S&P 500 Dividend Yields Drop: Investors Eye Top Stocks

S&P 500's soaring gains see yields dip. Walgreens, Altria, and Verizon emerge as top picks for dividend hunters amidst fluctuating performances. Income-oriented investors are keen on these stocks for potential resilience.

Date: 21-01-2025

AI Rating: 6

Dividend Yield Dynamics
The S&P 500 index has witnessed a significant increase, climbing nearly 51% over the last two years, leading to a reduction in its dividend yield, now standing at 1.2%. This trend could deter income-focused investors. However, there are still notable candidates for those seeking dividends.

Walgreens Boots Alliance (NASDAQ: WBA)
Historically, Walgreens has struggled, as evident from a steep 64% decline in stock price the previous year. The operational challenges led to a cut in its dividend, yet its current yield stands at 9.1%. The adjusted earnings-per-share (EPS) guidance for the year, ranging between $1.40 to $1.80, remains crucial for income investors, indicating potential stability in the dividend going forward.

Altria (NYSE: MO)
Altria’s dividend yield sits at 7.7%, which is appealing to investors, despite a 2.5% drop in revenue for the year. Adjusted EPS have shown a slight increase of 1.6% to $3.84, which, while not robust, does indicate some profit resilience. However, the flat revenue growth poses concerns for sustaining long-term dividends.

Verizon Communications (NYSE: VZ)
Verizon offers an attractive dividend yield of 6.9%. Yet, their performance reflects a flat operating revenue of $33 billion, with adjusted EPS decreasing from $1.22 to $1.19. The company faces hurdles due to a high debt level, which complicates its financial flexibility, especially in light of market share losses to competitors like T-Mobile.

Conclusion
While Walgreens, Altria, and Verizon present appealing current dividend yields, their respective challenges and performance metrics suggest cautious optimism for income investors. Monitoring EPS, revenue growth, and broader market conditions will be essential for assessing future opportunities within these stocks.

Stocks: WBA MO VZ