A method of producing a modified pigment by sulfonating a pigment and subsequently oxidizing the pigment. The modified pigment may have sulfonic acid and carboxyl surface modifying groups attached to the surface of the pigment. Charge balancing counterions such as alkali metals, alkaline earth metals and NR1R2R3H+, where R1, R2 and R3 are independently H or C1-C5 alkyl groups, may be associated with the surface modifying groups. The modified pigment is combined with water to produce a dispersion that can be used in such applications as coatings, paints, papers, adhesives, latexes, toners, textiles, fibers, plastics and inks.