What dividend stocks have in common

Three groups

We split the 14 paying companies from the dividend yield table into two equal halves by yield, the higher half first, and added the Six that pay nothing. Each figure is the group's median, and P/E here uses the profit in the latest annual report.

The share of profit paid out, the payout ratio, is the dividend divided by profit. It is the same as the dividend yield times the P/E ratio.

More of the profit goes to the owners

The half with the higher yield paid out 35% of its profit, the other half 12%. What is not paid out stays in the company and can pay for growth.

Its shares were also cheaper relative to profit: a P/E of 29.5 against 37.6. Investors often pay less for companies expected to grow slowly.

Some sectors

The most common sectors in the higher-yield half were Technology and Financials, and in the other half Telecoms and Technology. Banks, energy companies and businesses with steady sales often pay out a lot, because they need less cash for new plants or products.

Buybacks instead of dividends

Many large US companies return more cash by buying back their own shares than by paying dividends. In the year of their last annual report, the median buyback was 37% of profit in the higher-yield half, 35% in the lower-yield half and 2% among the companies that pay nothing. How buybacks work is in What is a stock buyback?

What a high yield does not show

A high yield can mean the price has fallen, and how often such a dividend has been cut is in When are dividends cut? Nor is the dividend the whole return: a company that keeps its profit and grows can give its owners more through the price.

Each company on its own: Dividend yield. What you received in dollars: the dividend calculator.