Since 1926, dividends have driven 32% of S&P 500 total returns, and dividend stocks have historically doubled the annualized returns of non-payers. General Mills (GIS) trades at a P/E of 9 with a 6.70% yield, and VICI Properties (VICI) pays 6.67% secured by long-term triple-net gaming leases. Kinder Morgan (KMI) moves 40% of U.S. natural gas through 66,000 miles of pipeline, positioning it to capture surging AI data center power demand.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PepsiCo didn't make the cut. Grab the names FREE today. The S&P 500 index tracks the performance of the 500 biggest companies in the United States.
It is considered a top indicator of the U.S. stock market's health. The venerable index is market-capitalization-weighted and tracks the 500 leading publicly traded companies in the U.S. Typically, larger companies have a significant impact on the index.
The roaring success of the mega-cap Magnificent 7 stocks over the past few years is a testament to that. While the equal-weighted index may make more sense now, some of its individual stocks are incredible back-to-school bargains. We screened the S&P 500 for high-yielding dividend stocks trading at attractive valuations across metrics including price-to-earnings and free cash flow.
Five stocks caught our attention as strong ideas for growth and income investors looking to enter the fall months with less risk in their portfolios, generate dependable passive income, and deliver solid total returns over the long haul. All five are rated Buy by the top Wall Street firms we cover. Since 1926, dividends have accounted for approximately 32% of the S&P 500's total return, while capital appreciation has accounted for 68%.
Therefore, sustainable dividend income and the potential for capital appreciation are essential to total return expectations. A study by Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past 50 years (1973 to 2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
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