Dividends are good. If they weren't, more than 400 companies in the S&P 500 (^GSPC 0.53%) wouldn't pay them to their shareholders.

But exceptionally high dividend yields aren't always good. They can sometimes point to underlying business problems that investors shouldn't ignore. Should you buy the three highest dividend-paying stocks in the S&P 500?

1. LyondellBasell Industries NV

LyondellBasell Industries NV (LYB 0.70%) offers the juiciest dividend in the entire S&P 500 -- and it isn't close. The global chemical company's forward dividend yield stands at 11.7%. No other member of the S&P 500 has a double-digit percentage yield.

However, LyondellBasell's ultra-high yield is a direct result of its abysmal stock performance. While the overall market has boomed this year, this chemical stock has plunged almost 40%. This decline reflects what CEO Peter Vanacker referred to as a "prolonged cyclical downturn" in his company's second-quarter update.

Aside from the tremendous yield, another positive side effect of LyondellBasell's steep sell-off is that its valuation is attractive. Shares trade at a low forward price-to-earnings ratio of 13.

Is this beaten-down stock a good pick for investors? I don't think so. My main concern is that there's no way to know how long the cyclical pressures on LyondellBasell will continue. The company is taking steps to navigate the challenging industry dynamics. However, I favor staying on the sidelines with this stock until clear signs of a turnaround are visible.

2. United Parcel Service

United Parcel Service (UPS 0.96%) pays the second-highest dividend in the S&P 500. The world's largest package delivery company offers a forward dividend yield of 7.8%. UPS has even increased its dividend for 15 consecutive years (albeit modestly in recent years).

Like LyondellBasell, UPS has been a loser for investors in 2025. Its share price has fallen more than 30%, with the negative impact of the Trump administration's tariffs especially taking a toll. UPS' revenue has also declined as a result of management's decision to slash the low-margin shipments it handles for Amazon (AMZN -0.61%).

Could UPS' dividend be in jeopardy? CEO Carol Tomé would argue that it isn't. She stated in the company's Q2 earnings call:

UPS is rock solid strong, and so is our dividend. The UPS dividend is backed by solid free cash flow and a strong investment-grade balance sheet. We know how important the dividend is to our investors, and you have our commitment to a stable and growing dividend.

I understand why many investors would be hesitant to buy UPS stock. However, I like the Amazon move, which should boost profitability over the long run. I expect the fallout from tariffs to eventually fade. And I believe Tomé that the dividend is safe. My view is that UPS remains a solid stock for long-term investors, especially those seeking income.

3. ConAgra Brands

ConAgra Brands (CAG 1.64%) isn't too far behind UPS, with a forward dividend yield of 7.6%. The food company has a great dividend track record, paying dividends every quarter since January 1976.

Is ConAgra's high yield due to a poor stock performance, as was the case with LyondellBasell and UPS? Yep. The company's share price has sunk more than 30% year to date.

ConAgra's top and bottom lines are headed in the wrong direction. The negative impact of mergers and acquisitions accounts for part of the problem. Persistently high inflation, coupled with weak consumer sentiment, has also hurt ConAgra's business.

Is this stock worthy of consideration by investors? Wall Street's average 12-month price target reflects an upside potential of roughly 12%. However, most analysts still recommend holding ConAgra rather than buying it. I agree with this consensus, for now.