Investing

These 15 Stocks Are Among the Top Dividend Payers in the Wilshire 5000

John Seetoo

Published: October 30, 2024 9:32 am

Created in 1974, the Wilshire 5000 Index was intended to be a market-weighted index of the combined NYSE, NASDAQ, and American Stock Exchange (since merged with NASDAQ in 1998). The “5,000” represents the number of stocks included at the time of creation. That count fluctuates monthly based on a calculation formula that uses the following criteria:

• Number of issues included in the index;
• Price of one share of issue 
• Number of shares of issue for the full capitalization version, or share numbers for the float-adjusted version;
• A fixed scaling factor.

American Depository Receipts (ADRs), Master Limited Partnerships (MLPs), Bulletin Board, Pink Sheet, and other OTC stocks are not included in the Wilshire 5000. Nevertheless, while it is market weighted and trade volume influenced, the Wilshire 5000 Index is considered to be more comprehensive and representative of the entire mainstream US stock market than the Dow Jones Average or the S&P 500. 

24/7 Wall Street Insights

• The Wilshire 5000 Index was created to be a more complete overview of US stock exchange health, encompassing the NYSE, NASDAQ, and American Stock Exchanges. 
• ADRs, MLPs, Bulletin Board stocks, Pink Sheet, and OTC stocks are not included in the Wilshire 5000 Index, being deemed unqualified due to tax status or market cap significance. 
• Dividend stocks may be an important source of passive income for many, especially with JP Morgan’s 45% odds prediction chance of a recession in 2025.

Dividends

While there are a substantial number of Wilshire 5000 stocks that pay dividends, the yields can range from under 1% to the nearly 18% of Orchid Island Capital, which tops the list below. Comparable to the S&P 500 or the NASDAQ Composite Indexes, member stock dividend yields average between 2% and 6%, for the most part. The few with yields in double digits are predominantly REITs. This is mostly due to SEC requirements that publicly traded REITs be registered with the SEC and that they remit 90% of profits to shareholders in exchange for access to the publicly traded capital markets. 

The list of 15:

The below 15 stocks are the highest yielding Wilshire 5000 stocks based on market price at the time of this writing. As one might expert, the majority of high-yielding stocks is overwhelmingly populated by REITs. High-yield dividend paying MLPs, such as Icahn Enterprises or Nextera Energy, and ADRs like Vale S.A., are not included in the Wilshire 5000, which explains this REIT sector domination. 

Passive Income Needs – Weaker US dollars

Financial research firm and mutual fund rating agency Morningstar published an economic forecast analysis in October. The leadoff sentence states: “We expect gross domestic product growth to weaken over the next year before beginning to reaccelerate as the effects of Federal Reserve rate cuts start to kick in. We still expect growth to remain positive, thus avoiding a recession. This period of weaker growth should cool off the economy and ensure that inflation returns to the Fed’s 2% target.”

Morningstar’s analysis notably sees growth slowing, but hopefully not to the extent that a recession could trigger. Contrary to this assessment, JP Morgan has stated it calculates a 35% chance of recession before the end of 2024, and a 45% chance of recession sometime in 2025. 

Both analysts concur that growth is slowing and that the direction of the economy is heading down, not up – they simply disagree as to the severity. This is ominous news for most American households already hard pressed to make ends meet. US dollar buying power continues to diminish due to inflation. Obtaining a source of passive income is increasingly becoming of paramount importance.

For those families with investable assets, dividend stocks may be among the best options available.

Why Dividend Stocks?

As a source of passive income, dividend stocks have a number of attractive features:

• Low entry admission price (unlike investments in real estate or other businesses, which can run into tens of thousands, stock purchases can be made with hundred of dollars for small share amounts)
• Diversification of industrial sectors (managing risk with a portfolio mix of various sector stocks, so that personal sector preference or avoidance can be achieved.)
• Market Liquidity (T+1 is now standard) advantage, relative to illiquid real estate or private businesses, which can take weeks or months to sell.
• Volatility range is broad (those with weak stomachs as well as thrill seekers can all fine stocks to their liking for their respective portfolios)
• Replaceability (if one stock receives adverse news, it can easily be replaced by another stock with a comparable yield)