These are six dividend income stocks with better yields than the S&P 500. The S&P 500 has a dividend yield of approximately 1.60% from a practical standpoint.

The reason this is so is that the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) trades for $374.64 as of June 23, and its training 12-month (TTM) dividend payment is $6.01. That gives it a dividend yield of 1.60%. The Wall Street Journal reports that the actual index yield is 1.76%. But you cannot make that unless you buy an index fund like SPY or else own all 500 stocks separately.

The recent SPY quarterly dividend payment was $1.58. That works out to $6.32 annually. But that is only if the quarterly dividends were all at the same level. That is not what happens with the SPY dividend. They vary each quarter. So the TTM dividend payment is the best way to measure the S&P 500 yield from a practical, comparable standpoint.

Therefore, these six stocks have better yields than the S&P 500 as measured by the SPY ETF (i.e., 1.60%). They also have enough earnings to cover their dividends. Moreover, these six stocks have outperformed the SPY index, which is down 21.63% YTD. They also have lower price-to-earnings (P/E) ratios. The WSJ reports that the S&P 500 P/E ratio is just over 20 times (20.33x, as of June 23).

Let’s dive in and look at these stocks.

Dividend Income Stocks: Merck & Co (MRK)

Market Cap: $231.487 billion

Merck & Co. (NYSE:MRK) a large pharmaceutical stock with a 3.26% dividend yield, which is higher than the SPY index yield of 1.60%. So far this year MRK stock is up 19% YTD, as of June 23, which outperforms the 21.63% negative performance of the SPY index.

Moreover, its yield is higher than its 2.93% 4-year average yield, implying a 4.4% higher stock price. On top of that, Merck is forecast to make $7.39 in earnings per share (EPS) this year and $7.42 next year, according to a survey of 22 analysts by Seeking Alpha. That shows that its earnings more than cover the annual $2.76 dividend payments at Merck.

It also shows that MRK stock has a much lower P/E at slightly over 12 times earnings. This compares to 20.33 (as mentioned above) with the S&P 500.

So MRK stock has a better yield, a well-covered dividend, a lower P/E, and better performance than the S&P 500. This is as seen in a comparison with the SPY ETF. That makes it one of the better dividend income stocks.

Raytheon Technologies (RTX)

Market Cap: $131.8 billion

Raytheon Technologies Corp (NYSE:RTX) is a defense and aerospace contractor that has good earnings growth, a higher dividend, and a lower P/E multiple than the S&P 500. For example, as of June 23, RTX has a dividend yield of 2.38%, at a $2.20 annual dividend payment on a stock price of $92.56 per share. This is well above the SPY dividend yield of 1.60%.

Moreover, given that RTX stock has a forward P/E multiple of 19.4x for the year ending December 2022. Since earnings are forecast to move 20.9% higher from $4.77 in 2022 in 2023 to $5.77 per share, the P/E multiple falls to just 16x. Both of these multiples are lower than the 20 times S&P 500 multiple.

In addition, it is clear that the $4.77 EPS more than covers the annual $2.20 dividend payment. Moreover, analysts expect RTX stock to rise 28% to $116.86 per share. This makes RTX one of the best dividend income stocks on this list.

Cabot Corporation (CBT)

Market Cap: $3.414 billion

Cabot Corporation (NYSE:CBT) is a specialty chemicals company whose stock is up over 9% YTD. This compares to the 21.6% decline in the S&P 5o0 (SPY) as of June 22. Moreover, CBT stock has a 2.36% dividend yield vs. the 1.60% dividend yield of SPY ETF and 1.76% of the S&P 500.

On top of this, Cabot is much cheaper than the S&P 500. For example, analysts project that it will make $6.12 for the fiscal year ending Sept. 2022. This is forecast to grow 17.6% in the coming year to September 2023 to $7.20 per share, based on the average of a survey of six analysts.

That also puts CBT on a forward multiple of 10.2x September 2022 FY earnings and 7.2x September 2023 FY earnings. That is significantly cheaper than the 20x S&P 500 index multiple.

And, of course, it goes without saying that Cabot’s earnings more than cover the $1.48 dividend payments. Cabot has made dividend payments consecutively for the past 32 years, so it’s likely to keep doing so.

Lastly, analysts project that the target price for Cabot stock is $85.50 per share, according to a survey of five analysts by Refinitiv (Yahoo! Finance). That is 37.3% over today’s price of $60.50 as of June 23.

Avnet (AVT)

Market Cap: $4.048 billion

Avnet (NASDAQ:AVT) is up 3.1% YTD compared to the 21% decline in the S&P 500. Avnet is an electronics distributor that is forecast to show nominal growth.

But AVT stock has a low 6.85x multiple of earnings for 2022 and 7x for 2023. This is well below the 20x P/E of the S&P 500.

In addition, AVT’s 2.45% dividend yield is well above the 1.60% SPY dividend yield. It also has plenty of free cash flow (FCF) to cover the dividend.

For example, last quarter ending April 30, it produced $232.2 million in FCF. That covered its dividend payment of $25.6 million as well as share repurchases of $43.4 million.

This makes Avnet one of the best dividend income stocks worth considering an investment.

Dividend Income Stocks: Resources Connection (RGP)

Market Cap: $606.811 million

Resources Connection, Inc. (NASDAQ:RGP) is an interesting consulting firm that provides services in transactions (e.g., integration and divestitures, bankruptcy/restructuring, going public) and regulations (accounting, audit, compliance, etc.).

The company is consistently profitable and has paid a dividend consistently over the past 11 years. Right now its dividend yield is 3.03% with an annual dividend of 56 cents on its price today of $18.33 (June 23). This is well above the S&P (SPY) yield of 1.60%.

Moreover, the stock is up 3.49% YTD, compared to the 21.6% fall in SPY stock. Moreover, analysts forecast earnings this year (to May 2022) of $1.72 and lower earnings for the year to May 2023 of $1.66. That puts its P/E multiple at just 11.3x. Again, this is much more inexpensive that the S&P 500 multiple of 20x.

Analysts project a price target of $22.33 based on a survey by Refinitiv of three analysts. That presents a potential upside of 19.4%. This makes RGP stock one of the best dividend income stocks on this list.

Chevron Corp (CVX)

Market Cap: $276.92 billion

Chevron Corp (NYSE:CVX) is a large integrated oil and gas company. CVX stock is up almost 24% YTD, compared to the average 21% decline of the stocks in the S&P 500 index as seen by the SPY ETF. And, of course, no wonder since the prices of oil and gas have skyrocketed, pushing up inflation across the global economies.

Nevertheless, analysts still believe that prices will abate next year, lowering Chevron’s profitability. But this is not to the point where it will not be able to afford its ample dividend.

For example, right now Chevron pays an annual dividend of $5.68 per share, but analysts forecast that EPS will fall from $17.23 to $14.97 (almost $15 per share). That means earnings will still be well over 2.5x the dividend it pays out. This also gives CVX stock a dividend yield of 3.84%, over twice that of the SPY index at 1.60%.

Analysts still have a higher price target for CVX stock of at least $180.59, or over 22% over today’s stock price of $140.78. All this makes CVX stock one of the best dividend income stocks on this list.

On the date of publication, Mark Hake did not hold (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.