21 dividend stocks yielding 5% or more of companies that will produce plenty of cash in 2023

By Philip van Doorn

When the stock market has jumped two days in a row, as it has now, it is easy to become complacent.

But the Federal Reserve isn’t finished raising interest rates, and recession talk abounds. Stock investors aren’t out of the woods yet. That can make dividend stocks attractive if the yields are high and the companies produce more cash flow than they need to cover the payouts.

Below is a list of 21 stocks drawn from the S&P Composite 1500 Index /zigman2/quotes/210600453/delayed XX:SP1500 +0.75% that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.59% , the S&P 400 Mid Cap Index /zigman2/quotes/219506813/composite MID +1.85% and the S&P Small Cap 600 Index /zigman2/quotes/210599868/delayed SML +2.89% .

The purpose of the list is to provide a starting point for further research. These stocks may be appropriate for you if you are looking for income, but you should do your own assessment to form your own opinion about a company’s ability to remain competitive over the next decade.

Cash flow is key

One way to measure a company’s ability to pay dividends is to look at its free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay for dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes.

If we divide a company’s estimated annual free cash flow per share by its current share price, we have its estimated free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.

For this screen, we began with the S&P Composite 1500, then narrowed the list as follows:

• Dividend yield of at least 5.00%.

• Consensus free cash flow estimate available for calendar 2023, among at least five analysts polled by FactSet. We used calendar-year estimates, even though fiscal years for many companies don’t match the calendar.

• Estimated 2023 free cash flow yield of at least double the current dividend yield.

For real-estate investment trusts, dividend-paying ability is measured by funds from operations (FFO), a non-GAAP figure that adds depreciation and amortization back to earnings. Adjusted funds from operations (AFFO) takes this a step further, subtracting cash expected to be used to maintain properties. So for the two REITs on the list, the FCF yield column makes use of AFFO.

For many companies in the financial sector, especially banks and insurers, free cash flow figures aren’t available, so the screen made use of earnings-per-share estimates. These are generally considered to run close to actual cash flow for these heavily regulated industries.

Here are the 21 companies that passed the screen, with dividend yields of at least 5% and estimated 2023 FCF yields at least twice the current payout. They are sorted by dividend yield:

Any stock screen has its limitations. If you are interested in stocks listed here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click  here  for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

For the “estimated FCF yields,” consensus free cash flow estimates for calendar 2023 were used for all companies except the following:

• For the REITs, (Uniti Group Inc. /zigman2/quotes/203478257/composite UNIT +5.61% and Macerich Co. /zigman2/quotes/203054096/composite MAC +5.75% ), consensus AFFO estimates were used.

• Consensus EPS estimates were used for Prudential Financial Inc. /zigman2/quotes/203750923/composite PRU -0.04% , Invesco Ltd. /zigman2/quotes/200294387/composite IVZ +4.13% and Franklin Resources Inc. /zigman2/quotes/201997162/composite BEN +3.35% .

Don’t miss: Dividend yields on preferred stocks have soared. This is how to pick the best ones for your portfolio.

/zigman2/quotes/210600453/delayed

Add to watchlist XX:SP1500

S&P Composite 1500 Index

XX : S&P US

1,042.01

+7.71 +0.75%

Volume: 3.67B

Dec. 1, 2023 4:51p

/zigman2/quotes/210599714/realtime

Add to watchlist SPX

S&P 500 Index

US : S&P US

4,594.63

+26.83 +0.59%

Volume: 0.00

Dec. 1, 2023 4:51p

/zigman2/quotes/219506813/composite

Add to watchlist MID

American Century Mid Cap Growth Impact ETF

US : U.S.: NYSE Arca

$ 47.59

+0.86 +1.85%

Volume: 4,622

Dec. 1, 2023 4:10p

/zigman2/quotes/210599868/delayed

Add to watchlist SML

S&P Small Cap 600 Index

US : S&P US

1,204.52

+33.86 +2.89%

Volume: 521.97M

Dec. 1, 2023 4:51p

/zigman2/quotes/203478257/composite

Add to watchlist UNIT

Uniti Group Inc.

US : U.S.: Nasdaq

$ 5.84

+0.31 +5.61%

Volume: 1.81M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

10.27%

Market Cap

$1.32 billion

Rev. per Employee

$1.83M

/zigman2/quotes/200637580/composite

Add to watchlist HBI

Hanesbrands Inc.

US : U.S.: NYSE

$ 3.95

+0.31 +8.52%

Volume: 9.47M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

0.00%

Market Cap

$1.27 billion

Rev. per Employee

$113,980

/zigman2/quotes/210414114/composite

Add to watchlist KSS

Kohl's Corp.

US : U.S.: NYSE

$ 24.24

+0.79 +3.37%

Volume: 8.13M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

8.25%

Market Cap

$2.60 billion

Rev. per Employee

$186,577

/zigman2/quotes/203054096/composite

Add to watchlist MAC

Macerich Co.

US : U.S.: NYSE

$ 12.13

+0.66 +5.75%

Volume: 2.30M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

5.61%

Market Cap

$2.57 billion

Rev. per Employee

$1.34M

/zigman2/quotes/209479244/composite

Add to watchlist DVN

Devon Energy Corp.

US : U.S.: NYSE

$ 45.17

+0.20 +0.44%

Volume: 6.39M

Dec. 1, 2023 4:00p

P/E Ratio

7.72

Dividend Yield

6.35%

Market Cap

$28.81 billion

Rev. per Employee

$8.69M

/zigman2/quotes/203165245/composite

Add to watchlist T

AT&T Inc.

US : U.S.: NYSE

$ 16.76

+0.19 +1.15%

Volume: 35.41M

Dec. 1, 2023 4:01p

P/E Ratio

N/A

Dividend Yield

6.62%

Market Cap

$118.48 billion

Rev. per Employee

$757,617

/zigman2/quotes/209507510/composite

Add to watchlist NWL

Newell Brands Inc.

US : U.S.: Nasdaq

$ 8.11

+0.48 +6.29%

Volume: 4.12M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

3.45%

Market Cap

$3.16 billion

Rev. per Employee

$297,929

/zigman2/quotes/203121064/composite

Add to watchlist DOW

Dow Inc.

US : U.S.: NYSE

$ 52.30

+0.55 +1.06%

Volume: 4.27M

Dec. 1, 2023 4:00p

P/E Ratio

28.69

Dividend Yield

5.35%

Market Cap

$36.30 billion

Rev. per Employee

$1.21M

/zigman2/quotes/200036808/composite

Add to watchlist LYB

LyondellBasell Industries N.V. Cl A

US : U.S.: NYSE

$ 95.50

+0.40 +0.42%

Volume: 1.65M

Dec. 1, 2023 4:00p

P/E Ratio

13.69

Dividend Yield

5.24%

Market Cap

$30.85 billion

Rev. per Employee

$2.15M

/zigman2/quotes/200553749/composite

Add to watchlist SMG

Scotts Miracle-Gro Co.

US : U.S.: NYSE

$ 58.15

+2.49 +4.47%

Volume: 747,233

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

4.54%

Market Cap

$3.15 billion

Rev. per Employee

$645,691

/zigman2/quotes/201200230/composite

Add to watchlist FANG

Diamondback Energy Inc.

US : U.S.: Nasdaq

$ 154.27

-0.14 -0.09%

Volume: 1.35M

Dec. 1, 2023 4:00p

P/E Ratio

8.75

Dividend Yield

2.18%

Market Cap

$27.64 billion

Rev. per Employee

$8.45M

/zigman2/quotes/205918291/composite

Add to watchlist BBY

Best Buy Co. Inc.

US : U.S.: NYSE

$ 73.42

+2.48 +3.50%

Volume: 3.06M

Dec. 1, 2023 4:00p

P/E Ratio

12.66

Dividend Yield

5.01%

Market Cap

$15.44 billion

Rev. per Employee

$483,789

/zigman2/quotes/209413137/composite

Add to watchlist VTRS

Viatris Inc.

US : U.S.: Nasdaq

$ 9.37

+0.19 +2.07%

Volume: 7.43M

Dec. 1, 2023 4:00p

P/E Ratio

6.21

Dividend Yield

5.12%

Market Cap

$11.01 billion

Rev. per Employee

$416,714

/zigman2/quotes/203750923/composite

Add to watchlist PRU

Prudential Financial Inc.

US : U.S.: NYSE

$ 97.74

-0.04 -0.04%

Volume: 1.77M

Dec. 1, 2023 4:00p

P/E Ratio

63.20

Dividend Yield

5.12%

Market Cap

$35.30 billion

Rev. per Employee

$1.31M

/zigman2/quotes/208911460/composite

Add to watchlist F

Ford Motor Co.

US : U.S.: NYSE

$ 10.58

+0.32 +3.12%

Volume: 61.62M

Dec. 1, 2023 4:00p

P/E Ratio

6.94

Dividend Yield

5.67%

Market Cap

$41.07 billion

Rev. per Employee

$1.01M

/zigman2/quotes/200294387/composite

Add to watchlist IVZ

INVESCO Ltd.

US : U.S.: NYSE

$ 14.86

+0.59 +4.13%

Volume: 6.64M

Dec. 1, 2023 4:00p

P/E Ratio

11.40

Dividend Yield

5.38%

Market Cap

$6.42 billion

Rev. per Employee

$681,001

/zigman2/quotes/201997162/composite

Add to watchlist BEN

Franklin Resources Inc.

US : U.S.: NYSE

$ 25.63

+0.83 +3.35%

Volume: 3.18M

Dec. 1, 2023 4:00p

P/E Ratio

14.89

Dividend Yield

4.68%

Market Cap

$12.27 billion

Rev. per Employee

$857,489

/zigman2/quotes/212177228/composite

Add to watchlist KTB

Kontoor Brands Inc.

US : U.S.: NYSE

$ 54.21

-0.76 -1.38%

Volume: 1.05M

Dec. 1, 2023 4:00p

P/E Ratio

14.42

Dividend Yield

3.69%

Market Cap

$3.09 billion

Rev. per Employee

$185,406

/zigman2/quotes/201824240/composite

Add to watchlist STX

Seagate Technology Holdings PLC

US : U.S.: Nasdaq

$ 79.18

+0.08 +0.10%

Volume: 2.03M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

3.54%

Market Cap

$16.55 billion

Rev. per Employee

$203,683

/zigman2/quotes/204092533/composite

Add to watchlist FL

Foot Locker Inc.

US : U.S.: NYSE

$ 29.71

+2.78 +10.32%

Volume: 6.12M

Dec. 1, 2023 4:00p

P/E Ratio

36.17

Dividend Yield

5.39%

Market Cap

$2.54 billion

Rev. per Employee

$173,230

/zigman2/quotes/203478257/composite

Add to watchlist UNIT

Uniti Group Inc.

US : U.S.: Nasdaq

$ 5.84

+0.31 +5.61%

Volume: 1.81M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

10.27%

Market Cap

$1.32 billion

Rev. per Employee

$1.83M

/zigman2/quotes/203054096/composite

Add to watchlist MAC

Macerich Co.

US : U.S.: NYSE

$ 12.13

+0.66 +5.75%

Volume: 2.30M

Dec. 1, 2023 4:00p

P/E Ratio

N/A

Dividend Yield

5.61%

Market Cap

$2.57 billion

Rev. per Employee

$1.34M

/zigman2/quotes/203750923/composite

Add to watchlist PRU

Prudential Financial Inc.

US : U.S.: NYSE

$ 97.74

-0.04 -0.04%

Volume: 1.77M

Dec. 1, 2023 4:00p

P/E Ratio

63.20

Dividend Yield

5.12%

Market Cap

$35.30 billion

Rev. per Employee

$1.31M

/zigman2/quotes/200294387/composite

Add to watchlist IVZ

INVESCO Ltd.

US : U.S.: NYSE

$ 14.86

+0.59 +4.13%

Volume: 6.64M

Dec. 1, 2023 4:00p

P/E Ratio

11.40

Dividend Yield

5.38%

Market Cap

$6.42 billion

Rev. per Employee

$681,001

/zigman2/quotes/201997162/composite

Add to watchlist BEN

Franklin Resources Inc.

US : U.S.: NYSE

$ 25.63

+0.83 +3.35%

Volume: 3.18M

Dec. 1, 2023 4:00p

P/E Ratio

14.89

Dividend Yield

4.68%

Market Cap

$12.27 billion

Rev. per Employee

$857,489