Stocks With the Highest Dividend Yields in the S&P 500

AT&T

• Market value: $112.5 billion
• Dividend yield: 6.99%
• Analysts' consensus recommendation: Buy 

AT&T (T) is the first of two telecommunications companies on our list of stocks with the highest dividend yields in the S&P 500. No surprise there. Thanks to customers sending in their checks every month, telcos are known for their generous and dependable dividends. 

In AT&T's case, the company has paid uninterrupted dividends since 1984. Until 2019, it had raised its payout annually for more than three decades, making it a one-time member of the S&P 500 Dividend Aristocrats. 

Shares were off about 15% for the year-to-date through November 6, hurt in part by concerns over the costs associated with cleaning up lead contamination. Although the slumping stock price has pushed up T's dividend yield, it actually remains below its own five-year average.

Shareholders can also take comfort in the fact that AT&T has been chipping away at its heavy debt load and freeing up cash. The company generated free cash flow (or the cash remaining after expenses, capital expenditures and financial commitments are met) of $103.4 billion in 2022. That's much better than the negative free cash flow of $67.7 billion AT&T recorded the previous year. Free cash flow is what ultimately supports dividend payments, so this was a welcome development for shareholders.

Of the 28 analysts covering AT&T tracked by S&P Global Market Intelligence, 10 call it a Strong Buy, three have it at Buy, 13 say it's a Hold and two rate it at Strong Sell. That works out to a consensus recommendation of Buy with modest conviction. 

KeyCorp

• Market value: $10.5 billion
• Dividend yield: 7.20%
• Analysts' consensus recommendation: Buy 

KeyCorp (KEY) is a regional bank whose stock was already under pressure along with the rest of the sector – and then things got worse. Both Moody's and S&P Global Ratings downgraded the lender's credit rating over the summer, citing issues such as constrained profitability and a "tough" lending environment.

Shares in KeyCorp are now off about 35% for the year-to-date, pushing up the yield on the dividend to well above its five-year average of 5.6%.

The elevated yield on KeyCorp's dividend naturally has investors worried about a potential cut. Somewhat unhelpfully, experts are split on whether the payout is safe. 

JPMorgan Chase, for example, upgraded KEY to Neutral (the equivalent of Hold) from Underweight (Sell) in early August, noting that the bank has "enough runway to manage its capital to required levels with less much risk of a dividend cut over the near-term."

Other observers are less optimistic. Speaking for the bears, CFRA Research analyst Alexander Yokum reiterated his Strong Sell call on the name in mid-October, saying the bank's high payout ratio was a liability. Yokum has warned clients in the past that KEY's dividend is in danger of getting cut. 

CRFA Research's concerns notwithstanding, Wall Street tips toward bullishness on the name. Of the 22 analysts covering KEY tracked by S&P Global Market Intelligence, 10 call it a Strong Buy, four say Buy and eight have it at Hold. That works out to a consensus recommendation of Buy, with moderate conviction. 

Verizon

• Market value: $150.1 billion
• Dividend yield: 7.38%
• Analysts' consensus recommendation: Buy 

Telecommunications stocks such as Verizon Communications (VZ) are known for producing steady and generous dividends. As the only telecom in the Dow Jones Industrial Average, Verizon gets more than its fair share of attention from institutional investors looking for equity income. 

True, VZ sports one of the highest dividend yields in the benchmark index partly because shares are off about 10% so far this year. As with AT&T, the stock is down partly because of concerns over the costs associated with cleaning up lead contamination. That said, at 7.38%, VZ's dividend yield is not wildly out of line with past levels. The stock's three-year average dividend yield stands at 6.5%.

Long-term investors seeking out the best dividend growth stocks will be happy to know that this telco is also a reliable dividend grower. VZ has hiked its payout annually for 19 consecutive years. And the dividend increases should keep coming. 

How can we be confident of this? Verizon generated free cash flow of $17.8 billion for the 12 months ended Sept. 30, 2023. And that was after disbursing almost $11 billion in dividends.

As for VZ stock's prospects for beating the market over the next 12 to 18 months, Wall Street's consensus recommendation stands at Buy, albeit with low conviction, per S&P Global Market Intelligence. 

Walgreens Boots Alliance

• Market value: $18.8 billion
• Dividend yield: 8.68%
• Analysts' consensus recommendation: Hold 

Walgreens Boots Alliance (WBA) is a good example of a dividend stock whose yield is unusually elevated because its share price is in a funk. 

And what a funk it's been. WBA is off more than 40% on a price basis for the year-to-date, pushing the yield on its dividend well past its five-year average of 4.2%. 

Ordinarily, a yield that's moved this high because of a diving share price would be reason enough to wonder if the company's dividend is sustainable at current levels. So it should come as something of a relief that the pharmacy chain in late October declared a quarterly dividend of 48 cents per share, unchanged from the previous five quarters.  

Walgreens Boots Alliance likes to note that it and its predecessor company, Walgreen, have paid a dividend for 364 straight quarters, or 91 years. The thing is, even if its dividend is safe, WBA remains very low on the list of analysts' top-ranked Dow Jones stocks.

Indeed, Wall Street expects this long-time market laggard to at best match the performance of the broader market over the next 12 to 18 months. Of the 16 analysts covering WBA surveyed by S&P Global Market Intelligence, two rate it at Strong Buy, two call it a Buy, 10 have it at Hold, one says Sell and one rates it at Strong Sell. That works out to a consensus recommendation of Hold.

Altria Group

• Market value: $71.8 billion
• Dividend yield: 9.64%
• Analysts' consensus recommendation: Hold 

Altria Group (MO) always sports a generous dividend yield, but it rarely claims the top spot on the list of stocks with the highest dividend yields in the S&P 500. 

The deal with Altria is that there isn't much growth to be found in the U.S. tobacco business. And so the company known for Marlboro cigarettes and Copenhagen dipping tobacco has to keep shareholders happy with generous and reliable dividends.

But dividends are only part of the story when it comes to Altria's status as a defensive equity income stock. Sales of its addictive products tend to hold up well when economic times get tough. MO stock also tends to trade with much lower volatility relative to the broader market.

Those characteristics – as well as a dividend yield of more than 9.6% and 13 consecutive years of dividend increases – make MO a pretty good place to hide in a bad market. 

That was certainly the case in 2022, when the S&P 500 generated a total return (price change plus dividends) of -18%. It was one of the worst years ever for stocks, and yet MO delivered a total return of +4.4%.

By the same token, defensive stocks like Altria tend to underperform in rising markets. And that's certainly been the case in 2023. While the S&P 500's total return came to about 15% through November 6, MO's total return stood at -5.1%.

Analysts expect Altria only to match the performance of the broader market over the next 12 to 18 months, assigning it a consensus recommendation of Hold, per S&P Global Market Intelligence. 

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