By Ian Salisbury
These days dividends are hard to find. Hefty payouts backed up by solid earnings are even rarer. The good news: There are still a handful of companies that boast dividend yields of at least 5% and beat earnings estimates last quarter, including Verizon Communications, Best Buy and Kimberly-Clark.
While the stock market is humming along, the S&P 500's dividend yield has been hovering near 1% -- a historic low. It's hard to find stocks that yield 5% -- FactSet counts just 24 names with payouts that exceed that threshold.
A big problem is that many of these are potential yield traps, whose high yields are a reflection of falling stock prices -- such as Campbell's, which has seen its yield balloon from 4.2% to 7.5% as its stock price slumped 40% in the past 12 months. In March, the company reported fiscal second-quarter sales declined 5%, while the company badly missed expectations and slashed its outlook for the year.
So what companies offer a 5% dividend yield while actually beating Wall Street forecasts? As it turns out the list shrinks to considerably fewer than 24. But there are still a few companies that strike this golden balance.
To find these names, we screened for stocks with a dividend yield of 5%, that beat Wall Street forecasts in their latest reported quarter. To avoid anomalies, we also looked for companies that are expected to grow earnings in 2026, and have a dividend payout ratio below 90%. A dividend payout ratio measures the share of income that goes toward covering a dividend, so a score above 90% suggests the payout may not be sustainable.
We found just five names: Telecommunication giant Verizon, with a 6% yield; corporate benefits company Paychex, yielding 5.1%; consumer giant Kimberly-Clark, yielding 5.2%; Las Vegas real estate investment trust VICI Properties, 6.2%; and Best Buy, 6.5%.
It's worth noting that even these stocks are not without their risks. Verizon struggled for years amid stiff subscriber competition. But the company, which named a new CEO last fall, impressed Wall Street in the first quarter, adding 55,000 postpaid phone customers, the first time it had posted growth in a decade.
Shares of Kimberly-Clark, which makes diapers, Kleenex and other consumer goods, are down about 28% in the past year, in large part because of investor skepticism about its proposed acquisition of Tylenol maker Kenvue. All the same, the company's first quarter earnings beat Wall Street forecasts thanks to higher productivity and lower marketing and research costs.
Neither company looks like a slam-dunk growth story. Still, if you're hunting for 5% yields, some compromises are inevitable. But these names have solid fundamentals.
Write to Ian Salisbury at ian.salisbury@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 11, 2026 14:42 ET (18:42 GMT)
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