Why the Highest-Paying Dividend Stocks Aren’t the Best Dividend Stocks

When it comes to dividend stocks, you probably already know that I’m somewhat of a fanatic. I mean, what other investment pays you to wait while you watch your money grow in value? But when it comes to the highest-paying dividend stocks, meaning those with the largest payment per share, I’d advise investors to take caution before getting too excited about those big numbers. Because it’s not the dividend payment that’s most important. It’s the dividend yield and the company’s ability to maintain and grow that dividend over time.

So today I’m going to take some time to cover the three highest-paying dividend stocks trading on U.S. exchanges and explain why just being the highest-paying dividend stocks isn’t enough to make them the best dividend investments for your portfolio. And as a special treat, I’ll also share an opportunity to learn more about some of the best dividend investments available for investors today. Now, let’s get to it…

Highest-Paying Dividend Stocks: Booking Dot Yeah!

First up on our list of the highest-paying dividend stocks is the infamous online travel reservation conglomerate, Booking Holdings Inc. (NASDAQ: BKNG). Booking Holdings started as one of the many third-party travel aggregators that scraped internet APIs and gave consumers a single site where they could compare prices from multiple companies. Over the course of the past few years, it’s acquired or merged with pretty much every other company in the market. And now it owns Booking.com, KAYAK, Priceline.com, and even OpenTable, to name just a few.

It’s also the highest-paying dividend stock headquartered in the U.S. of A, with a seemingly massive payout worth $35.10 per share! Sounds pretty great, right? Not so fast. You see, that $35 per share payout only amounts to a measly 1% yield. That means to collect $35 in dividends, you’ve got to shell out around $3,500 for one share! All of a sudden, the highest-paying dividend stocks aren’t looking so hot, huh? But maybe that’s just a fluke — an exception and not the rule. So let’s see what our other highest-paying dividend stocks look like “under the hood.”

Highest-Paying Dividend Stocks: Picks and Shovels and Airplanes!?

Next up on our list of the highest-paying dividend stocks is a company called TransDigm Group Inc. (NYSE: TDG). It’s a supplier of components and parts in the aerospace industry. And it makes the list of highest-paying dividend stocks with a payment just slightly smaller than our first company. TransDigm pays out $35.07 to its shareholders. And at nearly 3%, it doesn’t have the anemic yield of its high-payment peer, Booking. So maybe Booking was the exception…

Or maybe it wasn’t. You see, you still have to shell out around $1,250 a share to get access to that 3% yield. And there’s no way of being certain that you’ll get any dividend payments at all next year. That’s because TransDigm pays what’s known as a special or irregular dividend. That means it’s up to management if and when the next payment will be sent out. Investors got one in 2022 and 2023, but they had to sit out 2020 and 2021. And nothing’s been announced for this year yet. So it’s only one of the highest-paying dividend stocks if management decides to pay a high dividend. And that’s not income you can rely on.

 Highest-Paying Dividend Stocks: Do They Still Make Department Stores?

The final entrant in our competition for the highest-paying dividend stocks today is an old stalwart in an even older industry. Department store chain Dillard’s Inc. (NYSE: DDS) was founded in 1938 and makes its money selling everything you’d expect to find at a department store, even if you didn’t expect to find any department stores. But despite being in what some might call an antiquated business, Dillard’s is still one of the highest-paying dividend stocks on the market. It shares $25.07 per share with investors. And with the stock currently priced around $400, that works out to a pretty respectable yield of over 6%. So this contender for the highest-paying dividend stocks is actually looking like a pretty good deal.

But when you “look under that hood,” things start to change, and you might have another think coming. You see, while Dillard’s pays a dividend every single quarter, they only add up to around $1 per year. It’s those special dividends like TransDigm pays that really juice your income. And those aren’t guaranteed, nor are they predictable. Some years you might get $15 extra, some they might pay you $20. Sometimes you’ll get nothing but those quarterly payments that add up to a 0.25% yield. So if you’re looking for income you can rely on, this isn’t the place to look either.

The Bottom Line on the Highest-Paying Dividend Stocks

The bottom line here is that just because a stock has a high payment doesn’t mean it’s paying a lot. You need to look at more than just the overall dollar value and see how much bang you’re getting for your buck. You also need to know if those dividend payments will be consistent and help you generate a predictable income stream you can rely on. And now that you’ve seen some examples, I think we can all agree that there’s a lot more to picking the best dividend investments than just finding the highest-paying dividend stocks.

But there’s one more thing I promised to share before I let you get back to your day. And that’s a special opportunity to learn even more about the best dividend-paying investments in the world. I’d like to get you started with one of my most popular reports on a company that can help you earn a few extra thousand dollars every quarter, courtesy of the ever-expanding U.S. federal budget.

Once you’re set up to collect those reliable payouts, you can dig even deeper into my archive of incredible dividend investments and set yourself up with a whole extra salary…

And once you’ve done that, don’t forget to keep coming back here to Wealth Daily for more market-beating, trend-setting investment advice.

To your wealth,

Jason Williams

@TheReal_JayDubs

Angel Research on Youtube

After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter; the founder of Future Giants, a nano cap investing service; and authors The Wealth Advisory income stock newsletter. He is also the managing editor of Wealth Daily. To learn more about Jason, click here.

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