5 High-Yield Stocks Sacrificing Future Growth to Protect the Dividend

Capital spending at Verizon (NYSE:VZ | VZ Price Prediction) was cut from $26.74 billion in 2022 to $17.011 billion in 2025. Over the same years its dividend bill rose every year, reaching $11.481 billion. This is the slowest trap in income investing: a company keeps the payout safe by spending less on the business that funds it. A high yield depends on the quality of the assets behind it.

How to spot it: A dividend is unsustainable when earnings and free cash flow fall short of it, debt fills the gap, or capital spending gets squeezed to make room for it. Maintenance capex keeps existing plants and networks running; growth capex adds new capacity. Cutting growth spending delays future earnings. Cutting maintenance wears down the assets that produce today’s cash, which does far more damage.

LyondellBasell (LYB): Already Halved, Still Shrinking the Capital Budget

LyondellBasell (NYSE:LYB) has a forward yield of about 4.7% at $58.57. Shares are up 39.75% since the end of 2025, and Q2 2026 adjusted EPS of $4.30 beat the $3.43 consensus as Middle East supply disruptions drove polymer margins higher.

The quarterly dividend has already fallen from $1.37 to $0.69. In 2025, operating cash flow of $2.262 billion just topped capex of $1.9 billion, leaving little room for $1.764 billion in dividends. Capex is now planned at $1.2 billion for 2026. The Flex-2 low-cost propylene project was deferred to save capital, and recycling investments were scaled back. The 2026 budget prioritizes safe operations, so cuts have landed on growth projects. Drove Flex-2 back still means giving up competitive capacity.

The supply squeeze has to last for this to work. Management sees disruption likely extending into 2027, but it guided Q3 operating rates down to about 85% in North America and 70% in Europe.

Dow (DOW): A Halved Payout Riding Polyethylene Prices

Dow (NYSE:DOW) yields about 5.1% at $27.60, a price 38.16% below where it stood five years earlier. In Q2 2026, free cash flow of $692 million covered $253 million in dividends.

Dow cut its dividend from $0.70 to $0.35 in 2025. That year, capex fell 19.12% to $2.479 billion, free cash flow came in at negative $1.417 billion, and adjusted EPS was -$0.94. The Q2 rebound rode a 30% jump in polyethylene prices, while total liabilities rose 9.45%. Part of the capex decline reflects a finished build cycle, since the Poly-7 and Seadrift alkoxylation units came online. The rest came alongside idling higher-cost European assets, leaving a smaller base to earn through the next upturn.

For this to work, pricing has to hold, and Transform to Outperform has to deliver more than $1.3 billion in self-help benefits.

Hormel Foods (HRL): A Dividend King Shrinking to Fit Its Payout

Hormel Foods (NYSE:HRL) yields about 5.8% at $20.03. Much of that yield comes from a 41.92% five-year drop in the share price. The 60-year streak of increases continues, but the raises are shrinking: the latest took the quarterly payout from $0.29 to $0.2925.

Whether the dividend is covered depends on which earnings you trust. The $1.17 annual dividend fits under adjusted EPS guidance of $1.45 to $1.51. It topped part of the GAAP guidance range of $1.06 to $1.12. Hormel is selling assets (Ceratti, whole-bird turkey, Justin’s), it cut net sales guidance to $12.1 to $12.2 billion, and Retail sales fell 4.3%. Fiscal 2026 capex is guided to $260 million to $290 million, down from $310.9 million. In fairness, the higher fiscal 2025 figure paid for capacity expansions, so part of the step-down reflects projects that are finished.

Adjusted earnings need to turn into GAAP earnings for this to work. Operating cash flow, up 53.54% to $240.6 million, gives Hormel a path.

International Paper (IP): Deferred Maintenance Behind a Frozen Dividend

International Paper (NYSE:IP) yields about 5.7% at $32.52 after a 26.18% one-year decline. The quarterly payout has stayed at $0.4625 since it was reduced from $0.5125 in 2021.

IP’s total capex rose 56.67% to $517 million in Q1 2026. Q2 guidance absorbed maintenance outages pushed back from Q1. CEO Andy Silvernail said in the Q1 release, “We still have work to do to improve consistency and reliability.” Free cash flow was negative $159 million for 2025 and only $94 million in Q1, when adjusted EPS of $0.15 fell short of one quarterly dividend. The company cut adjusted EBITDA guidance to $3.20 to $3.50 billion.

For this to work, mill reliability has to improve, and the EMEA separation has to go smoothly. That segment lost $51 million in Q1.

Verizon (VZ): Lower Capex, Higher Leverage, Rising Payout

Verizon yields about 6.1% at $46.09, and its quarterly dividend rose to $0.7075. Much of the capex drop tracks the wind-down of its C-band buildout, a stated investment cycle. Free cash flow guidance of $21.94 to $22.14 billion is well above the dividend bill.

The warning signs are in the finances. Unsecured borrowings total $136.5 billion, leverage rose to 2.5x from 2.2x, and cash fell 49%. Capex is guided lower to $16.0 to $16.5 billion, while fixed wireless net adds fell 30.6%. If spending keeps falling below the post-C-band baseline, that signals maintenance risk for a network business.

For this to work, 3.5% service revenue growth has to keep paying for the dividend while leverage comes down.

A dividend cut usually takes the stock down with it, and underinvestment gives few early signals. The signs tend to show up first in capex guidance, deferred projects, and asset sales. As our roundup of names where coverage is cracking also shows, yield by itself is not a reason to buy.

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