Should You Buy the 3 Highest-Paying Dividend Stocks in the S&P 500?

Yield chasing hits fever pitch as investors scramble for S&P 500's top dividend payers.

Dividend Aristocrats or Value Traps?

These three stocks deliver the S&P 500's fattest yields—but high dividends often signal deeper troubles. Companies sometimes boost payouts to distract from stagnant growth or declining market share.

The Risk-Reward Equation

Massive yields come with massive questions. Can these companies sustain payouts during economic downturns? Are they sacrificing innovation for shareholder appeasement?

Traditional finance's obsession with dividends feels increasingly archaic in an era of digital assets generating real yield through DeFi protocols—but Wall Street still loves its quarterly paperwork rituals.

Smart money looks beyond the yield percentage to fundamentals—because sometimes a towering dividend is just a farewell gift before the ship goes down.

1. United Parcel Service: 7.8% yield

What can Brown do for you? Lately, it hasn't been much. Revenue plunged 9% for the transportation stock in 2023. Business has stabilized somewhat, but top-line growth has been negative in four of the last six quarters. Trailing profitability has been been cut in half from its 2021 peak. Shares of the package delivery giant haven't fared better. The stock has shed more than 60% of its value since its 2021 high, down by more than a third in the past year alone.

It's easy to see why UPS was in its prime four years ago. The pandemic made us homebodies, ordering stuff online to be delivered to our homes. It's also easy to see why it's not at its best these days. Tariffs and waning consumer confidence have stymied demand. A deal it struck with the UPS Teamsters union two summers ago locks in rising labor costs through at least the next three years. There's also the seismic shift in its relationship with longtime partner.

Image source: Getty Images.

UPS and Amazon used to get along like peanut butter and jelly. As e-commerce erupted in popularity, UPS was the obvious partner to nail the fulfillment. However, Amazon has outgrown UPS. It has expanded its partnerships with other shippers and built out its own last-mile fleet. Earlier this year, UPS and Amazon agreed to cut their shipments by more than half in the next two years.

UPS argues that this will give it the opportunity to focus on higher-margin opportunities. Analysts somewhat agree. The rest of this year will continue to be problematic. Revenue declines will accelerate in the second half of this year, and profitability will fall even harder. Wall Street pros see flat revenue on improving profitability next year, but it will still be earning half of what it was in 2021.

Something has to change for the beefy dividend to be sustainable. Even next year's improving profit target of $7.23 a share translates to a stiff payout ratio of 91%. Any stumbles along the way, and it could be an end to this 16-year streak of hikes. A dividend cut is also a real possibility if the headwinds don't dissipate soon.

2. Conagra Brands: 7.6%

There's a good chance that there's some Conagra representation in your pantry or fridge. Conagra's portfolio includes Hunt's tomato sauce, Pam cooking spray, and Hebrew National hot dogs. Toiling away in consumer staples is supposed to be an all-weather niche, but business is going the wrong way.

Revenue has declined in back-to-back fiscal years. Several analysts slashed their price targets on the stock after falling short on both ends of income statement for its fiscal fourth quarter. Its guidance for the new fiscal 2026 year calls for flat organic sales growth with profits falling well short of what the market was forecasting. Conagra's payout ratio is 79% based on the midpoint of its net income guidance for this fiscal year. It's not great, but sustainable if it can start to beef up its margins.

3. LyondellBasell Industries: 10.7%

The highest yield among the S&P 500 -- and it isn't even close -- is LyondellBasell. It's not a dinner bell. It's a warning bell. The producer of chemicals and plastics used in automotive and packaging parts is seeing its profitability contract sharply for the fourth year in a row.

It's the one stock on this list that is currently not able to cover its distributions out of its reported earnings. The snapshot is better when you focus on cash FLOW and cash earnings, but LyondellBasell is still in a tough spot in a cyclical industry. Being a chemical stock atop of the S&P 500's high yielders is dangerous. was on top of this list until this summer, until it cut its juicy dividend in half in July. If LyondellBasell isn't on this list in a few months you shouldn't be surprised.