The average dividend yield in the S&P 500 Index remains low at 1.7%. As a result, income investors largely have to settle for less dividend income when buying stocks. However, there are still quality companies with high dividend yields well above 4%.

These 3 stocks have leadership positions in their industries, dividend yields above 4% and secure dividend payouts.

Verizon Communications (VZ)

Verizon is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people and 98% of the U.S. 

On September 7th, 2023, Verizon announced that it was increasing its quarterly dividend 1.9% to $0.665 for the November 1st, 2023 payment, extending the company’s dividend growth streak to 19 consecutive years. 

On October 24th, 2023, Verizon reported earnings results for the third quarter for the period ending June 30th, 2023. For the quarter, revenue declined 2.7% to $33.3 billion, but this was in-line with expectations. Adjusted earnings-per-share of $1.22 compared unfavorably to $1.32 in the prior year, but this was $0.04 more than anticipated. Verizon had postpaid phone net losses of 51K, but this was an improvement both on year-over-year and sequential basis. 

Revenue for the Consumer segment declined 2.3% to $25.3 billion, though wireless service revenue improved 2.9% due to higher average revenue per account. Broadband totaled 434K net new customers during the period, the fourth consecutive quarter of at least 400K net adds. This included 384K fixed wireless net additions, up from 342K additions in the prior year. Fios additions totaled 72K. Wireless retail postpaid phone churn rate remains low at 0.85%. 

Free cash flow for the first nine months of the year totaled $12.4 billion, compared to $14.6 billion last year. Free cash flow for 2023 is projected to be $18 billion, $1 billion higher than previously expected. Verizon reaffirmed guidance for 2023 as well with the company still expecting adjusted earnings-per-share of $4.55 to $4.85 for the year. Wireless service revenue is still projected to grow 2.5% to 4.5%. 

One of Verizon’s key competitive advantages is that is often considered the best wireless carrier in the U.S. This is evidenced by the company’s wireless net additions and very low churn rate. VZ stock has a high dividend yield of 6.9%.

International Business Machines (IBM)

IBM is a global information technology company that provides integrated enterprise solutions for software, hardware, and services. IBM’s focus is running mission critical systems for large, multi-national customers and governments. IBM typically provides end-to-end solutions. 

The company now has four business segments: Software, Consulting, Infrastructure, and Financing. IBM had annual revenue of ~$60.5B in 2022. IBM reported solid results for Q3 2023 on October 25th, 2023. Companywide revenue rose 3.5% to $14,752M from $14,107M while diluted adjusted earnings per share climbed 22% to $2.20 from $1.81 on a year-over-year basis. Diluted GAAP earnings per share increased to $1.86 in the quarter from a loss of (-$3.55) in the prior year, which was affected by charges. 

Software revenue increased 6.3% to $6,256M from $5,811M in comparable quarters due to 7% growth in Hybrid Platform & Solutions and a 5% increase in Transaction Processing. Revenue was up 8% for RedHat, 13% for Automation, 6% for Data & AI, and (-3%) for Security. The firm launched watsonx for generative AI and machine learning. Consulting revenue increased 5.0% to $4,963M from $4,700M due to 5% rise in Business Transformation, +1% increase in Technology Consulting, and 7% growth in Application Operations. 

The book-to-bill ratio is a healthy 1.15X. Infrastructure revenue was down 7% at $3,272M from $3,352M due to flat growth in Hybrid Infrastructure and a 7% decrease in Infrastructure Support. Z systems revenue rose 9%. IBM continued its tuck-in acquisition spree, acquiring software company Apptio for $4.6B, expanding its AI offering. Also, in 2023, it has announced the purchase of StepZen and NS1. IBM has acquired 30+ companies under the present CEO. 

IBM forecasts revenue growth in the mid-single-digits and free cash flow of about $10.5 billion in 2023. IBM’s competitive strength is its brand, entrenched customer relations and extensive patent portfolio. IBM is also the market leader in mainframe computers where it has 90% of the market and little competition. IBM stock yields 4.1%.

Altria Group (MO)

Altria Group was founded by Philip Morris in 1847. Today, it is a consumer staples giant. It sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal, Copenhagen, and more. Altria also has a 10% ownership stake in global beer giant Anheuser Busch InBev, in addition to large stakes in Juul, a vaping products manufacturer and distributor, as well as cannabis company Cronos Group (CRON). 

On October 26, 2023, Altria Group, Inc. (MO) disclosed its financial results for the third quarter and nine months of 2023, narrowing its full-year earnings guidance. The reported net revenues for Q3 2023 stood at $6.281 billion, marking a 4.1% decrease compared to the same period in the previous year. The revenues net of excise taxes amounted to $5.277 billion, a 2.5% decline. The reported diluted earnings per share (EPS) for the quarter were $1.22, while the adjusted diluted EPS was $1.28, meeting the earnings expectations. 

In Q3 2023, Altria repurchased 5.9 million shares at an average price of $44.26, totaling $260 million, as part of its share repurchase program. By September 30, 2023, $268 million remained under this program, with completion expected by the year-end. Additionally, dividends of $1.6 billion were paid during the quarter, with a notable 4.3% increase in the regular quarterly dividend in August.

The decline in the U.S. smoking rate continues, though it has recently recovered some. In response to the negative long-term trend, Altria has invested heavily in new products that appeal to changing consumer preferences. 

Altria ranks very highly in terms of safety because the company has tremendous competitive advantages. It operates in a highly regulated industry, which virtually eliminates the threat of new competition in the tobacco industry. Altria enjoys strong brands across its product portfolio, including the No. 1 cigarette brand. 

As a result, it has pricing power and brand loyalty. In addition, tobacco companies enjoy low manufacturing and distribution costs, thanks to its economies of scale. This has fueled Altria’s tremendous dividend growth, enabling it to boast an impressive dividend growth streak of 54 years. MO yields 9.5%.