5 Dividend Stocks Where Sky-High Yields Could Be Hiding Serious Problems
A 30% yield sounds like a windfall until you see what is hiding behind it. These five dividend stocks all flash warning signs that income investors tend to overlook until after the cut arrives.
At a unit price of $6.67, Icahn Enterprises (NASDAQ:IEP | IEP Price Prediction) yields about 30%. That figure is high mostly because the units have fallen 66.27% over five years. A big yield is often a sign of trouble, and it is only worth something if the company can keep the payout. As Jim Cramer put it on Mad Money, “often super high yields are signal that the payout simply can’t be maintained.”
The quick test: a dividend holds up when the right earnings measure covers it, free cash flow pays for it after capital spending, and new debt isn’t filling the gap. Those are the same red flags we cataloged in a free guide to spotting dividend traps before the cut.
Icahn Enterprises (IEP): A 30% Yield With Negative Operating Cash Flow
The annualized distribution is $2.00 per unit, which makes this the most extreme ultra-high-yield name on the list. Retirees should know its history. The quarterly payout was $2 per unit in 2022 and 2023, then $1 in 2024, and it has been $0.50 since 2025.
Icahn is a partnership, so EPS is the wrong yardstick. What matters is the cash it generates against what it pays out. Operating cash flow in 2025 was negative $313 million, and the partnership still paid $288 million in distributions. In the second quarter, adjusted EBITDA attributable to IEP fell to a $134 million loss, and indicative net asset value dropped $765 million to about $2.60 billion. Unitholders get paid in new units by default, which keeps the payout from draining cash but dilutes everyone who owns the units.
One item to watch: the $700 million Pep Boys sale. Management says part of the proceeds will go toward the 2027 notes.
United Parcel Service (UPS): Dividends Running Ahead of Free Cash Flow
United Parcel Service (NYSE:UPS) pays $6.56 a year, an ultra-high yield of about 6.9%. The dividend has grown from $0.17 in 2000 and has never been reduced. Price explains much of the yield: the stock is down 37.06% over five years.
In 2025, operating cash flow of $8.45 billion minus capex of $3.685 billion left about $4.77 billion in free cash flow. Dividends cost $5.398 billion. The dividend is about 123% of trailing GAAP EPS of $5.34. For 2026, management guides to roughly $5.5 billion in free cash flow against about $5.4 billion in dividends, while also making a $1.3 billion pension contribution. Cash fell to $4.65 billion from $5.89 billion over six months.
Here’s what supports the dividend: adjusted EPS guidance of $7.22 means a payout ratio near 91%. Management also expects about $3 billion in savings from its restructuring this year. We covered this tension in depth in our UPS dividend analysis.
Flowers Foods (FLO): Already Cut, Still Stretched
Flowers Foods (NYSE:FLO) cut its quarterly dividend to $0.125 from $0.2475 this year. It still offers an ultra-high yield of about 8.4% because the shares fell 48% over the past year.
The new $0.50 annual rate is about 185% of trailing EPS of $0.27. In the second quarter, volume fell 5.8%, net sales slipped 4.0%, and adjusted EPS of $0.21 missed expectations. Management lowered full-year adjusted EPS guidance to $0.75 to $0.85.
If Flowers hits that guidance, the reduced dividend is covered on an adjusted basis. The key question is whether the Nature’s Own relaunch can stop the volume losses.
Conagra Brands (CAG): Negative Free Cash Flow After the Cut
The quarterly payout at Conagra Brands (NYSE:CAG) was halved to $0.175 from $0.35. It now yields about 5.1%. The stock is down 47.12% over five years.
Free cash flow in fiscal Q1 2027 was negative $127.9 million, and cash fell 46.77% to $371.6 million. Net leverage is 3.83x and is guided to about 4.0x at year-end. Organic sales are expected to fall 1% to 3%.
Adjusted EPS guidance of $1.40 to $1.50 covers the $0.70 annual rate. The test is whether the company reaches its target of converting more than 90% of earnings into free cash flow.
LyondellBasell (LYB): A Wartime Earnings Spike Supporting the Payout
LyondellBasell (NYSE:LYB) cut its quarterly dividend to $0.69 from $1.37. The stock yields about 4.6% after a 43.18% rally this year.
In 2025, operating cash flow of $2.262 billion minus capex of $1.878 billion left about $384 million to cover $1.764 billion in dividends. Trailing EPS is negative $0.83. Second-quarter adjusted EPS of $4.30 came largely from the supply disruption caused by the Middle East conflict. Management itself said “Q2 was exceptional in terms of EBITDA, but it was not perfect.”
The company ranks keeping its investment-grade rating ahead of dividends. Watch whether its $500 million cash improvement plan can support the payout once the supply disruption passes.
How to Read a Stretched Yield
When a dividend is cut, the share price usually falls too, so the income loss comes with a capital loss. Treat any yield above 6% as a question that needs answering. Check free cash flow, debt, and the right coverage metric for the business before relying on the payout. The yield alone isn’t a reason to own a stock. For more names under similar pressure, see these huge yields with even bigger warning signs.
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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.
