The current dividend yield for the S&P 500 on average is just north of 1.6% at present. A few years ago, that would have been within spitting distance of many top-rated bonds — but with 10-year Treasury yields now at 4.7%, many investors are now looking at the typical dividend stocks with a very skeptical eye.
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There is a small group of stocks with yields significantly higher than bonds in this high-interest-rate environment, however. Most of them have big yields because their share price has been under pressure lately, but if you focus on the largest and most established names in the group, there may be an opportunity to tap into big dividends at discount prices.
The following stocks are the 10 highest-yielding stocks in the S&P 500 at present, all offering payouts north of 6.7%. Just make sure you research the risks, because these paydays do come with a degree of uncertainty.
| S&P 500 Stock | Dividend Yield (as of Oct. 16 close) |
| 3M Co. (ticker: MMM) | 6.7% |
| Boston Properties Inc. (BXP) | 6.9% |
| Simon Property Group Inc. (SPG) | 7% |
| Comerica Inc. (CMA) | 7% |
| Truist Financial Corp. (TFC) | 7.2% |
| AT&T Inc. (T) | 7.7% |
| KeyCorp (KEY) | 7.7% |
| Walgreens Boots Alliance Inc. (WBA) | 8.4% |
| Verizon Communications Inc. (VZ) | 8.5% |
| Altria Group Inc. (MO) | 9.1% |
3M Co. (MMM)
With more than 60 years of consecutive dividend growth, 3M is an income-generating machine. However, the diversified global manufacturing company has admittedly been left behind as tech stocks have come into favor this year — and as it continues to pay down a $6 billion settlement for selling earplugs to the military that didn’t perform as advertised. Ironically, that settlement actually reduces 3M’s risks going forward — and with a huge array of products serving health care companies, food service operators, automakers, construction firms, electronics companies and others, the diversified revenue stream could keep MMM going strong despite any short-term hiccups on Wall Street. Though trading at less than half of its 2021 highs, this could be a decent time to consider giving 3M a second chance in the wake of its recent settlement and big current dividend yield.
Dividend yield: 6.7%
Boston Properties Inc. (BXP)
Though Boston is in the name, this real estate firm is much bigger than one city, ranking as the largest publicly held developer of Class A office properties in the U.S. This term covers top-tier commercial real estate that can compete for prestigious clients — and command above-average rents as a result. BXP focuses primarily on five in-demand urban markets: Boston, Los Angeles, New York, San Francisco and Washington, D.C. With more than 50 million square feet across roughly 200 properties, it has the footprint to provide potentially generous dividends. There’s definitely risk here, but so far the payout has held firm at pre-pandemic levels of 98 cents per share. And with many employers now moving more toward in-office work, the worst could be behind BXP.
Dividend yield: 6.9%
Simon Property Group Inc. (SPG)
Structured as a real estate investment trust, or REIT, mall operator Simon has a mandate for big dividends. However, investors haven’t been too impressed with this stock in 2023, thanks to what has been an uncertain environment for consumers along with increased e-commerce pressures now that the pandemic has made online ordering for pick-up and delivery even more common than it already was. It may not have much growth ahead, but SPG does have a portfolio of some of the most attractive properties across the U.S., including high-traffic outlet malls, as well as upscale, open-air town centers in high-net-worth areas. The real power of this REIT, however, comes from its big yield and its history of consistent dividend hikes. Back in 2010, SPG was paying just 60 cents a quarter in 2010, and now distributions are more than three times that level, at $1.90 per share.
Dividend yield: 7%
Comerica Inc. (CMA)
One of the biggest stories of 2023 has been volatility for regional banks and smaller financial institutions brought on by the First Republic Bank collapse, which was the second-largest bank failure in U.S. history (roughly $212 billion in reported assets when it disappeared). Comerica is one of several midsize firms caught up in this turmoil. It is not a megabank like some of the more recognizable names on Wall Street, and it relies on retail banking, commercial lending to small and medium businesses, and the typical grind of mortgage and car loans. It’s no small fry, operating in Texas, California, Michigan, Arizona, Florida, Canada and Mexico. However, after trading for nearly $100 a share in late 2022, it has crashed to just $40 or so and is now among the 10 smallest companies in the S&P 500. Earnings are set to drop sharply next year but are still forecasted to come in at $6 per share — more than twice its current annual dividend. There’s big risk here, obviously, but also the potential for big yield.
Dividend yield: 7%
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Truist Financial Corp. (TFC)
The regional bank formerly known as BB&T Corp., Truist has been under pressure in 2023 thanks to the aforementioned turmoil in the financial sector. If you don’t mind the risk of short-term volatility, the long-term income potential of this regional bank may make it worth a look. The firm is reportedly planning to sell a $10 billion stake in an insurance-brokerage business to recapitalize and streamline operations, a move floated by its own staff and not an outside activist putting pressure on the board. That at least hints that TFC is thinking seriously about the current risks and pursuing a stronger future. In the meantime, it’s projecting about $3.48 in earnings per share next fiscal year but only paying $2.08 annually in dividends — a great sign that this income stream will survive intact.
Dividend yield: 7.2%
AT&T Inc. (T)
Telecom tends to be a pretty safe bet in the long term, particularly when you’re talking about pedigreed blue chips like AT&T that have survived plenty of rough patches over the years. However, it’s undeniable that 2023 holds plenty of new challenges for this iconic firm. It started the year by spinning out its stake in Warner Bros. Discovery Inc. (WBD), streamlining its operations but reducing its total market value, revenue and even its dividend. The firm carries almost $150 billion in long-term debt, which is nearly 50% more than its total market cap at present, and the fact that AT&T’s wireless business has slowed is definitely giving some investors cause for concern right now. Still, its worth noting that the stock’s 27.75 cent-per-share dividend remains only about half of its earnings, so it could be a good income play even if the share price remains under pressure.
Dividend yield: 7.7%
KeyCorp (KEY)
As stated in reference to previous S&P dividend leader Truist, many regional banks have suffered significantly in 2023 in the wake of First Republic and Silicon Valley Bank going bust. But there’s perhaps no better example of that than KeyCorp, which hit a high of $27 a share in early 2022 and now trades for just over $10 a share. However, it’s worth noting that KeyCorp still enjoys strong cash flow and stable earnings. In fact, its 20.5-cent quarterly dividend is only about 60% of projected profits. Bank runs are fundamentally a crisis of confidence, so you can’t discount the negativity that has weighed on shares. But aggressive investors who believe in the long-term future of KEY stock may want to give this top dividend stock a look despite recent troubles.
Dividend yield: 7.7%
Walgreens Boots Alliance Inc. (WBA)
Things went from bad to worse for Walgreens in the last several weeks as the firm delivered a disappointing fourth-quarter report and forward profit outlook after an already troubled 2023. However, bottom-fishing investors may be encouraged by the fact that WBA just made a further commitment to a fresh start through deeper cost-cutting and a new CEO at the helm. With a massive network of some 8,900 locations under the Walgreens and Duane Reade brands in the U.S. and about 4,000 more under the Boots and other nameplates internationally, WBA certainly has the scale to get ahead if it can figure out the right management structure. And with a dividend that is only about half of projected earnings this fiscal year, plus these efficiencies, WBA’s income stream remains strong and intact in the short term.
Dividend yield: 8.4%
Verizon Communications Inc. (VZ)
Verizon has suffered in 2023 due to unfortunate headlines, including stiff competition from T-Mobile US Inc. (TMUS) that has prompted the firm to invest some $19 billion in towers, fiber cable and spectrum licenses to beef up its network. Considering higher interest rates make borrowing more expensive and Verizon is already carrying more than $160 billion in long-term debt despite a market cap of only $120 billion … well, it’s no wonder investors are worried. Still, with projected earnings of $4.68 next year and a payout ratio of only 60% of earnings, the generous dividend seems safe. And after September brought its 17th consecutive annual dividend increase, there’s a chance, if VZ turns a corner, that the payouts could get even higher in the years ahead.
Dividend yield: 8.5%
Altria Group Inc. (MO)
Altria has been one of the underperformers in the S&P 500 this year, with a decline of about 7% year to date through mid-October. That would be bad enough, but considering the index has added 13%, on average, it makes this so-called solid stock a big a disappointment in 2023. However, the tobacco giant behind Marlboro cigarettes, Black & Mild pipe and cigar products, and smokeless tobacco like Copenhagen and Skoal isn’t going anywhere. It dominates the U.S. market and has logged 54 consecutive years of dividend increases, showing a long-term commitment to shareholders. MO stock may not be a growth darling, but buy-and-hold investors could be well served over the long haul despite recent declines.
Dividend yield: 9.1%
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10 Highest Dividend-Paying Stocks in the S&P 500 originally appeared on usnews.com
Update 10/17/23: This story was published at an earlier date and has been updated with new information.
