These are the companies with the highest dividend yields in the S&P 500

Many stocks have been left behind, and many are yielding 6% or more — including a total of about 40 in the S&P 500 and S&P MidCap 400 indexes, according to data from S&P Dow Jones Indices.

Financial publication Barron’s checked for even higher returns than 7% in the S&P 500 and came up with half a dozen companies.

The share prices of all six companies in this screen are in the red this year, and they trade for 10 times 2023 forecast earnings or less. Boston Properties and Healthpeak Properties used funds from operations, a measure of cash flow used by real estate investment trusts, instead of earnings per share, which was lower for both companies.

Altria and Walgreens top the list with 9.5% dividend yields, and the other four are in the 7% range.

Data: FactSet

Altria, whose shares have fallen about 5% this year to $41, has been weighed down by concerns about a huge decline in cigarette volumes, which hit 10% in the third quarter, compared with historical annual declines in the 4% to 5% range.

Following the third-quarter earnings report in August, Goldman Sachs analyst Bonnie Herzog wrote that there were growing concerns about Altria’s ability to “offset accelerating cigarette volume declines with pricing that leads to potentially more limited earnings growth/ EPS”.

Affordability is an issue, with a pack of Marlboros costing an average of $9 in the U.S. and demographics that skew toward lower-income customers. Herzog remains bullish, arguing that Altria’s yield and valuation are attractive.

Altria sees earnings of about $4.95 per share this year, up 2% from 2022.

Few large companies are as committed to their dividends as Altria. It has raised the payout annually for more than 50 years, including a 4% increase to a quarterly rate of 98 cents a share in August. It pays out about 80% of its profits in the form of dividends.

Walgreens had a terrible year. Its shares are down nearly 50% to $20, making it the worst-performing component of the Dow Jones Industrial Average.

The company has sharply cut earnings guidance since the start of the year, and the consensus for fiscal 2024 (ending August 2024) now stands at about $3.35 per share, down from nearly $5 per share at the start of 2023. It changed its CEO after being hit by a Covid-related sales slump and facing doubts about the success of its strategy to diversify into medical practices.

JP Morgan analyst Lisa Gill upgraded Walgreens to Overweight from Neutral in late October, making her one of the few analysts on the Street with a Buy rating on the stock. She likes the company’s new CEO, Tim Wentworth, a health-care veteran who came out of retirement to lead the drugstore chain. It cited a “healthcare-focused management team” and a “lowered but reliable bar” for financial results in the current fiscal year.

Is the dividend safe? Gill wrote that its discussions “lead us to believe that investors generally expect a dividend cut.” Walgreens said on its October conference call that “at this time” the board has made no change to its dividend policy. Given the expectations for a cut, the actual cut may not have much of an impact on the stock.

Verizon Communications rose 20% from its October lows to $37 after the company’s third-quarter earnings report offered some reassurance about the company’s competitive position in the wireless business. Verizon stock carries a dividend yield of about 7%.

While the high yield shows some investor concern about dividend sustainability, the company raised its quarterly dividend by about a penny to 66.5 cents a share over the summer, the 17th consecutive year of payout increases.

On the earnings conference call in July, CEO Hans Vestberg said, “Our dividend coverage is very good. Year-to-date, our dividend payout ratio of free cash flow is approximately 56%, a significant improvement over a year ago.”

KeyCorp has been hit along with other regional bank stocks this year, but has gained more than 25% from its lows to around $12. KBW analyst David Conrad upgraded the stock to Outperform from Market Perform in early November, citing a decline in long-term interest rates and “thus improved equity visibility.” It has a price target of $15.

Conrad noted that KeyCorp has an elevated dividend payout ratio of about 70% and a lower capital ratio than other regional banks. The company left its quarterly payout unchanged at 20.5 cents in a dividend declaration earlier in November.

Boston Properties is one of the leading office REITs with buildings in key markets such as New York, Boston and San Francisco.

Its shares have been depressed on worries about tough conditions in the industry. In conjunction with its third-quarter earnings release, it essentially kept its 2023 guidance on funds from operations.

During its conference call, its CEO Owen Thomas said that “despite strong negative market sentiment, BXP had another productive quarter with financial and leasing results above expectations and a stable dividend.” Shares at a recent $54 are yielding over 7%.

Healthpeak, another REIT that leases office space to physician practices and laboratory space to biotech and other pharmaceutical companies. The company has a merger deal with Physician Realty Trust.

In announcing that deal earlier in November, the company’s CEO Scott Brinker said it planned to maintain its annual dividend of $1.20, which provides a yield of about 7% at a recent price of $16.75.

*The material is analytical in nature and is not advice to buy or sell assets in the financial markets.