Should You Buy the 3 Highest-Paying Dividend Stocks in the S&P 500?

The S&P 500 (SNPINDEX: ^GSPC) has been on fire for the last two years, racking up a gain of nearly 51%, which it hadn't done since the dot-com era. Along the way, however, its valuation has gotten stretched, which means its dividend yield has fallen, with the exchange-traded funds that track the index now paying a yield of just 1.2%.

However, there's still some hope for income investors looking to participate in the popular broad-based index. Keep reading to see the three top dividend yields on the S&P 500 today, and to learn whether any of them are buys.

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1. Walgreens Boots Alliance (dividend yield of 9.1%)

Walgreen Boots Alliance (NASDAQ: WBA) was one of the worst performers on the S&P 500 last year, falling 64%. The drugstore chain was even forced to cut its dividend earlier in the year, though the stock fell far enough to give investors a sky-high yield of 9.1% today.

Walgreens' profits fell last year, and it also 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 the corner. The company reported a rebound in pharmacy sales in the fiscal 2025 first quarter (which ended Nov. 30), on comparable pharmacy sales growth of 12.7%, though retail sales declined.

Profits were also down overall, but Walgreens showed signs that the business was stabilizing, and it maintained adjusted earnings-per-share (EPS) guidance of $1.40 to $1.80 for the year. As long as it can hit that mark, the dividend, which totals $1 per share for the year, should be safe, and there's significant upside potential if it returns to growth. Walgreens stock looks like a buy for income investors, though it still faces challenges.

2. Altria (dividend yield of 7.7%)

Altria (NYSE: MO) is the nation's largest tobacco company, but like Walgreens, the stock has struggled recently, pulling back after a rally through much of 2024.

The tobacco sector performed well last year as investors fearing interest rate cuts moved into high-yield stocks like Altria, even as the business continued to face headwinds from the decline in smoking.

Through the first three quarters of 2024, revenue fell 2.5% though adjusted earnings per share rose 1.6% to $3.84.

The company has bet on Njoy! to drive its next-gen product business, though it's fallen behind peers like Philip Morris International and British American Tobacco.

Altria's dividend yield is well funded, and management knows that's why people own the stock, but as long as its revenue growth is flat, income investors should look elsewhere for dividends.

3. Verizon (dividend yield of 6.9%)

Telecom giant Verizon Communications (NYSE: VZ) offers the third-highest dividend yield of any S&P 500 stock at 6.9%. Verizon has lost market share to rivals like T-Mobile US as it mismanaged its 5G rollout, underinvesting in mid-band spectrum that offers more widespread coverage.

Over the last few years, Verizon has struggled and its growth has been nearly flat as the smartphone market is mature. Operating revenue was flat at $33 billion in the third quarter, and adjusted earnings per share fell slightly from $1.22 to $1.19.

While Verizon does have wide profit margins, it also has a lot of debt, which adds a headwind to the stock, creates risk, and limits financial flexibility. Verizon is also in the process of acquiring Frontier Communications for $20 billion.

Verizon's dividend yield looks adequate for income investors, but the stock has a track record of underperforming the stock market. Meanwhile, the business's financial trajectory doesn't leave much room for upside potential. Income investors could find better alternatives elsewhere.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c., Philip Morris International, T-Mobile US, 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.