The Top 10 S&P 500 Dividend Stocks for March

These dividend stocks yield no less than 5% and sometimes more than 12%

A lot sure has changed since the last time we looked at the Top 10 S&P 500 dividend stocks, and almost all of those changes are good. About a month ago, the S&P 500 was down nearly 6% for the year-to-date, and everyone was getting nervous about what it would take for stocks to arrest that slide.

dividend-stocks-dividend-yieldCut to today, and anxious chatter about a full-blown correction has quieted down. That’s what happens when the broader market rises more than 4% in a month to once again hit record highs. Stocks are positive for the year-to-date, and we’re celebrating a gain of 177% for the S&P 500 on the bull market’s fifth anniversary.

There’s not much downside to any of this, but it does make investing in dividend stocks a little trickier. After all, yields on dividend stocks decline as share-price rises. The yield on the S&P 500 currently stands at 1.92%. A year ago, it was at 2.14%

At the same time, bond have sold off, meaning yields on fixed income are higher now than they were a year ago. As a result, dividend stocks have more competition for buyers these days. (Bond prices and yields move in opposite directions.) The yield on the benchmark 10-year Treasury note is up to 2.79% from 2% around this time last year.

So yield is getting a bit harder to come by among dividend stocks, and they could see some rotational selling as investors look elsewhere for income. And yet, some dividend stocks in the S&P 500 still throw off gushers yields. Indeed, some of the yields on these dividend stocks would make junk bonds blush.

To get a sense of what’s out there among high-yield dividend stocks, here are the top 10 S&P 500 dividend stocks for March. (Note: All dividend yields are as of 10 a.m., Mar. 11.)

#10: Transocean (RIG)

dividend-stocks-dividend-yield-rig-stockRIG Dividend Yield: 5.29%

Transocean (RIG) breaks into the top 10 dividend stocks this month. Surprise, surprise, Transcocean is an oil and gas driller, the kind of company that’s usually good for generous payouts. Unfortunately for anyone holding Transocean stock, the dividend yield climbed this high only because the stock has fallen so far. It’s off about 15% for the year-to-date.

But that does afford some opportunity for new money, which can get in on the 5.29% dividend yield — and a much cheaper stock. Transocean now trades for a bit more than 7 times forward earnings — half as expensive as the broader market.

#9: Teco Energy (TE)

dividend-stocks-dividend-yield-TE-stockTE Dividend Yield: 5.42%

Like oil and gas drillers, utilities are a fountain of dividend income. Teco Energy (TE) broke into the top S&P 500 dividend stocks last month and the yield has barely budged since then — and neither has the stock. TE is still down about 6% so far this year.

But the TE stock slide does appear to have been arrested, thanks to the extended deep freezes that hit so much of the country during winter. Increased demand gave natural gas prices a pick up after languishing near historic lows for more than a year.

#8: Health Care REIT (HCN)

dividend-stocks-dividend-yield-HCN-stockHCN Dividend Yield: 5.42%

Real estate investment trusts (REITs) are required to pay out most of the earnings as dividends in exchange for certain tax benefits, which is why so many of them make lists of top dividend stocks. With a consistently high dividend yield, Health Care REIT (HCN) has become a staple of this list.

HCN enjoys a solid portfolio of senior housing, long-term care and medical office facilities, but an acquisition spree has greatly increased costs. Still, that hasn’t hurt the share performance this year. HCN stock is up 9.6% for the year-to-date, beating the broader market by a wide margin.

#7: Pepco Holdings (POM)

dividend-stocks-dividend-yield-pom-stockPOM Dividend Yield: 5.51%

Pepco Holdings (POM) is another electric and gas utility that throws off a big yield. Rising prices for natural gas and electricity — which move together — have given POM stock a little buoyancy, too. Pepco stock is up 2.4% for the year-to-date.

Pepco beat Wall Street’s fourth-quarter profit estimate, helped by higher electric distribution revenue, and set a full-year target of $1.12 to $1.27 per share. And although gas prices are headed lower ahead of spring, POM stock derives most of its revenue from electricity, which sees a spike in demand every summer.

#6: AT&T (T)