You don’t have to be a dividend investor to love dividend stocks.
Even if you prefer to invest in growth stocks, every investor likes to receive a quarterly check in the mail or in their investment account.
So what are the best paying dividend stocks today? One way to narrow down the list is to take a respected index, such as the S&P500 and see what the best-yielding stocks are. Without further ado, let’s take a look at whether one of the three top-yielding dividend stocks is worth buying.
1. Altria (dividend yield 8.8%)
Altria (NYSE:MO) is the largest dividend payer in the S&P 500. That should come as no surprise to investors who follow the stock. Tobacco stocks are known as rewarding dividend stocks, and Altria and its peers were among the stock market’s top performers in the 20th century.
Today, the domestic Marlboro maker has seen its growth slow but is still highly profitable and its low valuation allows it to pay an 8.8% dividend yield.
However, high returns alone are not a reason to buy a stock. Cigarettes are an industry in decline, and Altria is having a hard time moving past it, despite numerous attempts to do so. The company spent $12 billion to take a 35% stake in JUUL and had virtually nothing left after several years of regulatory crackdown. His investment in cannabis grower Cronos group also failed to create value, and also failed to achieve success with iQOS, Philip Morris International‘s heat-not-burn product.
Altria has since turned to NJOY to boost its next-gen business, but that brand is still small and total revenue and adjusted earnings per share (EPS) both fell 2.5% in the first quarter.
Dividend investors may be lured by Altria’s yield, but even for yield seekers, there are better options on the market. For example, you can consider British-American tobaccowhich offers a dividend yield of 9.7%.
2. Verizon (6.7% dividend yield)
Like tobacco, telecom stocks are also known for being strong dividend payers Verizon (NYSE: VZ) is a multi-year high-yield dividend stock.
Like tobacco, telecom is a slow-growing industry that tends to throw away cash flows. However, telecom is still a form of technology and operators like Verizon must make heavy capital expenditures to keep up with new technologies and infrastructure needs.
The good news is that Verizon and its peers appear to have passed the peak of the 5G investment cycle, meaning capital expenditures are expected to decline this year, boosting free cash flow.
Verizon is still growing slowly with just 0.2% revenue growth in the first quarter and wireless revenue growth of 3.3% in the quarter, but industry competition appears to be normalizing, which will benefit Verizon good one should come.
For investors looking for high returns from a reliably profitable company, Verizon is a smart buy.
3. Walgreens Boots Alliance (6.4% dividend yield)
Walgreens Boots Alliance (NASDAQ: WBA) has been at or near the top of many of these lists lately, but usually for the wrong reasons. The drugstore chain’s shares have fallen due to a combination of sales losses related to COVID-19, legal settlements related to opioids and questionable acquisitions to diversify away from its core businesses.
The company is so weak that it cut its dividend by 48% in January to save money to fund its growth and strengthen its balance sheet.
Nevertheless, Walgreens still offers a dividend yield of 6.4%, which is mainly due to the fact that the stock is down 54% in the past year and over 70% in the past five years.
The second-quarter earnings report included a $5.8 billion write-down on goodwill related to the acquisition, showing that the company is still reeling from bad acquisitions.
However, revenue and adjusted earnings are growing modestly, and the stock trades at a forward price-to-earnings (P/E) ratio of less than 5, based on forecast adjusted earnings per share of $3.20 to $3.35.
Risk-tolerant investors may be willing to take a chance on Walgreens, but I would prefer to see more clarity that the company is stabilizing and that the worst is behind it.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco Plc, Cronos Group, Philip Morris International and Verizon Communications and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.
Should you buy the three highest-paying dividend stocks in the S&P 500? was originally published by The Motley Fool
