1.48 a unit in November. However, regular distribution payments are not guaranteed for this new type of Master Limited Partnership, called a "variable MLP."
My top pick of these three energy stocks is Northern Tier, a new "variable" MLP that owns refineries near Western Canada and the Bakken Shale. Management estimated first-year distributions totaling $2.34 a unit when Northern Tier went public last July. However, the MLP\'s first distribution came in at $1.48 a share, well above estimates and suggesting significant upside to management\'s guidance. (I should note that while the headline yield on this stock is 25%, because this is a "variable MLP," you shouldn\'t expect the same hefty dividend payment each and every time.)

6. Tobacco -- average dividend yield: 3.3%

Highest-yielding stocks
  • Vector Group LTD (NYSE: VGR): 10%
  • Reynolds American (NYSE: RAI): 5.4%
  • Altria Group (NYSE: MO): 5.3%

The tobacco industry will likely face continuing challenges next year as a result of rising cigarette taxes and government restrictions that intend to reduce worldwide tobacco consumption. My top pick of these three tobacco makers is Altria, which has a 50% share of the U.S. cigarette market and a 30% stake in global brewery giant SABMiller. A cost-saving program is expected to fuel 5% earnings growth in 2013, and Altria has raised its dividend three times in two years, with annual increases averaging nearly 8%.

7. Durable goods -- average dividend yield: 2.7%

Highest-yielding stocks
  • Pitney Bowes (NYSE: PBI): 13.8%
  • Canon (NYSE: CAJ): 4.3%
  • Leggett & Platt (NYSE: LEG): 4.3%

An improving outlook for the home-building industry should create growth opportunities for furnishings component suppliers such as Leggett & Platt, making this stock my top pick from this group. Analysts forecast 15% earnings growth for Leggett & Platt in each of the next five years. The company also has a stellar 41 track record of dividend growth, including a 4% increase last August to $1.16 a share.

8. Financial services -- average dividend yield: 2.5%
Highest-yielding stocks

  • Mesabi Trust (NYSE: MSB): 20.3%
  • Arlington Asset Investment Corp (NYSE: AI): 16.5%
  • Solar Capital (Nasdaq: SLRC): 10.5%

The financial services group includes banks, investment brokerage firms and business development companies (BDCs). The 2013 outlook for BDCs is especially favorable, according to Fitch Ratings, because of unusually low borrowing costs and pent-up merger and acquisition activity.
Solar is a BDC that went pubic just two years ago. The company grew its portfolio 12% this year to $1.1 billion and earned a weighted average yield of 13.9% on its portfolio. There is also strong insider buying and a consistent dividend record showing quarterly payments of 60 cents a share for 10 quarters in a row.

Risks to Consider: Picking stocks based on yield alone is extremely risky. Several of the stocks listed above -- Pitney Bowes and France Telecom, for example -- have high yields mainly due to their plummeting share prices. In addition, several companies on the list are REITs and MLPs, which have different tax treatments than other stocks and may require advice from a tax expert.

Action to Take --> I will take a closer look at each of these eight high-yielding industries and delve more deeply into each group's top dividend payers in the next few articles. For now, investors should use the list of stocks I mention here as a starting point for further research. And if the goal is build a source of dependable Retirement Savings Stocks, then this list could be especially helpful.

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