Quick Read
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Verizon’s 6.18% yield is backed by $19.7B in free cash flow against $11.5B in dividends, leaving room for $3.5B in buybacks.
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Kinder Morgan’s 36% stock gain compressed its yield to 3.51%, the healthiest way for a yield to shrink.
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Realty Income has raised its dividend for 115 consecutive quarters and Altria every year since 2009, both funded by operating cash.
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The top of the S&P 500 yield table is where income investors go looking first, and it is also where the market prices in its worries. A big yield often signals a share price that has fallen because investors expect a dividend cut. The four index members below clear a stricter test: each funds its dividend from cash the business generates, with a balance sheet that can carry it. The group’s highest payer, Verizon Communications (NYSE: VZ), yields 6.18%, and its free cash flow covers that payout with room to spare.
Verizon Communications: Free Cash Flow Covers the Biggest Yield Here
Verizon is one of the largest U.S. wireless and broadband carriers and a component of the Dow Jones Industrial Average. At 6.18%, it is the only ultra-high-yield name on this list. That yield comes with a rising share price: the stock trades at $44.78, up 24.56% over the past year, and still trades at about 9 times forward earnings.
Coverage: In the second quarter, Verizon generated $6.43 billion of free cash flow, up 27.1% year over year, against $2.954 billion in dividends paid. For full-year 2025, operating cash flow of $37.137 billion minus capital spending of $17.461 billion left $19.676 billion of free cash flow, against $11.481 billion in dividends. Even after the payout, the company completed $3.5 billion of buybacks through the first half.
Track record: The quarterly dividend is now $0.7075 per share. It has risen every year since 2019, climbing in steps from $0.6025.
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Why the payout holds: The business is gaining momentum. Verizon added 184,000 postpaid phone subscribers in the second quarter, compared with a loss of 9,000 a year earlier, and its fiber broadband base reached 10.9 million. The shares were rising in premarket trading Monday after a subscriber surge impressed Wall Street. Adjusted EBITDA margin widened to 40.1% from 37.1%.
