By Andrew Bary

There's a new king among the S&P 500's dividend aristocrats.

Altria became the index's dividend leader on Thursday, after struggling Walgreens Boots Alliance suspended its payout that same day, citing an effort to improve its balance sheet.

Shares of Altria, the country's leading tobacco company and maker of Marlboro cigarettes, trade around $52 and yield just under 8%.

While Altria's dividend payout ratio is high at about 80% -- more than double that of the S&P 500 -- the company takes its dividend very seriously, having raised it in August for the 59th time in 55 years. Altria is a king among S&P dividend aristocrats.

"For the full year, we returned over $10.2 billion of cash to shareholders through dividends and share repurchases. We paid $6.8 billion in dividends and our Board raised our dividend by 4.1% in August, " Altria CFO Sal Mancuso said on the company's recent earnings conference call.

The tobacco company is looking to boost the dividend at a mid-single annual rate through 2028.

Just behind Altria in dividend yield in the S&P 500 are Crown Castle, the operator of cellphone towers; chemical makers LyondellBasell Industries and Dow; Verizon Communications; and Pfizer. They yield from 6.5% to 7.1% -- considerably above the index's yield of about 1.3%. Lyondell, Dow, Verizon, and Pfizer all are committed to their payouts.

Looking at other top yielders in the S&P 500, Verizon CEO Hans Vestberg noted on the company's recent earnings call that Verizon had boosted its dividend for the 18th straight year in 2024 and that "growing our dividend" remains a corporate priority.

The company's annual increases in the payout have been small, including about a penny in the quarterly payout in 2024.

In a recent issue of Barron's Energy Insider newsletter, managing editor Daren Fonda looked at the dividends of Dow and Lyondell, which are both roughly 7%. "While the companies face challenges in their core markets, their dividends are likely to be upheld partly because the market backlash would be severe if they were cut, sending the stocks further into purgatory," he said.

Shares of both Dow and Lyondeel have dropped about 20% in the past year. Dividend coverage for both companies is tight based on their earnings.

"Our differentiated portfolio and strong balance sheet enable us to deliver on all our capital allocation priorities, including an industry-leading dividend," Dow said when it released fourth-quarter earnings in January.

As for Lyondell, CEO Peter Vanacker said the company is "well-positioned to deliver on our strategic promises and reward shareholders with a growing dividend as part of our overall value proposition" when the company posted its fourth-quarter results.

Pfizer investors looking for a signal may have felt relief hearing CFO David Denton on the company's latest earning call in January.

"In addition to our strong top line performance, our cost reduction programs are creating a more ent organization, setting the stage for increased capital returns and supporting our commitment to maintaining and growing our dividend all while enhancing shareholder value," he said.

For investors, Walgreens might look like an outlier among the S&P 500's high yielders.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 31, 2025 17:46 ET (22:46 GMT)

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