“Dogs of the Dow” is a popular investing strategy. By buying shares of the highest-yielding stocks on the Dow Jones Industrial Average (DJINDICES: ^DJI) market index, you can buy into top-quality companies whose shares are selling at a discount. In the long run, these struggling winners should overcome their challenges, transforming low-priced stocks with rich dividends into solid income generators with healthy share prices.

What if you wanted to apply that strategy to a larger pool of potential dividend heroes? The S&P 500 (SNPINDEX: ^GSPC) index is much larger than the Dow, and its component stocks were also handpicked among the top companies in America. There are more high-yield names on this list, and the top payers are much more generous than their Dow Jones counterparts.

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So let’s check out the top three dividend yields on the S&P 500. Are Walgreens Boots Alliance (NASDAQ: WBA), Altria (NYSE: MO), and Ford (NYSE: F) poised to recover from their current struggles in the long run? More to the point, do any of these high-yielding S&P 500 stocks look like great buys in the middle of December, 2024?

Walgreens yield: 12.2%

The convenience store and pharmacy retailer stands out in a couple of ways:

• The 12.2% dividend yield is in a different class. No one else breaks the 10% barrier, or even the 8% level.
• Walgreens stock has plunged 62% lower in 2024. Again, this stock has no real competition for this dubious honor.
• The company is unprofitable on the bottom line, and its free cash flows are also negative over the last year.
• Investors have caught on to Walgreens’ troubles. 16% of its shares were sold short at the end of November, up from 5% in March. Again, no one else can compare to this pessimistic metric.

The transatlantic store chain boasts impressive revenue growth in recent years, but has failed to convert the sales into bottom-line profits. The turnaround attempt isn’t working out, and management has reportedly talked to private equity firm Sycamore about a leveraged buyout. Even that desperate exit idea seems unlikely, as the deal-financing banks would insist on a profitable long-term business plan. As the pharmacy business continues to move online, Walgreens is left with an expensive and unprofitable store network, financed by a burdensome $9.5 billion of long-term debt.

This juicy dividend is not connected to a slam-dunk turnaround effort. In cases like this one, extreme yields serve as red flags — Walgreens has serious business issues and it’s probably best to avoid the stock.

Altria yield: 7.5%

As suggested earlier, tobacco giant Altria comes with fewer financial problems than Walgreens. The stock is up 33% year-to-date, its dividend yield is not outlandish in the context of the income-generating tobacco industry, and the company can finance its entire dividend budget with robust free cash flows. Very few investors expect negative returns, and less than 2% of its shares are sold short.

And this company’s management is adapting to a new era. Altria’s long-term plan targets a leading position in smokeless and nicotine-free tobacco alternatives.

Altria isn’t my cup of chewing tobacco, but there is a solid market for these products and the stock should be able to maintain its lucrative dividend policy for years to come. If you’re interested in these sin stocks, you should compare and contrast Altria’s business to peers Philip Morris (NYSE: PM) and British American Tobacco (NYSE: BTI) before buying any shares. The index-leading dividend yield is just a starting point for a thorough financial review.

Ford yield: 7%

The automotive pioneer offers a compromise between Walgreens and Altria in many ways.

This stock has underperformed the broader market with a 17% price drop in 2024. The short-seller cohort is comparable to Altria’s and Ford’s dividend yield makes sense from a historical point of view.

Ford has shifted its business focus from cars to trucks, with shareholder-friendly results. Sales are trending up and only half of Ford’s free cash flows are required for financing the full dividend. Investors may worry about lower bottom-line earnings, but that’s arguably just a smart tax-avoidance strategy.

Altria is wrestling with updated tobacco habits and Walgreens faces an era of increasing e-commerce sales. Likewise, Ford must adjust as gas-powered vehicles give way to electric alternatives.

The company recently announced layoffs and production pauses in Europe, and the company is developing a deep portfolio of electric vehicles. This strategy is moving in the right direction, though it remains to be seen how Ford will perform against equally innovative rivals in places like Japan and Germany.

But if I had to buy one of these “Dogs of the S&P 500” stocks today, Ford would be it. This company is pulling all the right levers to stay competitive in a rapidly changing market, and the stock trades at a modest 6.2 times free cash flows. Ford could be a winner over time, and its generous dividend yield looks more helpful than frightening.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and Philip Morris International and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.