Looking for dividends? Try REITs

— -- Q: How do dividend yields at real-estate investment trusts rank among the Standard & Poor's 500?

A: Investors looking for cash flow are learning to love a four-letter word: REIT.

REITs, or real estate investment trusts, are unique investments that primarily buy into commercial property like office buildings, shopping centers and apartments. These investments, due to their limited line of business and focus on commercial property, tend to have stable cash flow. And most importantly to investors, they are often required to pay nearly all their earnings back to investors in the form of dividends.

It's this requirement of REITs to return cash to investors that makes them especially attractive to investors looking for income. And it's not unheard of for some yield-hungry investors to load up on REITs just for the dividends they pay out.

There are some exchange-traded funds that load up on REITs, in large part to funnel dividends to investors. Vanguard's REIT ETF vnq, for instance, yields 3.3%, topping the 1.9% yield from the Vanguard S&P 500 ETF voo.

But how do individual REIT stocks, at least the ones that are part of the S&P 500, stack up when it comes to dividend yields? To find out, below is a list of the top 20 highest dividend-yielding stocks in the S&P 500, according to S&P Capital IQ as of Feb. 9, 2012. You'll see that only one is a REIT: Health Care REIT hcn with a yield of 5.2%.

As a group, REITs on average do tend to pay a higher dividend yield than the average company in the S&P 500 does. But don't make the mistake of assuming that just because a stock is a REIT that its dividend yield would be one of the biggest compared with companies that aren't REITs.

Top 20 highest dividend-yielding stocks in the S&P 500, according to S&P Capital IQ as of Feb. 9, 2012:

• Frontier Communications ftr: 17.6%

• Limited Brands ltd: 8.92%

• R.R. Donnelley rrd: 8.32%

• Windstream win: 8.06%

• CenturyLink ctl: 7.65%

• Wynn Resorts wynn: 6.11%

• AT&T t: 5.86%

• Altria Group mo: 5.69%

• Reynolds American rai: 5.65%

• Diamond Offshore Drilling do: 5.54%

• Pepco Holdings pom: 5.43%

• Federated Investors fii: 5.40%

• Verizon Communications vz: 5.27%

• Exelon exc: 5.22%

• Health Care REIT hcn: 5.16%

• Supervalu svu: 5.15%

• FirstEnergy fe: 5.12%

• Leggett & Platt leg: 5.10%

• Integrys Energy Group teg: 5.10%

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz