The S&P 500 offers a fairly broad, fairly consistent look at the American economy. The index tracks a selection of 500 companies that best reflect large-cap stocks. Currently, the S&P index only includes companies that are valued at at least $900 million. There’s a certain degree of stability that companies on the S&P are likely to have that cannot necessarily be expected from smaller cap companies. As such, those companies that are part of the S&P and also have a strong dividend can be very attractive. There are a total of eight companies that offer a dividend yield of over 5.5 percent.
Frontier Communications (FTR)
At 16.6 percent, Frontier nearly doubles the next closest competitor for the biggest yield on the S&P. This telecom company remains focused on providing services to rural areas and smaller town and cities, but the biggest service it appears to be providing is to its shareholders.
R.R. Donnelley & Sons (RRD)
This global printing company operates primarily in the commercial print segment of the print industry. However, with a dividend yield of 8.73 percent, they might as well be printing money for their shareholders.
Windstream Corporation (WIN)
Windsteam provides technology and communications solutions, offering high-speed internet and complex data services among others in some 29 states. Windsteam doesn’t appear to be growing significantly anymore with its EPS numbers project to decline almost 1 percent over the next five years, but it’s offering a dividend of 8.13 percent, which might make up for some of that.
Pitney Bowes (PBI)
It’s hard to see Pitney Bowes, a provider of automated postage machines for offices, is operating in a strong growth industry given the current state of the United States Postal service. It does, though, offer a dividend yield of 7.78 percent.
CenturyLink (CTL)
CenturyLink is an integrated communications company offering a range of telecom and internet services in the United States. It’s offering a dividend yield of 7.75 percent.
AT&T (T)
If you’re noticing a trend here, it should probably be that telecom companies offer dynamite yields. AT&T is the fourth and final telecom company on this list, meaning that half of the eight companies here are in the telecom sector. There’s also a fairly steep fall off to the sixth highest yield, with AT&T offering an annual return of 5.88 percent.
Altria (MO)
Altria is a holding company that primarily sells cigarettes through subsidiary Phillip Morris. The company may leave some customers hacking and coughing, but investors are breathing easier given its dividend yield of 5.69 percent.
Reynolds American (RAI)
Reynolds is another holding company that’s primarily engaged in selling cigarettes through a subsidiary, this time R.J. Reynolds. It’s the second tobacco company on this list, meaning that all but two of the S&P’s eight best yields are either in telecom or tobacco. Reynolds offers a dividend of 5.64 percent.
If you are just beginning, you ought to stay away from poitons and futures. Not that there is anything inherently bad they are just not for beginners. And you'd better know what all that complicated' language means before you invest a cent. Yield' and dividend' are very basic terms. You need to educate yourself a lot more. End of sermon beginning of answer. Lets say someone wanted to buy a share of IBM. They could go out and buy the stock. Hopefully, understanding that is easy. However, lets say they didn't want to buy it until September.They could buy a futures contract where the seller agrees to sell you a share of IBM at a specified price in September. That is what is refered to as a future because you are agreeing to buy or sell something in the future. Futures contracts were initially for items such as corn. A farmer might want to sell a crop that wouldn't come in until October, and a bakery might want to buy the corn it would need in October in advance. A futures contract would be a deal between a farmer and a bakery for sale of corn to be delivered in October. Futures exchanges used standardized contracts. One of the advantages of a standardized contract was that either the farmer or the bakery could change its mind. The farmer could buy the contract back from anyone willing to sell it to him as opposed to just from the bakery, and the bakery could sell the contract to anyone willing to buy it from them. Options is where the seller grants the buyer the right but not the obligation to purchase something at a specific price at a specific time. They are called poitons because the buyer has the choice (or option) whether to buy the stock at the agreed upon price or not. The seller is paid a fee (called a premium) for granting the buyer that choice. For instance, you might buy an option to buy IBM at $130 per share before September 15 at $10 per share (all hypothetical numbers, I didn't look up the actual numbers). That would give you the right to buy a share of IBM at $130 per share. If you held the option until September 15, and IBM went to $120 on September 15, the option would expire worthless, and you would not exercise it (exercise means buying the share from the person who sold you the option for $130 once exercised, the option has no further value). Obviously, it would be cheaper to buy the share on the open market. You'd lose the $10 you paid for the option. If IBM went to $150, you could exercise the option to buy IBM at $130. If you were to immediately resell it at $150, you would make a $10 profit ($150 received for IBM $130 it cost you to buy the stock $10 it cost you to buy the option). The lure of poitons and futures to a lot of investors is that they allow for a lot of leverage. Leverage means that you can control a lot more assets than you have cash. For instance, there is a contract traded on the Chicago Board of Trade called the Dow-mini (this is a futures contract). The value of the contract is $5 times the value of the Dow, or about $57,500 as I write this. However, to buy this contract, you only need to put up $3,125 in margin. Now if the Dow goes up 100 points, you make $500 on a $3,125. $500 on $3,125 is about 16% return on investment, on what was about a 0.87% move in the index (100/11500). However, if the dow goes down 100 points, you lose $500 on your $3,125 investment, or 16%. Worse, you losses aren't limited to the amount you put up. If the dow drops 1,000 points, you lost $5,000. Not only do you not get any of your $3,125 back, your broker sends you a bill for the other $1,875 you lost. More likely, they'll sell you out when your account gets close to zero (and they have a right to do this to protect themselves). Options same thing. People look at trading poitons as a road to high quick returns. If you buy an option, and get it right, you can double your money easily. Get it wrong, and you lose everything you invested. For instance, buying an option on IBM Aug 130 costs about $3 now. If you believe that IBM is going to 140, and you buy 100 shares, you invest $13,000. If it goes to $140, you get back $14,000, or about a 7.7% return on your money. However, if you buy an option on 100 shares, it costs you $3, or $300. If you are right, you buy the stock and sell the share (or more likely, just sell the option), and net $10/share ($1,000), for a profit of 233%. However, if the stock stays at $130, whereas the person who bought the stock is even, the person who bought the option loses everything because the option expires. If the stock goes to $132, the stock buyer makes about 1.5%, while the option buyer loses 33%. Retail (small) investors often get into poitons and futures with dreams of easy money and huge returns. They aren't satisfied with slow growth in long term investments and are looking for easy money. They usually end up wiping out their accounts. Most professional traders have wiped out one or more accounts on the way to figuring out what they were doing. If you are really going to go down the trading road, be prepared to work at it for a while before you begin to see results, and plan on losing money at first. Like any other skill, it must be learned, and you will make mistakes at first.