The Highest Dividend-Paying Stock in 2021: MO vs. Dorian LPG LTD
Before delving further into the top dividend-paying stocks of 2021, it is crucial to understand a few key financial terms and concepts related to dividends. These terms can help investors make more informed decisions when choosing their dividend stocks.
Understanding Dividend Terms
The dividend yield is a financial metric that indicates the return on investment a stock provides in the form of dividends. It is calculated by dividing the company’s annual cash dividend per share by the current share price. This is represented by the formula:
Dividend Yield (Dividend per share / Price per share) x 100
The dividend payout ratio is another important metric that measures the percentage of a company’s earnings paid out to its shareholders. It is calculated by dividing the total dividend paid by the company by the total earnings of the company in that year. The formula is:
Dividend Payout Ratio Dividends per Share (DPS) / Earnings per Share (EPS)
It is important to note that while high dividend payout ratios may sound attractive, a company with such a high ratio might not have sufficient funds for reinvestment and expansion. Thus, it is wise to avoid such stocks as they may not be in your best interest in the long run.
Decoding the Top Dividend-Paying Stocks of 2021
Among the notable dividend-paying stocks in 2021 was MO, which pays a dividend of $0.90 per share. This stock has been paying dividends for the past 26 years and is considered a relatively safe investment. It stands out for its consistent dividend payments, making it a reliable choice for investors looking for stability in their portfolios.
According to The American High Dividend Handbook (Page 128), the highest dividend-paying stock traded on the NASDAQ and the NYSE in September 2021 was Dorian LPG LTD. This company was known to have paid a dividend of $31.70 per share at that time. Additionally, the book mentions 20 other stocks paying dividends of more than $10, with some stocks performing exceptionally well, ranging from $6 to $20 per share.
When evaluating stocks that pay dividends, it is essential to check the stock’s unique data page in the book to determine whether the current high dividend payout is a one-time occurrence or likely to be sustained. Stocks trading above $10 should be closely examined as they may present higher risk or reward.
Investors should also consider the historical performance and future prospects of the company. A one-time high dividend may not necessarily indicate a long-term sustainable dividend policy.
Dynamic Nature of Dividend Yields
It is important to understand that dividend yields are not static and can fluctuate due to changes in share prices throughout the trading day. Furthermore, dividends themselves can be adjusted over time, leading to changes in the yield. As such, a stock that has the highest dividend yield at one moment may not maintain that position in the next, and its ranking could change significantly a year later. This is why it is essential to continue monitoring the stock market regularly.
Conclusion
The highest dividend-paying stock in 2021 was Dorian LPG LTD, with a dividend of $31.70 per share. However, MO also stands out as a reliable choice with a consistent dividend of $0.90 per share. Both stocks offer distinct advantages, and investors should carefully consider their risk tolerance and investment goals before making any decisions. It is crucial to stay informed and constantly re-evaluate your investments.