5 High-Yield Dividend Stocks That Pass the Coverage Test (Not Just the Yield Test)

The 10-year Treasury now pays 5.18%, its highest reading of the past year as of Sept. 24. That raises the bar for every income stock. A dividend payer yielding less than a risk-free bond has to earn its place through growth, and one yielding more has to prove the payout is funded by real cash. This basket runs five names through the coverage metric that fits each business: free cash flow for the drugmakers, adjusted funds from operations (AFFO) for the REITs, and distributable cash flow for the pipeline partnership. Three of the five out-yield Treasuries. All five pass, and the margins of safety vary more than the yields suggest.

Gaming and Leisure Properties: An 8.32% Yield With the Most Room Among Ultra-High Yielders

Gaming and Leisure Properties (NASDAQ:GLPI) yields 8.32%, which clears the ultra-high-yield threshold and tops the 10-year Treasury well. The quarterly dividend stands at 82 cents, or $3.28 on an annualized forward basis.

Dividend safety read: AFFO is the right metric for a triple-net REIT because it strips out non-cash depreciation that distorts GAAP earnings. Second-quarter AFFO came in at $304 million, or $1.03 per diluted share, up 10.1% year over year, with full-year 2026 AFFO guidance raised to $4.10 to $4.12 per share. Set that against a $3.28 annualized dividend and the cushion is wide. Leverage sits at 4.8x net debt to adjusted EBITDA, below the company’s 5x to 5.5x target range, giving it the ability to fund its pipeline without issuing new equity. The dividend history shows steady steps higher: 76 cents through 2024, 78 cents through 2025 and a 5.1% raise to 82 cents in the second quarter of 2026.

Bull case: Growth is already contracted. A $2.02 billion development pipeline carries a blended 8.77% cap rate, and management projects per-share AFFO growth of through 2027 and into 2028. Second-quarter adjusted EBITDA rose 12.2% to $405.5 million, and the vast majority of tenant rent coverage sits above 1.8x. The shares trade with a 50-day moving average of $42.79, below the 200-day average of $45.26 and well under the $52.39 analyst target. Sentiment leans positive, with 6 Strong Buy and 10 Buy ratings against 7 Holds and 1 Strong Sell.

Risk: Tenant concentration. A few of regional casino operators generate most of the rent, and the weakest master lease covers rent at only 1.59x. Construction on a Chicago casino project adds execution risk. If a major tenant hits a gaming downturn, lease coverage compresses first, and that is where investors should look before the dividend ever feels pressure.

Western Midstream: An 8.33% Distribution Backed by Guided Cash Flow

Western Midstream (NYSE:WES | WES Price Prediction) yields 8.33%, the second ultra-high yielder in the group. The quarterly distribution is 93 cents per unit, or $3.72 annualized, with $3.68 paid over the trailing 12 months. As a master limited partnership, it issues a K-1 at tax time.

Distribution safety read: Distributable cash flow is the correct test for an MLP, and 2026 guidance calls for $1.85B to $2.05B, or $4.59 to $5.08 per unit. Even the low end sits well above the $3.72 annualized payout, and management expects results toward the high end of its ranges. First-quarter adjusted EBITDA hit a record $683.1M, up 15% year over year. The partnership holds an investment-grade balance sheet with roughly $2.0 billion of liquidity, and fee-based contracts with minimum-volume commitments protect cash flow when volumes wobble. The track record deserves a clear-eyed read: The quarterly payout climbed from 57 cents in early 2024 to 87 cents later that year and to 93 cents today, but it was cut from 62 cents to 31 cents in 2020.

Bull case: The $1.6 billion Brazos Delaware II acquisition adds roughly $100 million of additional EBITDA in 2026, and the Aris Water integration has captured about 85% of a $40 million synergy target. At 11 times forward earnings, the units price in modest expectations for a business guiding toward the top of its range.

Risk: Growth spending is eating into the cushion. Second-quarter capital expenditures of $741.791 million exceeded operating cash flow of $524.847 million, and free cash flow after distributions was -$137.4 million in the first quarter. If producers pull back drilling plans while capex stays elevated, the partnership leans harder on its balance sheet to hold the payout.

Realty Income: 5.93% Monthly Income With AFFO Coverage Intact

Realty Income (NYSE:O) yields 5.93%. That is high-yield territory rather than ultra-high-yield, and it sits only slightly above the 5.18% Treasury, the thinnest premium among the three names that beat the risk-free rate. The next ex-dividend date is September 30, 2026.

Dividend safety read: Second-quarter AFFO rose 3.8% to $1.09 per share, while monthly dividends paid in the quarter totaled to 81 cents per share. Full-year AFFO guidance moved up to $4.44 to $4.45, well clear of the annualized dividend of $3.252 as of June 30. The company reported its 115th consecutive quarterly dividend increase and 670 monthly dividend announcements in a row. Fitch rates it ‘A’ with a Stable Outlook, and occupancy stands at 98.8%.

Bull case: The acquisition engine is accelerating. Realty Income invested $2.6 billion in the second quarter at a 7.3% initial cash yield and raised 2026 investment guidance to $10 billion. A $6 billion large-scale data center joint venture and a management platform with $3.5 billion of third-party assets open new growth opportunities beyond retail. A free cash flow yield of 7.35% supports continued raises.

Risk: Leverage is moving the wrong way. Net debt to annualized pro forma adjusted EBITDAre rose to 5.4x from 5.2x in the first quarter, and 65.7% of annualized base rent is tied to tenants below investment grade. With the 10-year yield up 0.54% in a month, higher refinancing costs pinch the spread between what Realty Income earns on new deals and what it pays to fund them. Analysts reflect that caution, with 15 Hold ratings.

AbbVie: Why Free Cash Flow Tells the Real Dividend Story

AbbVie (NYSE:ABBV) yields 2.62% at a share price of $264.28. That trails the Treasury, so AbbVie earns its spot through coverage strength and payout growth rather than raw yield.

Dividend safety read: On paper, the payout looks extended. Trailing GAAP earnings per share of $3.55 sit below the $6.83 dividend per share, which puts the GAAP payout ratio above 100%. That figure misleads because GAAP earnings include huge non-cash charges tied to past acquisitions. In 2025, AbbVie booked net income of $4.226 billion but recorded $8.139 billion in depreciation and amortization, an expense that uses no cash. Free cash flow shows what actually funds the check: operating cash flow of $19.03 billion, less capital expenditures of $1.214 billion, still exceeds the $11.657 billion paid in dividends by a wide margin. Adjusted EPS guidance of $13.87 to $14.07 for 2026 tells the same story.

Bull case: The post-Humira transition is working. Skyrizi grew 24.4% to $5.505B and Rinvoq rose 24.5% to $2.525 billion in the second quarter, more than offsetting a 35.9% Humira decline. Adjusted EPS of $3.65 beat the $3.08 consensus on revenue of $16.99 billion, up 10.2%. Chief executive Robert A. Michael said “AbbVie delivered another excellent quarter… long-term outlook remains very strong.” The stock trades at 16x forward earnings after an 14.97% year-to-date gain.

Risk: The quarterly cushion narrowed in 2026. Second-quarter operating cash flow of $3.436 billion only slightly exceeded the $3.07 billion dividend payment, and the roughly $10.9 billion Apogee Therapeutics acquisition adds dilution and integration demands. Should Skyrizi and Rinvoq growth slow while Imbruvica keeps sliding (down 29.4%), the dividend growth rate is the first thing to give.

Johnson & Johnson: AAA Credit Behind a Payout Ratio That Is Creeping Higher

Johnson & Johnson (NYSE:JNJ) yields 2%, the lowest in the group and well under the Treasury. Its case rests on balance-sheet quality: It is one of only two U.S.-based companies with a AAA credit rating.

Dividend safety read: The direction of the payout ratio is the key tell. In the second quarter of 2025, J&J earned net income of $5.537 billion and paid $3.129 billion in dividends. A year later, net income was essentially flat at $5.534 billion while dividends rose to $3.227 billion. Quarterly earnings growth of -0.9% against a dividend raise from $1.30 to $1.34 per share (3.1%) means the payout ratio edged up over the trailing year. The starting point remains conservative: trailing EPS of $8.62 against a $5.24 dividend per share, and 2025 free cash flow of $19.7B against $12.381 billion in dividends. In absolute dollars, no name here has more room.

Bull case: Newer drugs are carrying the load. First-quarter sales of DARZALEX rose 22.5% to $3.96 billion, TREMFYA jumped 68.3% to $1.61 billion and CARVYKTI climbed 62.1% to $597 million. Guidance calls for 2026 revenue of $100.3 billion to $101.3 billion and adjusted EPS of $11.45 to $11.65, which would pull the adjusted payout ratio back in the right direction.

Risk: STELARA biosimilars. Sales fell 59.7% in the first quarter, a roughly 920bps drag on Innovative Medicine, and litigation charges added $330 million. First-quarter operating cash flow of $2.514 billion came in below the $3.131 billion dividend, a reminder that quarterly cash is lumpy. If the planned Orthopaedics separation or patent cliffs slow earnings growth further, the payout ratio keeps drifting up.

Coverage Scorecard: Who Passes With the Most Room

Johnson & Johnson and Gaming and Leisure Properties pass with the widest cushions, one on AAA-rated free cash flow and the other on AFFO guidance paired with leverage below target. Western Midstream and AbbVie clear their correct metrics well, though growth spending and a big acquisition trim their near-term margin. Realty Income passes on AFFO with the smallest balance-sheet room as leverage climbs. With the 10-year Treasury at 5.18%, only GLPI, WES and O pay more than the risk-free rate, and coverage is what separates the yields worth owning from the ones that merely look generous (we listed the seven warning signs that a fat yield is about to be cut, available here: Dividend Traps).

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