The S&P 500's Dividend Trap: Why These 3 High-Yield Stocks Are Red Flags

Dividend hunting in a down market sounds smart, right? Not so fast. Here’s the tea on S&P 500’s current yield leaders—and why they might be value traps instead of value buys.

LyondellBasell (LYB): 12.2% yield That insane 12% dividend? Not because the company is thriving—it’s because the stock tanked 40% YTD. The chemical giant is getting rekt by weak demand, input cost pressures, and overcapacity. Q3 revenue dropped 10% to $7.72B, EBITDA plummeted 71% YoY. Yeah, they beat estimates, but the bar was on the floor. The dividend is technically safe for now, but one bad quarter could trigger a cut.

Alexandria Real Estate (ARE): 10% yield Life sciences REIT down 48% this year. Occupancy rates falling, assets getting impaired, life sciences oversupply everywhere. FFO per share slid from $2.37 to $2.22 last quarter. Management basically admitted they’re “carefully evaluating” the 2026 dividend strategy—translation: a cut is coming. Skip this one.

Conagra Brands (CAG): 7.9% yield Packaged food never had it easy, and 2024 was brutal. Stock down 36%, organic sales flat, margins compressed 244 bps. EPS dropped 26.4% to $0.39. The $1.40 annual dividend looks safe mathematically, but the company’s been a decade-long disappointment. You’d be buying a sinking ship for yield.

The verdict? High yield often signals distress, not opportunity. These stocks are down because their fundamentals are weak. Unless you’re betting on a turnaround (risky), there are better dividend plays out there.