Biggest Dividend-Paying Stocks of 2012 – And the Smart Choice Is . . .

In terms of raw dollars shelled out to shareholders in dividend payments, AT&T (T) is the top dog. According to FactSet, AT&T paid an aggregate $10.283 billion in dividend payments for the 12 months through the end of the third quarter.

If you’re simply shopping for a bond-beating yield, AT&T probably looks alluring with a rising dividend and a current dividend yield that is nearly triple the 1.8% interest paid on a 10-Year Treasury.

T Dividend Yield Chart

T Dividend Yield data by YCharts

Thing is, you’re paying a lot for that 5.3% yield. AT&T’s current dividend payout ratio is more than 200%; yep, its dividend is more than double earnings. There’s still plenty of cash to cover those payouts, but the cash-dividend payout ratio of nearly 60% is nearly double the cash-dividend payout ratio for Verizon (VZ), which also has a standard payout ratio north of 200%. And both telecoms are just flat-out pricey, with trailing 12-month PE ratios north of 40. The S&P 500 by comparison is hovering under 14.

The far more intriguing investment among the big dividend payers is Exxon Mobil (XOM). According to FactSet, Exxon is the second largest dividend payer behind AT&T, having doled out $9.747 billion in the trailing 12 months. Its 22% payout ratio is about one-tenth AT&T’s and Exxon Mobil’s cash-dividend payout ratio remains below 50%, despite slow global growth being a drag for the energy sector.

Granted, Exxon-Mobil’s current yield of 2.6% is about half the payout for AT&T. But it’s still a nice premium to the 2% dividend yield for the S&P 500 index. Moreover, Exxon-Mobil has a much more impressive record of meaningful dividend hikes.

XOM Dividend Chart

XOM Dividend data by YCharts

And right now, Exxon Mobil trades at a sub 10 PE ratio.

Carla Fried, a senior contributing editor at ycharts.com, has covered investing for more than 25 years. Her work appears in The New York Times, Bloomberg.com and Money Magazine. She can be reached at editor@ycharts.com.

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