3 High-Paying Dividend Stocks That Still Have Safe Payouts

Key Points

• Altria boasts a 6.88% dividend yield and a 68% payout ratio, which has improved from unsustainable levels in recent years.
• UPS has a high payout ratio of over 95%, but is undergoing a turnaround that is improving margins, and offers value as the economy rebounds.
• Verizon offers a 6.29% dividend yield supported by a payout ratio in the mid-60s, which aligns with its historical average.

When investors look for dividend stocks, one of the first metrics they consider is dividend yield. This measure measures how much a company pays out in annual dividends relative to its stock price. But it’s important to know why a company’s dividend yield is at the level it is and whether that level is sustainable.

To do that, investors frequently examine a company’s dividend payout ratio, which expresses how much of its net income goes to paying its dividend.

However, regarding both dividend yield and payout ratio, it’s important for investors not to take the numbers at face value. In some cases, a high yield simply results from a declining stock price, which could be a sign of deeper trouble.

The same is true of a high payout ratio. If a company is borrowing to sustain its dividend (i.e., a payout ratio of over 100%), it could also signal that the dividend is not sustainable.

Remember, the idea behind dividend stocks is value and income first. Growth is a secondary priority. That’s why an attractive yield combined with a safe payout is the sweet spot for many investors who want dividend stocks to buy and hold through market volatility. 

Here are three stocks to consider in the current market.

Death, Taxes, and Tobacco: The Case for Altria Stock

Inevitability is an important consideration when looking at a dividend stock to buy and hold. 

Altria Group Inc. NYSE: MO is one of the world’s largest tobacco companies and the home to brands such as Marlboro. Despite the societal shift in attitudes about smoking, MO stock has continued to deliver for investors. In the last 15 years, MO stock has delivered a total return of over 609%. That includes the company’s dividend which has a robust 6.88% yield.

There’s no doubt that tobacco smoking is declining throughout the world. However, that’s leaving the door open for alternative nicotine products such as e-cigarettes, vapes, and heated tobacco.

That’s where Altria has been pivoting, and it should support continued revenue and earnings growth. Plus, with a price-to-earnings (P/E) ratio of 9x it’s undervalued compared to its recent history and to consumer staples stocks.

Some investors will be uncomfortable with the stock’s 68% payout ratio. However, that’s down from levels of 3- and 5-years ago when it was over 100%. That should give investors' confidence that Altria will add to the 56 consecutive years of dividend increases this dividend king has currently notched.

Don’t Let a Wicked Business Cycle Steer You From UPS Stock

Speaking of stocks with high dividend payout ratios, United Parcel Service Inc. NYSE: UPS has a payout ratio of over 95% as of May 22, 2025. But this is where context is important. UPS has always had a relatively high payout ratio. However, that’s not unusual for a mature business. In fact, on two occasions in the last 15 years, the company’s payout ratio has been much higher.

Both were times of economic weakness that arguably may have been worse for the company’s business. However, it didn’t stop the company from paying and increasing its dividend. Plus, if you look at the payout ratio regarding its cash flow, the number is a much more palatable 66%.

The company is in the middle of a turnaround plan, starting to show up in higher margins. As the economy rebounds as expected in the second half of the year, any concerns about the dividend's safety should fade away.

In the meantime, as was the case with Altria, UPS stock is trading at a P/E ratio around 14x, which is a discount to its historical averages.

More Growth May Be on the Frontier for VZ Stock

A 10-year total return of 45.22% won’t inspire much confidence for growth-oriented investors. However, with a dividend yield of 6.29%, there’s a reason why dividend investors are attracted to Verizon Inc. NYSE: VZ stock.

Higher interest rates and sticky inflation are weighing on the consumer. That’s showing up in Verizon losing an enormously high 289,000 net postpaid wireless subscribers in its most recent quarter.

With a payout ratio in the mid-60s, which is around its historical average, Verizon’s dividend is safe. Plus, the Federal Communications Commission (FCC) has approved Verizon’s deal to acquire Frontier, which may be the catalyst the company needs to compete with more nimble competitors like T-Mobile US Inc. NASDAQ: TMUS.

As with the other stocks in this group, Verizon is trading at a discount to its historical averages with a P/E ratio of around 10x as of May 22, 2025.