DOC - Should You Buy the 3 Highest-Paying Dividend Stocks in the S&P 500?
2024-04-27 16:13:00 ET
Buying stocks based on one aspect of a company is a mistake, but often, investors get fixated. Income-focused investors, for example, often give dividend yield too much sway in their investment decisions. That can be a mistake. Take three of the highest yielders in the S&P 500 index as a starting point. Altria (NYSE: MO) , AT&T (NYSE: T) , and Healthpeak Properties (NYSE: DOC) have huge yields, but they all have warts, and one looks like it could be a terrible long-term investment. Here's what you need to know before buying any of them.
Altria has a huge dividend yield of 9.3%. It has increased its dividend regularly for years. It hails from the consumer staples sector , which is generally considered a conservative area of the market. It also has a dominant position in the market it serves thanks to its ownership of an iconic brand, Marlboro. That last fact is actually the problem.
Altria is a tobacco company that sells cigarettes in the United States, where smoking has been increasingly frowned upon. To put a number on that, the company produced 76.3 billion cigarettes in 2023, down from 101.8 billion cigarettes in 2019. That's a 25% drop in just five years! The company has managed to offset the impact of the volume decline by steadily increasing its prices. But, at some point, price increases will likely exacerbate the decline. Most investors will be better off avoiding a business that appears to be in long-term decline.
For further details see:
Should You Buy the 3 Highest-Paying Dividend Stocks in the S&P 500?