Quick Read
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AT&T's leverage jumped to 3x EBITDA after a $23 billion spectrum purchase, while EPR faces a $450 million December maturity and heavy theater exposure.
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Altria's liabilities exceed its assets and cigarette volumes keep shrinking, while Verizon carries $166 billion of debt despite strong free cash flow covering its dividend.
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Most of these high yielders raised guidance, but leverage, tenant concentration and thin balance sheets hide the real threats to their payouts.
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A high yield matters only if the company can keep paying it. AT&T( NYSE:T ) shares have fallen 10.5% over the past month, so its yield rose because the price fell. Most of the six names below raised guidance in their latest quarterly reports. Their warning signs sit deeper, in leverage, tenant concentration, shrinking volumes, and thin balance sheets.
Quick test:a dividend is sustainable when the right earnings base covers it (AFFO or FFO for REITs, EPS for ordinary companies), when free cash flow pays for it after capital spending, and when the company isn't taking on more debt to keep the checks going out. (We put the full checklist of warning signs that a big yield is about to be cut in a free report here.)
AT&T (T): Leverage Jumps as the Stock Slides
AT&T pays $1.11 a year, which works out to a 5.1% forward yield at $21.63. Shares are down 8.68% year to date. Management has committed to keeping the payout at $1.11 through 2028.
Net debt to adjusted EBITDA rose to 3.13x from 2.68x after the $23 billion EchoStar spectrum purchase. Management doesn't expect to get back to its 2.5x target until 2029. Third-quarter free cash flow of $4.95B fell 5.93%, and dividends plus buybacks used $4.753B of it. Legacy copper revenue dropped 24.5%. AT&T has also cut before: the quarterly payout went from $0.52 to $0.2775 in 2022.
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For the payout to hold, AT&T needs to deliver its $18B+ 2026 free cash flow target and close the Mexico sale. If cash gets tight, buybacks are the obvious first cut.
EPR Properties (EPR): Theater Exposure and a December Maturity
EPR Properties( NYSE:EPR ) pays $0.31 a month, which is 6.3% at $59.50. The stock is up 25.87% this year. Its payment record shows a gap from April 2020 to July 2021.
For a REIT, FFOAA is the right coverage measure, and it looks fine: the payout is about 68% of the low end of 2026 guidance. The balance sheet shows the risk. Net debt to adjusted EBITDA rose to 5.0x from 4.7x, interest coverage slipped to 4.0x, and $450M of notes mature December 15, 2026. The top 10 tenants make up 68.0% of rent, and theaters account for 34%.
Box office receipts are up about 20% this year, and a new $1.6B credit facility gives EPR room to work.
Omega Healthcare Investors (OHI): GAAP Earnings Trail the Payout
Omega Healthcare Investors( NYSE:OHI ) pays $2.72 a year, a 5.6% yield, with shares up 15.07% this year.
GAAP EPS was only $0.27, well below the $0.68 quarterly dividend, after $59.9M of acquisition and transition costs. AFFO is the proper metric, and on that basis the dividend is about 83% of low-end guidance. The bigger risks are the operators: transitions at Genesis, Maplewood, and PACS; Medicaid reimbursement; and staffing rules for skilled nursing facilities. Cash fell 73.43% year over year.
Operator EBITDAR coverage improved to 1.67x, which gives the payout a buffer as long as tenants stay healthy.
Altria (MO): A Dividend King With Negative Equity
Altria( NYSE:MO ) pays $4.44 a year, or 5.8%, after its "61st increase in 57 years." Shares are up 38.42% this year.
The dividend takes about 78% of the low end of 2026 adjusted EPS guidance. Stockholders' equity is -$2.225B, and total liabilities of $36.65B exceed assets of $34.48B. Industry cigarette volume fell an estimated 5%, and Skoal volume dropped 12.6%. In the second quarter, operating cash flow of $719M didn't cover $1.776B in dividends.
For full-year 2025, operating cash flow of $9.29B covered $6.96B in dividends. Price increases need to keep outpacing volume losses for that to continue.
W. P. Carey (WPC): Already Cut Once, Now Facing Higher Rates
W. P. Carey( NYSE:WPC ) yields 5.8% on $3.80 a year. It cut its quarterly payout from $1.14 to $0.86 in late 2023, and the current $0.95 is still below its previous level.
The AFFO payout is a comfortable 71%. The pressure points are leverage of 5.5 times excluding forward equity, a €500 million eurobond that has to be refinanced in April, and rate headwinds. As CEO Jason Fox put it, "There are higher rates. That is going to be a headwind for everyone."
Verizon (VZ): Strongest Coverage, Biggest Debt Load
Verizon( NYSE:VZ ) yields 6.2%, and shares are up 19.82% this year. Third-quarter free cash flow of $7.80B easily covered $2.94B in dividends.
The concern is the debt. Total debt stands at $166.2B, interest expense rose 17.2%, and cash fell 41.67%. The CFO said, "We remain committed to growing the dividend."
Yield Alone Is Never a Buy Thesis
A dividend cut usually takes the share price down with it so that investors can lose income and principal at the same time. Before trusting a yield, check coverage with the right metrics: leverage and free cash flow. Earlier lists of high-yield traps for retirement investors and household names with dividends in danger run the same checks on other stocks.
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If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.
Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)
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