The markets have surged since the COVID-induced panic of last February and March, with recent rollbacks of coronavirus-related public health guidelines boosting the economy in many areas. But this upward trajectory in financial markets, coupled with low, risk-free rates offered by bonds, has left income investors with fewer options than last year. That said, even with the collapse of the S&P 500's average yield -- from a multi-year high of 2.3% in March 2020 to just 1.4% at the present -- there are still viable high-yielding dividend stocks out there for investors to check out.

Let's take a look at two S&P 500 companies that offer approximately triple the yield of the index. We'll examine their recent operating results, balance sheets, and dividend payouts to see whether they're the right fit for your portfolio.

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AbbVie (ABBV -1.01%) is a diversified biotech company with a 4.4% yield.

We'll start by addressing the elephant in the room: the pending loss of exclusivity of its top drug, Humira, in the U.S., which will occur in 2023.

Based on the 27% drop-off in Humira's international revenue, from $1.3 billion in 2018 (biosimilars hit the market late that year) to $948 million in 2019, it's reasonable to expect that the drug's U.S. revenue will experience a similar plunge in 2023, followed by smaller, steadier revenue declines in 2024 and beyond.

The good news for AbbVie is that the company is more than ready to make up for Humira's revenue declines with its other two blockbuster immunology drugs, Rinvoq and Skyrizi.

Rinvoq's revenue more than tripled from $86 million in Q1 2020 to $303 million in Q1 2021. That pace appears to be sustainable, not least because the drug is in phase 3 trials for the treatment of atopic dermatitis, psoriatic arthritis, Crohn's disease, and ulcerative colitis. Even one or two approvals from the U.S. Food and Drug Administration (FDA) for treatments of those conditions could be enough to drive future revenue growth.

AbbVie's revenue from Skyrizi also showed significant growth, nearly doubling from $300 million in Q1 2020 to $574 million in Q1 2021. If Rinvoq isn't able to secure FDA approvals for more indications, there's a chance Skyrizi will be able to do so, as the drug is also in phase 3 trials for the treatment of ulcerative colitis, Crohn's disease, and psoriatic arthritis.

In addition, AbbVie's oncology drugs Imbruvica and Venclexta offer additional avenues of growth beyond 2023. These two drugs were able to expand their combined revenue base from $1.55 billion in the first quarter of 2020 to $1.67 billion in Q1 2021, and both have numerous phase 3 trials in progress that can drive future revenue.

AbbVie also appears to be solid from a balance-sheet standpoint, with an interest coverage ratio of 6.2 in Q1 2021 ($3.87 billion in earnings before income taxes/$620 million in interest expense), which means the company's EBIT would have to fall by over 80% before it would be unable to cover its interest expense.

Third, AbbVie's adjusted earnings per share (EPS) payout ratio leaves the company with a secure payout. Management's projected midpoint of $12.47 for 2021 works out to a payout ratio of just 42% when considering the $5.20 in dividends per share that will be paid out this year.

Investors with $500 set aside could purchase four shares at the current price of about $119.


Pfizer (PFE) has a 3.7% yield. Investors may be aware of the role that Pfizer's COVID-19 vaccine (developed in conjunction with Germany's BioNTech) has played in the company's financial results. The vaccine (referred to as BNT162b2) contributed $7.8 billion of the company's $19 billion in revenue during the second quarter of 2021.

But in valuing Pfizer, we can set aside the fact that countries such as Israel are administering third doses of COVID-19 vaccinations and the U.S. federal government is reportedly planning to recommend a booster shot later this year. We will, in fact, completely discount the $7.8 billion in BNT162b2 revenue generated in Q2 2021 -- just to be conservative.

That leaves Pfizer with $11.1 billion in non-COVID-vaccine revenue in Q2 2021, which still represents double-digit year-over-year growth on an operational basis compared with the $9.9 billion reported during Q2 2020.

Leading the charge was the company's oncology segment, which saw sales surge 19% from $2.65 billion in Q2 2020 to $3.15 billion in Q2 2021. Revenue for breast cancer drug Ibrance jumped 4% year over year, from $1.35 billion in Q2 2020 to $1.4 billion in Q2 2021. And three of the company's biosimilar offerings, Ruxience, Zirabev, and Retacrit, were able to more than triple their sales, from about $100 million combined in Q2 2020 to over $350 million in Q2 2021.

Anticoagulant drug Eliquis also reported 16% year-over-year growth, with sales up from $1.27 billion in Q2 2020 to $1.48 billion in Q2 2021. The drug helped the internal medicine segment increase its revenue from $2.28 billion in the same period.

Pfizer is not only strong from the standpoint of operating fundamentals, but the company also boasts a healthy balance sheet.

Pfizer's interest coverage ratio improved significantly from 8.2 in Q2 2020 ($3.03 billion in EBIT/$350 million in interest expense) to 21.8 in Q2 2021 ($6.61 billion in EBIT/$300 million in interest expense), which indicates the company's EBIT would have to fall 95% for the company to have trouble covering its interest expense.

Based on Pfizer's midpoint adjusted EPS guidance of $4 and the dividend obligation of $1.56 per share, the company's payout ratio will be just under 40% for this year.

At the current price of $43 a share, investors with an extra $500 could acquire approximately 12 shares of Pfizer.

Two quality businesses that don't appear to be yield traps

It's often tempting for income investors to reach for yield, only to be sucked into "yield traps" -- companies that eventually go on to cut their dividends because of deteriorating fundamentals, weak balance sheets, and stretched payout ratios.

AbbVie and Pfizer, meanwhile, offer investors more than triple the S&P's average yield and improving fundamentals, decent-to-robust balance sheets, and sustainable payout ratios in the 40% range.

This supports the underlying argument that both companies are capable of not only maintaining their dividends for the foreseeable future, but also raising them. Income investors would therefore be wise to consider adding these two high-yielders to their portfolios.