Chris Lange
7 min read
Quick Read
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IEP’s 38% yield masks a crisis: units down 75% in five years, two prior cuts, and 2025 operating cash flow negative $313 million.
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PSEC’s own filings warn distributions exceed net investment income, and ARR’s payout ran at 101% of distributable earnings last quarter.
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A dividend cut typically hits investors twice, as income drops and share price falls simultaneously. This is what makes coverage metrics essential before buying yield.
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Icahn Enterprises (NASDAQ:IEP) units yield about 38.2% at a recent price of $5.23. Yields that high draw attention, but a payout is only as good as what the company can sustain. These six stocks offer attractive income, and each carries warning signs retirement-focused investors should watch closely.
A dividend looks unsustainable when the right earnings measure, free cash flow, or the balance sheet can’t fund it without taking on debt, selling assets, or issuing new shares. (We listed all seven of the warning signs that a big yield is about to be cut in a free report you can grab here.)
Kraft Heinz (KHC): Shrinking Sales Behind a Frozen Payout
Kraft Heinz (NASDAQ:KHC) pays $1.60 a year, which works out to a 6.5% yield at $24.46. Shares are down 55.94% over ten years.
Second-quarter revenue slipped 1.4% to $6.26 billion, and a $7.4 billion impairment drove a net loss of $5.46 billion. With those results, management guided constant-currency adjusted operating income down 16% to 18% this year. The planned separation into two companies is on pause. Measured against that adjusted EPS guidance of $2.03 to $2.09, the dividend takes up 77% to 79% of earnings.
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Cash supports the bullish thesis. Operating cash flow of $4.46 billion minus $801 million of capex left $3.66 billion in 2025, well above the $1.9 billion paid out in dividends. Still, the board once cut the quarterly payout from $0.625 to $0.40 during an earlier stretch of earnings pressure.
