To The Moon

The dividend stocks are often seen as low-risk investments, providing stability amidst economic uncertainty.If you’re on the hunt for quality dividend stocks, the $S&P 500(.SPX)$ is a great place to start.

Here are the three current highest-yielding dividend stocks in the index:

1. $Walgreens Boots Alliance(WBA)$ - Dividend Yield: 11.1%

For dividend investors, it’s crucial to differentiate between high-yield stocks and yield traps, and Walgreens is a classic example of the latter.

The pharmacy chain’s stock has plummeted 65% this year due to reduced COVID-related revenue, shrinking pharmacy margins, and ongoing retail struggles. A significant loss from its VillageMD acquisition has only added to its woes. While the stock appears cheap based on traditional valuation metrics, it carries a dynamic P/E ratio just above 3.

This year, the company has recorded a staggering $13.6 billion in impairment losses and a negative free cash flow of $1.5 billion. More asset write-downs are likely in the coming quarters, and profits are expected to continue declining. The risk of another dividend cut looms, and with its market cap dropping below $8 billion, Walgreens could soon be removed from the S&P 500.

2. $Altria(MO)$ - Dividend Yield: 7.9%

For about 50 years until 2017, Altria was one of the market’s top performers. However, with smoking rates steadily declining and the company’s transition efforts faltering, its stock has taken a hit.

A $12.8 billion investment in JUUL Labs ended in failure, along with significant losses in its cannabis investment with $Cronos Group Inc.(CRON)$ . Recently, Altria acquired $Enjoy Technology, Inc.(ENJY)$ , another e-cigarette company.

This spring, as next-generation products gained traction, investors began to sense a turning point, resulting in a rise for tobacco stocks. Altria is a reliable dividend payer with a yield of 7.9% and has raised its dividend 59 times in 55 years. While its long-term growth potential is uncertain due to declining cigarette consumption, Altria remains a solid choice for dividend growth.

3. $Ford(F)$ - Dividend Yield: 5.6%

Similar to Altria, Ford has been an industry leader but has struggled in recent years due to international losses, plateauing EV demand, and slow growth in the mature auto industry.

After disappointing earnings in the second quarter, Ford’s stock plummeted on news of a projected $5 billion loss in its EV business. However, profits from traditional fuel and commercial vehicles remain robust. Ford expects adjusted operating profits between $10 billion and $12 billion for the year, with adjusted free cash flow of $7.5 billion to $8.5 billion.

The current dynamic P/E and P/CF ratios are 4 and 5, respectively, indicating low valuation levels. With a dividend yield of 5.6%, if Ford can capitalize on hybrid vehicle growth, its stock may rise. Though its performance has lagged in recent years, its high dividend yield and attractive valuation are worth considering.