Market volatility in 2023 has made some equities overvalued and other undervalued. Investors have fled some sectors and industries because their results are sensitive to inflation and rapidly rising interest rates. They also fear a recession. However, despite predictions to the contrary, a recession has yet to occur.As a result, some equities are mispriced. They are undervalued and at decade-high yields. Economic and geopolitical risks may result in further market volatility. Also, some stocks have their own difficulties. The bottom line is higher yields may signify greater risk but may also present opportunity. Below are 3 high-yield, long-term income stocks that may generate decent total returns.
Walgreens Boots Alliance
Walgreens Boots Alliance (WBA), the huge pharmacy retailer, is a stock that investors have eschewed since roughly 2015 because of industry challenges and operational missteps. The CEO and CFO resigned after resetting fiscal year 2023 guidance lower. Consequently, the share price and valuation have declined, and the dividend yield has soared to an all-time high.Pharmacy retailing faces challenges because of intense competition, pricing pressures, lower COVID-19 vaccine demand, and opioid legal issues. In fact, Rite Aid, a much smaller competitor, has reduced its footprint and filed for bankruptcy. From an issue-specific perspective, Walgreens Boots has struggled with a complex organizational structure, strategic focus, and debt since the merger.That said, the firm is a market leader in the United States and the United Kingdom. Additionally, the Boots brand is gaining market share. Next, even though guidance was downgraded, pharmacy volumes and sales are growing. Also, the company is selling non-core brands and retail operations in other countries, sharpening its focus.Lastly, Walgreens Boots is making a significant move into healthcare. The firm has acquired several small companies and is expanding its healthcare offerings, including VillageMD for primary care, CareCentrix for post-acute care, Shields Health Solutions for specialty pharmacy, and Walgreens Health. Although these efforts are not profitable, they are growing quickly.Dividend YieldThe dividend yield has soared to 9%+, but the payout ratio is still only 48%, indicating that in the past, the company has been conservative in returning cash to shareholders. The high yield at the start of the year has earned the equity a place as one of the current Dogs of the Dow. Walgreens Boots has a 48-year dividend growth streak and has not missed a payment in 91 years. However, so far, it has held the dividend constant in 2023.Walgreens Boots has challenges and needs a new CEO and management team to improve operational execution. However, a more straightforward organization and efficiency moves should help profitability. In the meantime, investors are paid to wait for a turnaround with a price-to-earnings ratio of 6.4X. 
Source: Portfolio Insight
Verizon Communications
Verizon Communications (VZ) is another high-yield stock faced with intense competition, causing problems with consumer retail cellular phone growth. The firm has experienced several quarters of flat or declining numbers in the business. Besides competition, the firm’s Consumer Group has been through two leaders in twelve months, probably creating turmoil and uncertainty. Another negative is that pre-paid phone numbers are falling, too.On the plus side, Verizon is still adding post-paid mobile subscribers because of growth in business cellular phone users more than compensating for the decline on the retail side. In addition, broadband is a success story for the communication giant with consistent growth. For instance, in the second quarter of 2023, Verizon added 418 thousand customers, divided between 354,000 fixed wireless access and 54 thousand FiOS connections. Verizon is adding employees to continue its success in this area.Dividend YieldThe telecommunications firm has an 8%+ dividend yield, the highest in at least ten years. Furthermore, the dividend rate has been increased for 19 consecutive years, giving it Dividend Contender status. However, despite the elevated yield, Verizon’s dividend safety is not compromised with a non-GAAP payout ratio of 53% and lower-medium investment grade credit ratings of BBB+ /Baa1. Also, the dividend quality grade is rock solid at an ‘A,’ meaning it is in the 90th percentile.Despite the near-term challenges, Verizon has remained solidly profitable. It is undervalued, trading at a 6.8X earnings multiple. We view Verizon as a long-term buy, and investors may desire to dip into this stock now. 
Source: Portfolio Insight
Altria
The third high yield stock on our list is Altria Group (MO), the tobacco products manufacturer. The company is one of the global leaders in producing and marketing tobacco and cigarette products. It owns many iconic brands, like Marlboro, Copenhagen, Skoal, etc. that are the market share leaders in their categories. Altria sells its cigarette brands mainly in the United States, while Philip Morris International (PM) has international rights.Cigarette manufacturers are highly profitable because they sell a regulated product and operate in a mature oligopoly. Altria remains profitable despite new regulations, litigation, higher taxes, lower volumes, and competition from e-cigarettes. The firm is also trying to expand in the e-cigarette category by licensing iQOS, developing heated tobacco products, and acquiring Njoy for the vaping segment.That said, tobacco and cigarette manufacturing is in secular decline. However, new entrants are unlikely, meaning Altria should possess solid operating margins and profitability for the foreseeable future.Dividend YieldInvestors have stayed away from Altria, and the dividend yield has soared to 9%+. The company is also a well-known Dividend King with a 54-year history of dividend increases. Although the payout ratio is elevated at 76%, the firm seems committed to future growth. The last one was in August 2023. With few acquisition prospects in a concentrated industry, Altria will probably continue with its increases and share buybacks.Altria’s stock price is off its peak in 2017, and the valuation has dropped to about 8.6X. For those seeking income, this equity may be one to research further. 
Source: Portfolio InsightMore By This Author:Stock Market This Week – 10/29/23
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