S&P 500 Slump Boosts Dividend Yields for Altria, AT&T, and Verizon

Altria Group, AT&T, and Verizon offer high dividend yields, ranging from 6.5% to 9%, due to recent share price weakness. The companies' stable profitability and improving balance sheets make them attractive options for income-focused investors.

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Nitish Verma
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S&P 500 Slump Boosts Dividend Yields for Altria, AT&T, and Verizon

S&P 500 Slump Boosts Dividend Yields for Altria, AT&T, and Verizon

The S&P 500 index experienced a decline of 4.2% in April 2024, leading to a surge in dividend yields for certain stocks. Altria Group, AT&T, and Verizon are among the companies now offering high dividend yields, ranging from 6.5% to 9%, due to recent share price weakness.

Why this matters: The increase in dividend yields for these companies could attract investors seeking stable income streams, potentially offsetting the impact of market volatility on their portfolios. This trend may also influence the broader market, as investors reassess their strategies in response to shifting yields and economic conditions.

Altria Group Inc. (NYSE: MO) traded up 0.19% on Friday, reaching $44.90, with a trading volume of 12,160,008 shares. The company has a market capitalization of $77.12 billion, a P/E ratio of 9.39, a PEG ratio of 2.73, and a beta of 0.66. Altria Group reported $1.15 EPS for the quarter, meeting analysts' consensus estimates, with revenue of $4.72 billion, down 1.0% year-over-year. The company declared a quarterly dividend of $0.98 per share, representing a 3.92% annualized dividend and a yield of 8.73%.

AT&T Inc. (NYSE: T) has seen its stock trade sideways at $1.11 compared to the wider market at $3.90 since February 2024. The company reported a mixed FQ1 2024 earnings call with total operating revenues of $30.02 billion, adj. EBITDA of $11.04 billion, and Free Cash Flow generation of $3.14 billion. Despite top-line headwinds, AT&T's Mobility service revenues grew 3.2% YoY, and its subscriber base grew with Total Wireless Net Adds of 741K. The company's forward dividend yield stands at 6.50%.

Verizon Communications (VZ) pays an annual dividend of $2.66 per share and has a dividend yield of 6.6%. The company has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500. Analysts believe AT&T is more favorable than Verizon Communications, with a consensus target price of $20.81, indicating a potential upside of 21.19%. However, Verizon Communications has a higher dividend yield and a longer track record of dividend growth, making it the better dividend stock.

new, game, plan, excellent Institutional investors and hedge funds own significant stakes in these high-dividend companies. For example, Teacher Retirement System of Texas trimmed its stake in Altria Group by 13.6% in the fourth quarter, owning 729,684 shares worth $29,435,000. Several hedge funds and institutional investors have also recently made changes to their positions in AT&T, including Frank Rimerman Advisors LLC, Pineridge Advisors LLC, First Pacific Financial, Lipe & Dalton, and Ramirez Asset Management Inc.

The recent S&P 500 slump has boosted the attractiveness of high-dividend stocks like Altria Group, AT&T, and Verizon. With yields ranging from 6.5% to 9%, these companies offer investors a steady income stream during a period of market volatility. As AT&T and Verizon navigate the competitive telecommunications landscape, their robust dividend investment theses, stable profitability, and improving balance sheets make them compelling options for income-focused investors.

Key Takeaways

  • S&P 500 index declined 4.2% in April 2024, boosting dividend yields.
  • Altria Group, AT&T, and Verizon offer high dividend yields (6.5%-9%).
  • High-dividend stocks attract investors seeking stable income streams.
  • Institutional investors and hedge funds own significant stakes in these companies.
  • Robust dividend investment theses make them compelling for income-focused investors.