There Are Only a Handful of S&P 500 Stocks That Yield Over 5%. Here's My Top Pick to Buy in September.

With interest rates on U.S. Treasuries now firmly in multiyear-high territory, income investors have much to think about. The sort of yields that only dividend stocks were able to offer just a short while ago can now be matched -- if not topped -- by longer-term bonds. For perspective, 30-year Treasuries are now yielding 5.25%. An income-generating stock is going to need to bring something special to the table, so to speak, to justify its risk when safer and similarly yielding bonds are available.

There are some names out there that are up to the task, however, even if you're limiting your options to S&P 500 (SNPINDEX: ^GSPC) constituents. My pick of the litter this month is Verizon Communications (NYSE: VZ), which at the current share price boasts a forward yield of 5.7%.

Verizon and its dividend are built to last

Verizon, of course, doesn't need much in the way of introduction. As of the middle of this year, nearly 147 million different mobile devices were connected to its wireless network, making it the United States' top cellphone service provider. It's serving nearly 350,000 broadband internet customers as well.

Its sheer size isn't the big selling point, though, and for that matter, neither is its sizable dividend yield (although it certainly doesn't hurt). Rather, the more nuanced reason Verizon is my top S&P 500 dividend stock pick is that the company's got 19 consecutive years of dividend hikes under its belt, and there's no sign that streak is going to come to an end.

Think about it. For better or worse, consumers are practically glued to their mobile phones, and their smartphones in particular. Pew Research reports that 98% of adults in the United States own a mobile phone, with over 90% of those being smartphones. And among those smartphone owners, 45% made an attempt within the past 12 months to use them less often -- cutting back on the 5-plus hours that Harmony Healthcare IT says they're staring at their device's screens -- but only one-fourth of that 45% say they were very successful in their efforts.

Image source: Getty Images.

Connect the dots. Americans are effectively addicted to their mobile phones. Mentally healthy or not, they're not likely to disconnect their pocket-sized connections to the rest of the world now or anytime soon. This means plenty of reliable cash flow ahead for the nation's top name in the business.

Just understand what it is, and isn't

There's a trade-off to owning a stake in Verizon, to be clear. That's a lack of capital gains. While the telecom giant is entrenched, the wireless market is saturated. The bulk of its growth potential comes from population growth and price increases, neither of which is a huge growth engine. There are more effective and productive ways of driving capital gains (and still collect decent dividends along the way). This stock should be viewed strictly as an income and dividend growth holding.

For that particular purpose, though, you'll find few -- if any -- better options than this one.

So, don't overthink it. The yield is solid, and with the stock priced at only about 10 times this year's expected earnings, it's not likely to run into a valuation headwind anytime soon, either.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.