Ought to You Purchase the S&P 500’s Highest-Yielding Dividend Shares Heading Into 2025?

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I am going to by no means get uninterested in praising dividend shares because the market’s unsung heroes. Whereas they are not as attractive as high-flying progress shares, they are often simply as efficient at making traders cash.

The regular revenue from dividend shares may assist cushion traders towards the inevitable volatility of the inventory market. Whether or not costs are up, down, or stagnant, you may depend on receiving your month-to-month or quarterly payouts (usually).

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As we head into 2025, it is by no means too early to start desirous about which dividend shares might make sense on your portfolio, particularly these with enticing dividend yields. Under are the S&P 500’s highest-yielding shares:

Firm

Dividend Yield

Walgreens Boots Alliance (NASDAQ: WBA)

11.8%

Altria Group (NYSE: MO)

7%

Pfizer (NYSE: PFE)

6.6%

Supply: . Dividend yields as of Dec. 6.

Regardless of the excessive dividend yields, not all these firms are price investing in heading into the brand new yr. Let’s check out the place every stands.

Picture supply: Getty Photographs.

On paper, an 11.8% dividend yield looks like an revenue investor’s dream. Nevertheless, once you have a look at why Walgreens Boots Alliance’s yield is that prime, you may see the place the issue lies — particularly contemplating the corporate reduce its quarterly payouts by 48% to $0.25 early this yr.

By Dec. 6, the inventory worth of Walgreens Boots Alliance has dropped by greater than 68% in 2024.

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There hasn’t been a lot encouraging information coming from the corporate currently. Its working loss in its fiscal 2024 was $14.1 billion, it plans to shut round 1,200 shops within the subsequent couple of years, and competitors from the likes of Amazon and Walmart is steadily growing. Evidently, none of these details are sparking optimism amongst traders.

The funding thesis will get even worse when you think about the attraction of the inventory has been its dividend, and even that appears to be in jeopardy. Walgreens Boots Alliance distributed $1.3 billion in dividends in fiscal 2024 whereas being leagues away from making a revenue. That is a recipe for one more dividend reduce to be on the horizon.

WBA Total Dividends Paid (Annual) Chart
WBA Complete Dividends Paid (Annual) information by YCharts. Unfavorable numbers characterize payouts.

Whether or not Walgreens Boots Alliance will dial again its dividend once more and even droop it fully stays to be seen, however it’s not a inventory I might really feel snug investing in heading into 2025.

Tobacco large Altria has routinely been one of many S&P 500’s highest-yielding dividend shares. The inventory is up by near 37% this yr (as of Dec. 6), which makes its yield of round 7% — greater than 5 occasions the S&P 500’s common — much more spectacular.

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