How many companies in the S&P 500 pay dividends? Answer: Nearly four out of five. 

Not all of them pay dividends that are especially attractive, though. After all, the average yield for companies in that large-cap index is only 1.6% at current share prices. However, some of its components are delivering sky-high yields, for a variety of reasons. So if you're looking to add income-generating investments to your portfolio, you may want to know: Should you buy the five highest-yielding dividend stocks in the S&P 500 right now?

The S&P's high five

Let's first meet the S&P's high five. Each of these stocks pays an ultra-high-yield dividend.

1. Pioneer Natural Resources

Pioneer Natural Resources' (PXD -0.54%) dividend yield currently stands at 11.2%. It's a large independent oil and natural gas producer, and it pays out a base dividend plus a variable dividend that can fluctuate based on its free cash flow. 

2. Coterra Energy

Oil and natural gas producer Coterra Energy (CTRA -0.83%) pays a juicy dividend yield of nearly 9.7% at its current share price. The company was known as Cabot Oil and Gas prior to its merger with Cimarex Energy in 2021. 

3. Vornado Realty Trust

Because Vornado Realty Trust (VNO -2.50%) is organized as a real estate investment trust (REIT), it must return at least 95% of its taxable income to shareholders every year in the form of dividends. The company's dividend currently yields more than 9.6%

4. Devon Energy

Pioneer Natural Resources isn't the only oil company in the S&P 500 with a fixed-plus-variable dividend program. Devon Energy (DVN -0.84%) has a similar dual-component dividend that currently yields close to 8.4%.

5. Altria

Tobacco giant Altria (MO 0.38%) has been a longtime favorite of income investors. It remains popular today with a dividend yield of over 8.1%.

Two key questions

Investors shouldn't automatically buy the five highest-paying dividend stocks in the S&P 500 just because their yields are attractive right now. Instead, there are two key questions to ask first:

  • Is the dividend sustainable?
  • What are the company's near-term and long-term prospects?

A stock could have a sky-high dividend yield but still be a bad choice for income investors if the payout is in jeopardy of being cut. A great example of this is Lumen Technologies. Until recently, the tech company had the highest dividend yield in the S&P 500. However, Lumen has eliminated its dividend altogether. 

Completely halting dividend payouts is a worst-case scenario. It's more common for companies to reduce rather than eliminate them. As a case in point, oil companies' variable dividends have fallen recently as crude prices have declined. 

Also, a dividend yield that's in the stratosphere might not be enough to offset the share price declines incurred by a company with a poor outlook. Remember, too, that some companies can have reasonably good near-term prospects but dismal long-term prospects -- or vice versa.

Yeas and nays

So are any of these high-yielding S&P dividend stocks good picks to buy now? There are some yeas and some nays, in my view.

Altria has performed great over the long term. Its dividend is certainly attractive. However, I question the company's long-term prospects. And personally, I wouldn't invest in a company whose products have killed millions of people over the years. So Altria is a hard no for me.

Vornado also isn't a stock that I'd want in my portfolio. The company's dividend is high. But Vornado depends heavily on leasing office space. After COVID-19, that's not nearly as promising of a market as it used to be.

On the other hand, I think that the near-term tailwinds for energy stocks make Pioneer Natural Resources, Coterra, and Devon good options for income investors. Sure, the dividends for Pioneer and Devon will fluctuate somewhat with changing oil prices. However, I fully expect their dividend yields will continue to be attractive for a long time to come.