this S&P 500 Index (SNPINDEX:^GSPC) The past two years have been explosive, with gains of nearly 51%, an increase not seen since the Internet era. Along the way, however, its valuation has been stretched, meaning its dividend yield has declined and exchange-traded funds tracking the index currently yield just 1.2%.
However, there is still some hope for income investors looking to participate in the popular broad index. Read on to learn about the top three dividend yielders in the S&P 500 today and find out if any of them are worth buying.
walgreens boot league (NASDAQ: WBA) One of the worst performers in the S&P 500 last year, down 64%. The drugstore chain was even forced to cut its dividend earlier this year, though the stock fell enough to give investors a sky-high 9.1% yield today.
Walgreens' profits fell last year and it took a $5.8 billion write-down on its acquisition of VillageMD, a chain of primary care clinics.
However, there are signs that Walgreens is finally turning a corner. The company reported a rebound in drug sales in the first quarter of fiscal 2025 (ended November 30), with comparable drug sales rising 12.7% despite lower retail sales.
Overall profits also fell, but Walgreens showed signs that the business is stabilizing and maintained its guidance for adjusted earnings per share (EPS) this year of $1.40 to $1.80. As long as it can hit that target, the full-year dividend of $1 per share should be safe, with plenty of upside potential if growth resumes. Walgreens stock looks like a good buy for income investors, but it still faces challenges.
Altria (NYSE: MO) is the largest U.S. tobacco company, but like Walgreens, the stock has underperformed recently, retreating after rising for much of 2024.
The tobacco industry performed well last year as investors worried about interest rate cuts turned to high-yielding stocks like Altria, although the business continued to face headwinds from falling smoking rates.
Through the first three quarters of 2024, revenue fell 2.5%, but adjusted earnings per share increased 1.6% to $3.84.
The company has bet on Njoy! to drive its next-generation product business even though it lags behind like phosphorushilip morris international inc. and british american tobacco plc.
Altria's dividend yield is well funded, and management knows that's why people hold the stock, but as long as its revenue growth is flat, income investors should look elsewhere for its dividend.
telecom giant Verizon Communications (NYSE: VZ) The dividend yield is 6.9%, ranking third among S&P 500 stocks. Verizon loses market share to rivals T-Mobile United States Due to poor management of its 5G deployment, it has underinvested in mid-band spectrum with wider coverage.
Verizon has struggled over the past few years, with growth nearly flat as the smartphone market matures. Third-quarter operating income was flat at $33 billion, and adjusted earnings per share fell slightly to $1.19 from $1.22.
While Verizon does have higher profit margins, it also has a lot of debt, which creates headwinds for the company's stock, creates risk, and limits financial flexibility. Verizon is also in the process of acquiring Frontier Communications $20 billion.
Verizon's dividend yield appears adequate for income investors, but the stock has been underperforming the stock market. At the same time, the company's financial trajectory doesn't leave much room for upside. Income investors can find better options elsewhere.
Before buying Verizon Communications stock, consider the following factors:
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco, Philip Morris International, T-Mobile US, and Verizon Communications and recommends the following options: Long January 2026 BAT $40 Call and Short January 2026 BAT $40 Put options. The Motley Fool has a disclosure policy.
Should You Buy the 3 Highest Dividend Yield Stocks in the S&P 500? Originally posted by The Motley Fool