For those investors seeking income along with their capital appreciation, the SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD) gives you some ideas about where to look for dividend stocks to buy.

The exchange-traded fund tracks the performance of the S&P 500 High Dividend index, a collection of 80 companies held within the S&P 500 index that pay relatively high dividends. 

What one person thinks is high might not be what I think is high, and vice versa. So, for this article, I’m setting the bar at 4%. That’s considerably higher than the average index dividend yield of 1.28%. As a result, the risk is also higher. 

However, to help you out, I’ll give you seven S&P 500 stocks yielding 4% or more while also keeping a lid on the group’s average beta and systematic risk. I’ll be looking for a number close to 1, preferably even below 1. Here’s what I’ve been able to find:

• Dow (NYSE:DOW)
• Lumen Technologies (NYSE:LUMN)
• Altria Group (NYSE:MO)
• Kinder Morgan (NYSE:KMI)
• Western Union (NYSE:WU)
• AbbVie (NYSE:ABBV)
• IBM (NYSE:IBM)

Dividend Stocks to Buy: Dow (DOW)

• Dividend Yield: 4.6%
• Beta: 1.73% 
• Sector: Basic Materials

The first thing you’ll notice about this collection of high-yielding S&P 500 stocks is that I’ve included one from each sector. So, for example, Dow represents the basic materials sector. It’s also got the highest beta of the bunch. 

Dow is the SPYD’s 43rd-largest holding at a weighting of 1.24%. However, the ETF is equally weighted and rebalanced twice a year, at which point the weighting is reset to 1.25%. 

As for the company, it generates $3.67 billion in trailing 12-month (TTM) free cash flow (FCF) for an FCF yield of 8.1%. I consider anything over 8% to be in value territory. Year-to-date through Sept. 7, Dow’s got a total return of 13.1%, trailing the entire U.S. market by more than 700 basis points.

Of the 23 analysts covering DOW stock, the consensus rating is overweight, with a median price target of $68.50. 

Looking at its second-quarter 2021 results, not only did it increase sales on a sequential basis across all operating segments, businesses and regions, it also grew its year-over-year FCF by 27.3%.

Its business is coming to life.

Lumen Technologies (LUMN)

• Dividend Yield: 8.2%
• Beta: 1.06
• Sector: Communication Services

If you’ve been away from the markets for a while, you might not recognize the name Lumen Technologies. It used to be called CenturyLink until the Colorado company rebranded itself in September 2020. 

Lumen has shifted its telecom business away from the consumer in favor of businesses, which account for approximately 70% of its revenue. However, it still has more than 4.5 million broadband customers on the consumer side. It also owns more than 450,000 miles of fiber. 

Lumen generates $3.53 billion in TTM FCF for an FCF yield of 26.2%, an exceptionally high FCF yield. YTD, Lumen’s got a total return of 31.8%, more than 50% higher than the entire U.S. market. 

LUMN stock is SPYD’s 66th largest-holding at a weighting of 1.18%. 

Of the 14 analysts covering LUMN stock, the consensus rating is underweight with a median price target of $11, under its current share price. There’s a reason its FCF yield is so high. Its beta belies the stock’s inherent risk.

However, the company is working with Microsoft (NASDAQ:MSFT) to bring its Azure cloud capabilities to Lumen’s edge computing platform.

“There is no other company right now with Lumen’s reach in edge compute. Lumen already has 45 edge compute nodes up around the U.S. and continues to expand,” Paul Savill, Lumen’s senior vice president of Product Portfolio Strategy and Alliances, told Microsoft’s Transform blog earlier this month.

You might not want to load up on LUMN stock, but it’s got enough good stuff going on to consider a small bet generating a good amount of income.

Dividend Stocks to Buy: Altria Group (MO)

• Dividend Yield: 7.1%
• Beta: 0.65
• Sector: Consumer Defensive

If there’s a stock you always expect to be on a list of high-yielding S&P 500 stocks, Altria would have to be it. Instead, MO stock falls just outside SPYD’s top 10 holdings in 11th place and a weighting of 1.32%.

After several years of underperforming the markets, Altria’s having a rebound year in 2021, up 28.3% YTD. Its results have something to do with the strong showing.

The company’s second-quarter results were better than expected. Sales were $5.61 billion, $230 million higher than the consensus estimate, while earnings per share were $1.23, five cents higher than the analyst estimate. Furthermore, management raised its guidance for all of 2021, from a low-end projection of $4.36 a share to $4.56 a share. 

It generates $5.94 billion in trailing TTM FCF for an FCF yield of 6.4%. That puts it in growth-at-a-reasonable price territory. 

Of the 19 analysts covering MO stock, the consensus rating is overweight, with a median price target of $54.15. 

In July, Altria agreed to sell its Ste. Michelle wine business to Sycamore Partners, a large private equity firm. Sycamore paid $1.2 billion and assumed some of its debt.

Kinder Morgan (KMI)

• Dividend Yield: 6.7%
• Beta: 1.12
• Sector: Energy

I’ve never been a fan of energy stocks. And by energy, I mean oil and gas, not renewable energy. In fact, back in 2018, I included Kinder Morgan in a list of seven S&P 500 companies whose debt scared me.

It had just exited its Trans Mountain pipeline and expansion project, selling it to the Canadian government for a profit of 2.89 billion CAD ($3.07 billion). At the time, it had net debt of $35.2 billion.

Flash forward to today. Kinder Morgan’s got net debt of $31.7 billion, 10% lower than three years ago. However, with rising oil prices, it’s been able to double its FCF to $4,34 billion over those years, which should help speed up the debt repayment.

Interestingly, despite its FCF improving dramatically, KMI stock has a YTD total return of only 23.6%, trailing both its industry peers and the entire U.S. market. As a result, KMI has an FCF yield of 11.8%, putting it squarely in value territory.

KMI is SPYD’s 77th-largest holding with a weighting of 1.14%.

Of the 27 analysts covering KMI stock, the consensus rating is “hold,” with a median price target of $18.50.

I can’t believe I’m saying this, but this midstream oil and gas play provides a good mix of income and value at the moment. So it’s an interesting buy at current prices.

Dividend Stocks to Buy: Western Union (WU)

• Dividend Yield: 4.4%
• Beta: 1.00
• Sector: Financial Services

Early in 2021, Morningstar.com added Western Union to the Morningstar Wide Moat Index, a portfolio of companies with moats that give them a sustainable competitive advantage, suggesting that originator of the CandyGram now has economies of scale in the global money transfer business that would enable it to continue to thrive. 

“Western Union is the clear leader in an industry where size confers significant advantages,” noted Morningstar senior analyst Brett Horn. “An industry shift toward electronic methods of money transfer will likely limit growth, he warned. Meanwhile, his firm colleague Susan Dziubinski in January advised clients that “… the company’s cost advantage nevertheless remains significant.”

Remittances to people in less-developed countries account for a significant portion of those same countries’ gross domestic product. For example, remittances account for 22% of in El Salvador’s GDP. 

It’s a lucrative business. 

As far as SPYD goes, it is the 78th-largest position, right behind Kinder Morgan, with a weighting of 1.14%. 

Western Union generated $661.3 million in TTM FCF for an FCF yield of 7.6%. I consider anything over 8% to be in value territory. YTD, Western Union’s got a total return of 0.0%, trailing the entire U.S. market by more than 20 percentage points. Over the past 10 years, it’s generated an annualized total return of just 5.7%.

Of the 20 analysts covering WU stock, the consensus rating is “hold,” with a median price target of $26. 

So, at least the analysts think it’s got some upside. If you need to park some money, the dividend yield is attractive.

AbbVie (ABBV)

• Dividend Yield: 4.8%
• Beta: 0.80 
• Sector: Healthcare

I very recently recommended AbbVie stock and nine other S&P 500 stocks I thought were a cut above the rest when it comes to dividend income growth. 

I commented that in the nearly nine years since the company was spun-off by Abbott Laboratories (NYSE:ABT), it’s grown revenues 149% to $45.8 billion in 2020. 

It continues to grow at a reasonable pace for a company of its size. In 2020, it paid out $7.72 billion in dividends while repurchasing almost $1 billion of its stock.  

The TTM generated $19.6 billion in FCF, good for an FCF yield of 10.2% and an FCF margin of 36.5%. 

Sure, like many mega-cap stocks, it’s got its share of issues — psoriatic arthritis treatment Humira accounts for almost half its annual sales — but at the end of the day, it’s a massive business that pays an excellent dividend yet remains a value play for income and growth.

Analysts like ABBV stock. Of the 23 covering it, the consensus rating is “overweight” with a median price target of $127.50, well above its current price.

It is the 74th-largest position in SPYD, with a weighting of 1.15%.

Dividend Stocks to Buy: IBM (IBM)

• Dividend Yield: 4.7%
• Beta: 1.21
• Sector: Technology

With the inclusion of IBM, with its beta of 1.21, the seven dividend stock suggestions I’ve included in this article have an average beta of 1.08, almost landing perfectly on my target of 1.0. 

Putting IBM out there as a stock to buy is equally amazing as my selection of Kinder Morgan. I spent most of 2018 arguing that the exit from IBM by Warren Buffett was a sign then-CEO Ginni Rometty wasn’t the right fit as the tech company’s top leader. 

Now that she’s moved on from all roles at the company, including serving as a director, the company’s push to own a piece of the cloud is getting serious. The segment accounted for $27 billion of its Q2 2021 sales, with Red Hat leading the way. 

To that end, it is spinning off Kyndryl, the company’s managed infrastructure business, to focus on the cloud. That’s good news if you’re a long-suffering IBM shareholder. 

Over the past 10 years, a $10,000 bet on IBM stock would be worth $11,571 today.

The same $10,000 in Apple (NASDAQ:AAPL)? $117,232.

Of the 17 analysts covering it, the consensus rating is “hold” with a median price target of $149.50, above its current price.

It is the 59th-largest position in SPYD, with a weighting of 1.21%. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.