Quick Read UPS pays out 121% of GAAP earnings at a 7% yield, while Pfizer’s payout ratio hits 226% as free cash flow falls short of dividends paid. Ford posted an $8 billion GAAP loss in 2025 from EV write-offs, carries a 4.66 debt-to-equity ratio, yet still pays a near-5% dividend yield. Just released. Our
Quick Read
UPS pays out 121% of GAAP earnings at a 7% yield, while Pfizer’s payout ratio hits 226% as free cash flow falls short of dividends paid.
Ford posted an $8 billion GAAP loss in 2025 from EV write-offs, carries a 4.66 debt-to-equity ratio, yet still pays a near-5% dividend yield.
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A big yield looks like free money until the company can no longer afford to pay it. United Parcel Service (NYSE:UPS) yields 7.02%, and it sits on this list next to three other household names whose payouts carry real warning signs. A high yield is only as good as the payout’s sustainability, and for retirees who rely on that income, a cut hurts twice: the checks shrink and the share price usually falls with them.
Quick test for sustainability: earnings and free cash flow should cover the dividend with room left over, and the payout shouldn’t depend on rising debt or a falling share price.
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Pfizer: A 6% Yield Resting on Thin Coverage
The drugmaker Pfizer (NYSE:PFE) pays $0.43 a quarter, which works out to a yield of 6.10%. Part of that yield comes from a low share price. The stock is down 16.28% over five years.
Coverage is where the problems start. Trailing diluted EPS is $0.76 against a $1.72 annual dividend, which puts the GAAP payout ratio at approximately 226%. Cash flow is tight as well. Free cash flow in 2025 came to $9.076 billion, short of the $9.771 billion paid out in dividends. In the first half of 2026, free cash flow was $2.481 billion while dividends totaled $4.896 billion. Leverage stands at 2.7 times, and management expects it to stay “around current level or modestly higher” as patent expirations reduce revenue.
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Pfizer’s case for keeping the dividend rests on its adjusted earnings guidance of $2.80 to $3.00, which comfortably covers the payout. Chief Executive Albert Bourla said on the August earnings call that “the dividend will be maintained and eventually after the LOE period, will start growing it again.” For that promise to hold, growth from Pfizer’s newer drugs has to outpace the decline in revenue from its COVID-related products. Our earlier look at Pfizer’s fragile dividend story covers the details.
UPS: A 7% Payout Above GAAP Earnings
UPS pays $6.56 per share each year. The stock has fallen 34.49% over five years, and that drop has pushed the yield above 7%.
Trailing GAAP EPS of $5.41 means the company pays out about 121% of its earnings. Free cash flow in 2025 was $5.47 billion, against expected dividend payments of around $5.5 billion. In the first quarter of 2026, free cash flow of $1.28 billion fell short of the $1.352 billion paid to shareholders. Cash dropped from $5.887 billion to $4.653 billion over six months, and second-quarter interest expense rose 14.3% year over year.
On the positive side, management expects adjusted EPS of about $7.22 this year, helped by roughly $3 billion in transformation savings. If those savings turn into cash, coverage improves. If those savings fall short, the roughly $5.4 billion planned for 2026 dividends will strain the balance sheet.
Kraft Heinz: Shrinking Sales Behind a Yield Lifted by the Falling Stock
Packaged-food maker Kraft Heinz (NASDAQ:KHC) yields 6.82% on a $1.60 annual dividend. Most of that yield comes from the stock’s fall. The stock is down 59.6% over ten years and 11.78% in the past month alone.
Trailing GAAP EPS is −$2.88, pulled down by $7.4 billion in goodwill and intangible impairments in the second quarter, following $9.3 billion in 2025. Revenue fell 3.5% last year, and 2026 guidance calls for organic sales to fall 0.5% to 2.0% and constant-currency adjusted operating income to drop 16% to 18%. A company whose sales and earnings are both shrinking has less room to keep a flat dividend going.
Free cash flow is the strongest part of the bull case. It reached $3.661 billion in 2025, well above the $1.898 billion paid in dividends, and adjusted EPS guidance of $2.03 to $2.09 covers the payout. Everything depends on the volume recovery that management is spending heavily to achieve.
Ford: Heavy Debt and GAAP Losses
Ford Motor (NYSE:F) pays a regular 15 cents per quarter, for a yield of 4.98%. Shares have dropped 11.34% over the past month.
Ford lost $8.162 billion in 2025 after $10.7 billion in EV impairments and program cancellations, and trailing EPS is −$1.87. Free cash flow fell 47.87% to $3.513 billion last year, against a regular dividend that costs roughly $2.35 billion a year. First-quarter 2026 free cash flow was negative $1.874 billion. Debt-to-equity stands at 4.66, and interest coverage is only about 2x. Model e losses of $4.0 billion to $4.5 billion are expected this year.
Management is guiding to adjusted free cash flow of $5.0 billion to $6.0 billion, which would cover the payout if commodity and tariff costs stay manageable. Ford’s long-term outlook depends on its EV spending slowing down.
Look Past the Yield Before You Buy
A dividend cut usually drags the share price down with it, so income investors can lose both their income and part of their principal. All four of these companies say their payouts are safe, but their earnings, cash flow, and balance sheets point to real strain. A high yield alone is never a reason to buy. (We laid out the seven warning signs a big yield is about to be cut in a free dividend trap guide.) Before counting on one of these payouts, check coverage, free cash flow, and debt in every earnings report.
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