Stocks paying high dividends that are safe and ones that are not, according to Bank of America
Dividend stocks can be a good way to earn income amid market volatility, but not all dividends are necessarily safe. Investors tend to turn to dividend-paying equities during times of economic uncertainty. While the bond market has been rewarding investors with high yields lately, they're expected to eventually decline as the Federal Reserve wraps up its rate-hiking cycle. However, dividends also aren't guaranteed. Some companies may cut their payouts if times get too difficult. Bank of America looked at companies with higher dividend yields versus history and measured against their peers, and separated those with higher leverage and those with lower leverage —in other words, those with a lot of debt as a percentage of assets, and those with smaller debt loads. "With a higher cost of debt, companies with high leverage that also have stretched dividends could be more at risk of cutting dividends vs. those who have low leverage," chief equity strategist Savita Subramanian wrote in a note last week. Here are some of those stocks that offer a strong balance sheet and high, but safe, dividends, according to Bank of America. Among the financial names on the list is T. Rowe Price , which yields about 5.2%. The Baltimore-based asset manager recently reported an earnings beat, with adjusted third-quarter earnings per share coming in at $2.17 for the third quarter. Analysts polled by StreetAccount were expecting $1.78. Revenue also topped expectations. Shares are down about 11% year to date. Meanwhile, here are highly leveraged companies with potentially stretched dividends. KeyCorp tops the BofA list with an estimated net debt to equity ratio of 2.6. FactSet pegs its latest yield at 7.1%. The Cleveland-based regional bank was hit during the banking crisis earlier this year and has tumbled about 34% year to date. In October, KeyCorp reported third-quarter earnings per share of 29 cents, slightly above the 27 cents expected by analysts, per StreetAccount. Walgreens Boots Alliance , with an 8.8% dividend yield, is also highly leveraged, with a debt-to-equity ratio of 1.8, according to Bank of America. In October, the pharmacy chain offered weaker forward guidance and reported fiscal fourth-quarter earnings that fell short of expectations. Adjusted earnings per share came in at 67 cents, versus the 69 cents expected from analysts polled by LSEG, formerly known as Refinitiv. Shares have lost 41% so far this year. — CNBC's Michael Bloom contributed reporting.