In Search of High Dividend Yields (An Industry by Industry Survey)

Many investors recognize that Electric Utilities and Tobacco tend to be good places to look for solid companies with strong dividend yields. However, there are some other promising industries for dividend investors as well. While knowing the top yielding stock in a given industry is an interesting starting point, it is probably more valuable to know which industries have significant numbers of dividend paying companies and also which industries tend to provide above average dividend yields. This article will try to answer those questions. The methodology for this analysis was to pull all dividend yielding stocks using data from Zacks.com. Unfortunately, Zacks.com provides a dividend yield based upon the most recent quarterly dividend payment annualized. Yahoo!Finance also uses this approach which is at odds with dividend yields from Google.com and Bloomberg, both of which pull a dividend yield based upon a trailing twelve months dividend. The differences are most pronounced with stocks that pay irregular dividends. This is especially common for ADRs for foreign companies, including the Southern Peru Copper Corporation (NYSE: SCCO). However, it is also true for some U.S. companies, including Cal-Maine Foods, Inc. (Nasdaq: CALM).
Companies were segmented into industries using Edgar Online's classification, which might cause some disputes. For example, I don't think I would classify Wal-Mart Stores, Inc. (NYSE: WMT) as a department store; however, Discount Store is not a designation used by Edgar though it is used by other classification systems. Furthermore, World Wrestling Entertainment, Inc. (NYSE: WWE) is listed under motion pictures and happens to have the highest dividend yield in that group. Unfortunately, this is the only reasonable approach since its not feasible to check all ~2500 stocks. The following table shows each industry, the weighted average dividend yield, and percentage of companies that pay a dividend. The weighting for the industry dividend yield was based on market capitalization for the companies and not just a straight average. For example, Semiconductors had an industry dividend yield of 2.0% despite only 14% of the companies paying a dividend. This is due to Intel Corp. (Nasdaq: INTC) paying a dividend around 3.2% with a market capitalization representing about 20% of the semiconductor market capitalization. So 0.6% of the 2.0% industry dividend yield is from just one of the 220 Semiconductor companies.... Read more