Are These High-Yield Dividend Stocks Worth Your Money? A Deep Dive into Altria, Verizon, and Walgreens

Who wouldn't enjoy a little extra cash landing in their account every quarter? Dividend stocks provide exactly that – a regular income boost even if your main focus is on growth stocks. If you're curious about the top dividend stocks on the S&P 500, look no further. Let's dissect whether the three highest-yielding dividend stocks are worth your money.

1. Reigning at the Top: Altria

Altria (NYSE: MO) leads the pack with a hefty dividend yield of 8.8%. Known for its role as the domestic king of Marlboro cigarettes, Altria has long been a favored pick among dividend investors. Despite its slow growth, the company maintains a treasure trove of profits, allowing it to sustain its high dividend yield.

However, a high dividend yield doesn’t always equate to a wise investment. The tobacco industry is facing a gradual decline, and Altria’s attempts to diversify – including a $12 billion investment in JUUL, its foray into cannabis via Cronos Group, and an unsuccessful collaboration with Philip Morris International’s heat-not-burn product – have not exactly panned out. Their recent pivot to NJOY is still in its infancy, and both revenue and adjusted earnings per share (EPS) dropped by 2.5% in the first quarter. Investors looking for yield might want to mull over other options, like British American Tobacco.

2. Next in Line: Verizon

Verizon (NYSE: VZ) boasts a solid 6.7% dividend yield. Telecom stocks like Verizon are notorious for their generous payouts. Even though telecom is a slow-moving sector, it’s imbued with significant capital requirements to keep up with evolving tech and infrastructure demands. Fortunately, Verizon and other carriers appear to have moved past the peak of the 5G investment spree, suggesting a future rise in free cash flow due to waning capital expenditures.

Verizon demonstrated mild growth in the first quarter, with total revenue nudging up by 0.2% and wireless service revenue rising 3.3%. As industry competition appears to stabilize, Verizon might be a robust choice for those in search of a reliable, high-dividend stock.

3. Wrapping Up: Walgreens Boots Alliance

Walgreens Boots Alliance (NASDAQ: WBA) rounds out our list with a 6.4% dividend yield. This drugstore titan has seen better days, battling a slew of challenges ranging from post-COVID-19 business losses and opioid-related legal settlements to a streak of questionable acquisitions. The dividend was slashed by 48% in January to bolster the company’s cash reserves for growth initiatives and debt management.

The high yield is a byproduct of stock price depreciation – down 54% over the last year and over 70% in the past five years. While recent financial results show a modest upturn in revenue and adjusted earnings, the shadow of past acquisitions continues to loom large, as evidenced by a $5.8 billion goodwill impairment in the second quarter. Only risk-happy investors might find Walgreens attractive at this juncture, as the business needs to display clearer signs of stabilization.

In conclusion, these high-yielding dividend stocks come with their own sets of challenges and opportunities. While Altria and Walgreens present substantial risks and uncertainties, Verizon emerges as a comparatively stable contender for those yearning for a blend of reliability and attractive yield. Before diving in, ensure you’ve weighed the potential risks and rewards aligned with your investment strategy.