After its 15% dividend hike, Apple Inc. (NASDAQ:AAPL) has the world’s biggest aggregate dividend payment. Rounding out the top spots are Exxon Mobil Corporation (NYSE:XOM) and AT&T Inc. (NYSE:T).
Top Dog
Howard Silverblatt, an analyst at S&P Dow Jones Indices, was recently quoted by Barron’s as highlighting Apple Inc. (NASDAQ:AAPL) as the world’s biggest dividend payer, pushing past Exxon by an aggregate $170 million. That assumes that Exxon doesn’t increase its dividend or see a change in its share count.
Exxon Mobil Corporation (NYSE:XOM) has a penchant for buying back shares, which would actually reduce its aggregate dividend, so a dividend hike is likely the only way it could get back the top spot. Silverblatt’s analysis suggests that a mere penny increase in Exxon’s quarterly distribution would push the integrated oil giant into the lead again.
While the idea of having the largest aggregate dividend is interesting, it speaks more to company size than anything else. However, the list of top dividend payers is filled with large, financially strong companies that clearly believe it is important to return value to shareholders. So getting caught up in who’s number one is fun, but any of the top companies are worth a look.
Here are the top three.
Number One
The latest dividend increase, potentially spurred by a dissident shareholder, is nice to see and comes with a big boost in the company’s buyback efforts. However, management also intends to start using debt. That is a big shift and probably speaks more to a changed view of Apple Inc. (NASDAQ:AAPL)’s outlook than the dividend.
Still, the company has a dividend yield of around 3%, remains a leader in key growth markets, and is beloved by its customers. Now could be a good time for investors to start taking a look at this strangely out of favor industry leader. That’s true even if its most innovative days are behind it.
The Runner Up
Exxon Mobil Corporation (NYSE:XOM) is among the largest integrated oil and natural gas giants in the world. Its dividend yield is around 2.5%, which seems odd when compared to Apple Inc. (NASDAQ:AAPL)’s 3% yield. However, the company has decades of annual dividend increases under its belt, a proven track record of operational excellence, and the financial strength to survive through even the most difficult markets.
That combination is on clear display today, as the company made an aggressive bet on natural gas by buying XTO Energy a few years back. Exxon Mobil Corporation (NYSE:XOM) is projecting that natural gas demand will increase over the next decade or so, to the point where it overtakes coal as the second most used energy source. Right now, however, a collapse in U.S. natural gas prices has been a notable drag on performance.
Exxon isn’t going to give up on this push, and investors will likely benefit from the company’s dedication to the long term. In fact, the company has done so well for so long that it is virtually always afforded a premium valuation.
While conservative investors might be interested in Exxon Mobil Corporation (NYSE:XOM), those looking for a larger yield might want to consider similarly positioned Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and its roughly 5% dividend yield.
Rounding Out the Trio
AT&T Inc. (NYSE:T) recently reported difficult quarterly results, as competition from its duopoly partner Verizon Communications Inc. (NYSE:VZ) took an obvious toll on performance. Another smaller competitor starting to sell the iPhone didn’t help either. However, the company still has a dominant industry position (it is part of a duopoly after all) and is financially sound. Its fortunes will ebb and flow, but a long-term decline seems unlikely without a material fight.
With the earnings news precipitating a notable price drop, income investors might want to examine this 4.0% yielding equity for purchase. Note, however, that around half of its business is tied to its older wired line business, which is in slow decline. The cell business, then, is the real growth driver. Here, increased data usage appears to be driving increased revenues per customer. That’s a positive trend that seems to have been lost in the earnings fallout.
AT&T and Verizon, though not interchangeable, are so similar that choosing between the two can be difficult. Buying both is one answer, but for those not willing to own the pair, AT&T’s long standing commitment to annual dividend increases might be the deal breaker. Verizon’s dividend hikes haven’t been as regular.
Big Payers
Apple Inc. (NASDAQ:AAPL), Exxon Mobil Corporation (NYSE:XOM), and AT&T Inc. (NYSE:T) are all household names. They are also all well run companies and, in aggregate, pay large dividends. Oddly, oil giant Exxon is the lowest yielding of the trio. Regardless, all three should be of interest to income investors—even if its just to window shop.
The article The Worlds Biggest Dividends, Part 1 originally appeared on Fool.com and is written by Reuben Brewer.
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