Many income investors focus mainly on a company’s track record for making and raising dividend payments, and the dividend yield. But if you’ve been wondering which companies pay the most dividends, you’ve come to the right place.
The top candidates would be large companies with high yields, but the two companies with the highest dividend expenses are actually Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) — both “Magnificent Seven” stocks.
Here’s a look at the 10 U.S.-based companies with the largest dividend expenses, why Microsoft leads the group, and why Microsoft is worth buying now.
Image source: Getty Images.
Microsoft’s multibillion-dollar annual dividend hikes
Other than ExxonMobil and Bank of America, the 10 U.S. companies with the largest dividend expenses are all in the Dow Jones Industrial Average, which is known for having industry-leading companies as its components.
MSFT Total Dividends Paid (TTM) Chart
If you follow the purple line in the chart, you’ll see that Microsoft’s dividend payment has increased significantly, especially recently. In fact, it has nearly doubled over the last six years. For fiscal 2024, Microsoft increased its dividend by more than 10%. Because it is such a large company, each 5% increase in the dividend translates to around $1 billion more in dividend expenses.
Meanwhile, Apple has made bare minimum dividend raises of 1 cent per share per year for the last few years. Apple prefers to return money to shareholders via stock buybacks rather than with dividends.
Don’t underestimate Microsoft’s dividend
Microsoft has a below-average yield of just 0.7% — but that’s still the most of any Magnificent Seven stock, even when factoring in Meta Platforms‘ new dividend.
Microsoft has made sizable dividend hikes, but its stock price growth has well outpaced that dividend growth rate, which has resulted in a shrinking yield over time. Over the last decade, management has nearly tripled the dividend, yet the yield has fallen from more than 2.5% to 0.7% simply because of the stock’s monster 900% gain over that time.
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