5 Massive Dividend Yields Being Funded With Someone Else’s Money
A 30% yield sounds like a dream for retirees, but the cash funding that payout may not be coming from the business itself. Five popular dividend stocks are hiding a three-line warning in their cash flow statements that most investors…
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One stock on this list has a forward yield of about 30%. For a retiree, a number like that looks like a solid paycheck. A high yield only means something if the payout is sustainable, and each of the five names below has spent years sending out more cash than the business brought in.
How to run the check yourself: Open the cash flow statement and find three lines: cash from operations, dividends paid, and net cash from financing. When dividends beat operating cash year after year, management has made that a policy. A payout that needs financing to keep going is being paid for by lenders and new investors.
Global Net Lease (GNL): Four Straight Years Above Operating Cash
Global Net Lease (NYSE:GNL) pays $0.76 a year. At $8.32 a share, that works out to a yield of about 9.1%.
Dividends paid topped operating cash flow in four straight years: $187.1 million vs. $181.8 million in 2022, $233.2 million vs. $143.7 million in 2023, $316.2 million vs. $299.5 million in 2024 and $235.8 million vs. $222.8 million in 2025. Net cash from financing came in at $469.0 million in 2023. AFFO guidance of $0.82 to $0.85 per share sits only slightly above the payout. AFFO was $0.99 in 2025. The quarterly dividend has been cut from $0.5325 to $0.19.
For the payout to hold, the Modiv Industrial deal needs to deliver its expected 4% AFFO growth. Operating cash of $67.1 million covered the $51.5 million dividend in the latest quarter.
Prospect Capital (PSEC): A 22% Yield That Has Already Been Cut
Prospect Capital (NASDAQ:PSEC) pays $0.035 a month, or $0.42 a year. At $1.91, that is a yield of about 22.0%.
The right test for a BDC is net investment income, and the company has disclosed that distributions exceed NII. Fourth-quarter NII fell to $0.15 per share from $0.17. Dividends topped operating cash flow in fiscal 2021 ($195.6 million vs. $31.0 million), 2022 ($270.3 million vs. negative $795.3 million), 2023 ($299.1 million vs. negative $220.8 million) and 2024 ($360.3 million vs. $280.0 million). Financing inflows reached $767.1 million and $281.1 million in 2022 and 2023. NAV per share dropped from $6.56 to $5.71, and the monthly payout was cut from $0.045.
Operating cash covered dividends in fiscal 2025 and 2026, but that happened while the portfolio fell from 114 to 91 companies. For the payout to hold, credit has to stabilize and the $264.5 million bond maturity has to be managed smoothly. Shares are down 52.88% over five years.
Icahn Enterprises (IEP): Seven Years of Losses
Icahn Enterprises (NASDAQ:IEP | IEP Price Prediction) declares $2 a year, a yield of about 30.0% at $6.67. If unitholders do not choose cash, they receive additional units by default, which helps Icahn hold on to cash.
Icahn posted net losses every year from 2019 through 2025, including $293 million in 2025. Operating cash flow was negative $313 million while distributions paid totaled $288 million. It lost $0.52 per unit against a $0.11 consensus profit during the second quarter, and estimated NAV dropped by $765 million. Distributions were cut from $2 to $1 to $0.50 a quarter.
Operating cash did cover distributions in 2023 and 2024. To keep the payout going, Icahn needs to close the $700 million Pep Boys sale and use part of the proceeds on its 2027 notes. Units are down 65.56% over five years.
Brookfield Renewable Partners (BEP): Distribution Growth Funded by Financing
Brookfield Renewable Partners (NYSE:BEP) pays $1.568 a year, a yield of about 5.6%. It has raised the payout every year since 2023.
FFO is the right metric here, and coverage looks adequate: first-quarter FFO of $0.55 per unit against a $0.39 distribution. The cash flow statement tells a different story. Capex has been larger than operating cash flow in every year from 2021 through 2025. In 2025, operating cash flow was $1.52 billion, capex was $6.70 billion, distributions were $1.16 billion and financing inflows were $7.40 billion. In 2021, distributions of $854 million were larger than operating cash of $734 million. Corporate debt rose to $4.8 billion from $3.7 billion.
For the payout to keep growing, Brookfield’s new projects have to start producing cash. It does start from a strong position: 92% of output is contracted for the rest of 2026.
Clearway Energy (CWEN): Little Room Left After a Guidance Cut
Clearway Energy (NYSE:CWEN) pays $1.90 a year, a yield of about 6.4%, and has raised the dividend every quarter.
The right metric for a YieldCo is cash available for distribution (CAFD). Management cut its 2026 CAFD guidance to $430 million to $470 million from $470 million to $510 million. In 2025, operating cash flow after capex was $369 million, against $358 million in dividends. Clearway reported GAAP net losses in five of seven years from 2019 through 2025, with total debt of about $9.1 billion.
Clearway’s bull case is the strongest of the five. Second-quarter EPS of $1.00 beat the $0.66 estimate. Dividend growth depends on reaching $2.90 to $3.10 of CAFD per share by 2030.
Yield Alone Does Not Make an Income Stock
When a dividend is cut, shares usually fall too, so income investors can lose both their income and their principal. Run the three-line check before you buy, and look for a pattern across several years rather than one bad quarter (we rounded up seven more warning signs that a big yield is about to be cut in a free dividend trap guide). Yield alone should not drive your decision to buy.
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
