Looking for an alternative to low-interest savings accounts or bonds? Check out these S&P 500 stocks that pay an annual dividend yield of over 7%.
Interest rates were already near historic lows before the COVID-19 pandemic and look like remaining that way for the foreseeable future as the Federal Reserve encourages more borrowing to stimulate the economy. As an alternative to keeping cash squirreled away in a low-interest saving account or government bond, investors can chase a higher return on their money by purchasing high paying dividend stocks.
Bear in mind, companies can slash or reduce their dividend at any time. For example, the major airline stocks pulled their dividends earlier this year amid the uncertainty surrounding travel during the health crisis. In saying that, let’s take a closer look at the three stocks in the S&P 500 that each offer a dividend of over 7%. Currently, the average stock in the index yields 1.8%.

Exxon Mobil Corporation
With headquarters in Irving, Texas, Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural gas. The global energy giant has increased its annual dividend for 33 consecutive years at an average of 3.53% each year. Investors currently receive a healthy forward dividend yield of 8.29%.

As of Nov. 26, 2020, the stock has a market capitalization of $172.55 billion and trades around 25% higher over the past month. From a chart perspective, a recent breakout above a 10-month downtrend line may trigger a retest of the early June swing high at $55.36.
Altria Group, Inc.
Altria Group, Inc. (MO) manufactures and sells cigarettes, smokeless products, and wine in the United States. Although not everyone’s cup of tea, the cigarette maker issues a smoking hot annual dividend of $3.44 per share, equaling an 8.52% yield. Furthermore, the company’s dividend has increased by an average of 11.75% annually for the past 11 straight years.

Altria shares have a market value of $75 billion and trade up a modest 3.33% over the last month as of Nov. 26, 2020. Technically, the price continues to find resistance from the top trendline of a descending channel that may see a decline to the pattern’s opposing side at $35.75.

AT&T Inc.
AT&T Inc. (T) provides telecommunication, media, and technology services through four segments: Communications, WarnerMedia, Latin America, and Xandr. The $206.58 billion communications titan pays a $2.08 dividend per share, with a yield of 7.17%. Impressively, the 37-year-old Dallas-based company has raised its dividend by an average of 2.04% each year for the past 36 consecutive years.

As of Nov. 26, 2020, AT&T stock has gained 4.21% over the last month, outperforming the telecommunications sector average by about 1%. Chart wise, the shares have consolidated since breaking above a multi-month downtrend line earlier this month. A breakout from this level could spark a rally to the June swing high at $33.24.

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