Archived article: Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The US holds some of the world’s most popular companies for investors, including Nvidia and Microsoft. However, for those looking to pocket some money as they go, the widely followed big tech companies may disappoint when it comes to dividends.
Most big tech firms offer tiny yields; some don’t pay dividends at all. In contrast, more generous income can be found elsewhere on the US market across sectors such as telecoms and healthcare.
When a company pays a dividend, it is paying out surplus cash to shareholders. The amount of money you get will depend on how many shares you hold, and the yield offered by the shares. For example, if a company had a 5% yield and you had shares totalling £100, you would receive a dividend payment of £5 in one year. Typically, companies in the US pay dividends once a quarter and UK stocks pay every six months.
High-yield US stocks
Here are stocks with the highest dividend yields in the S&P 500 index of US shares with a market value over $50 billion:
| Company | Prospective dividend yield | 5-year total return |
|---|---|---|
| United Parcel Service | 7.7% | -28% |
| Pfizer | 6.9% | -9% |
| Altria | 6.2% | 96% |
| Verizon Communications | 6.2% | -6% |
| Realty Income | 5.5% | 13% |
| Bristol Myers Squibb | 5.2% | -3% |
| Simon Property | 4.7% | 202% |
| Dominion Energy | 4.5% | -8% |
| Truist Financial | 4.5% | 44% |
| Kinder Morgan | 4.4% | 138% |
Source: AJ Bell, ShareScope. Data as of 4 July 2025
The yields in this table are based on dividend forecasts for the next financial year to be reported and the share price at the time of writing.
The yields give a good idea of what investors might receive in the future, although dividends are not guaranteed payments. Companies are free to pay less or nothing at all, which is an important consideration.
Reasons why some dividends are generous
Certain companies are in a strong position whereby they generate a lot of cash that can be used to pay down debt, reinvest in the business, and still have money left over for dividends and share buybacks.
Bigger dividends are typically paid out by more mature companies, while those that are still growing earnings at a rapid rate may choose to use their capital for further expansion or to acquire other businesses.
Investors should always look at total return when judging performance, factoring in share price gains and losses, as well as income.
Despite the names in the table have generous prospective dividends, there’s a lot of variation when it comes to the total return they’ve generated for investors over the past five years. It underlines the importance of thorough research when picking stocks and not simply being guided by the yield.
Sometimes, companies paying out large dividends can be past their prime. Deciding if this is the case is ultimately up to the investor, but spreading your investments through different companies can help reduce risk.
If you aren’t comfortable making the decision yourself, one alternative is to consider an equity income fund.
How US dividend-payers stack up against UK companies
UK companies often have a long history of paying out dividends to shareholders, so it may not be necessary to go abroad, depending on what you’re looking for. You need to look on a case-by-case basis.
There are a few extra hoops to jump through if you decide to invest in the US, so it can be helpful to look at similar companies in the UK to see how they stack up.
For example, US-listed pharmaceutical company Pfizer has a 6.9% prospective dividend yield, and it has two key competitors on the UK stock market: GSK and AstraZeneca.
GSK and AstraZeneca have lower dividend yields than Pfizer, at 4.3% and 1.9%, respectively. However, there is a different story when you look at both dividends and share price performance.
Pfizer has lost money for shareholders with an 8% negative total return in the past five years, whereas its British counterparts have made investors money. GSK has generated a 22% total return and AstraZeneca more than twice this amount at 58%.
This difference in performance is also on show in other sectors. For instance, tobacco company Altria has a 6.2% prospective dividend yield and a 96% total return over the past five years. In the UK, British American Tobacco is one of the leading companies in its field but has generated slightly lower returns for investors over the past five years at 62% and has a 6% prospective dividend yield.
Because UK investors may need to pay tax on part of dividends from US-listed stocks, a slightly lower dividend yield in a UK-based company may end up putting more money in your pocket. There's a long list of UK companies paying out dividends if you choose to stay with the home market.
Minimising dividend tax
There is different tax treatment for stocks listed in the UK and the US, and further differences depending on where you hold such investments.
Dividend payments on UK-listed investments held in an ISA or SIPP are free from tax. UK stocks held in a Dealing account are subject to dividend tax once you’ve used up your £500 annual dividend allowance.
Non-US residents and citizens must pay tax on income received from US shares, called withholding tax and this is deducted directly from the dividend payment. Fortunately, there is a way to reduce this tax.
By filling out a W-8BEN form, UK residents can buy US-listed shares and benefit from a rule that lowers the 30% standard withholding tax rate on US dividends to 15%, if the investment is held in an ISA or Dealing account. Put the US-listed share in a SIPP and you won’t be subject to any withholding tax at all.
Learn more about investing in US shares either directly or through funds.
Hannah Williford: Content Writer
Hannah joined AJ Bell in 2025 as an investment writer. She was previously a journalist at Portfolio Adviser Magazine, reporting on multi-asset, fixed income and equity funds, as well as macroeconomic impacts and regulatory changes...
