4 Dividend Stocks Yielding 2% to 6.66%. Here’s What You Give Up for More Income
Moving up the dividend yield ladder from a chipmaker near 2% to a package carrier above 6% sounds like a straightforward trade, but each step strips away something you probably assumed you were keeping.
Each step up the yield ladder pays you more today, and each one costs you something: growth, dividend increases, or the margin between what a company makes and what it pays out. The four stocks below run from lowest yield to highest. They start near 2% with a chipmaker and end with a package carrier whose 6.66% yield tops the ultra-high-yield bar. At every step, we ask the same two questions: what does the extra income cost you, and can the company keep paying it?
Texas Instruments: Small Yield, Huge Cash Engine
Texas Instruments (NASDAQ:TXN | TXN Price Prediction) yields 2.18% at $278.11 a share. That is the lowest income check on the ladder. In return, you get the most growth: the stock is up 63.01% year to date and 422.28% over ten years. You also pay up for it, at 42 times trailing earnings and 28 times forward earnings.
Dividend safety: The board just raised the quarterly dividend to $1.52 from $1.42. Over the trailing twelve months, Texas Instruments paid $5.62 per share in dividends and made $6.57 per share. Trailing free cash flow came to $6.5 billion, and the company returned $5.8 billion to owners over the same period. Management says it is committed to returning all free cash flow to shareholders. The company holds $7 billion in cash and short-term investments against $14 billion of debt at a 4% weighted average coupon. Quarterly payments have run unbroken since 1999, and the payout has grown from $0.77 in 2019 to today’s level.
Bull case: Second-quarter revenue rose 23% year over year to $5.5 billion, with operating profit at 42% of revenue. Capital spending is falling: it was $514M in the quarter versus $1,305M a year earlier. That frees up more cash for dividends. The CEO set the priority: “Ultimately, our objective and best metric to measure progress and generate value for owners is the long-term growth of free cash flow per share.”
The catch: Trailing free cash flow included $1.6 billion of CHIPS Act incentives. Those came from government policy, not chip sales, and this is a cyclical industry where a downturn can quickly cut into the cash that funds the payout.
Alliant Energy: Utility Raises Fueled by Data Centers
Alliant Energy (NASDAQ:LNT) yields 3.13% at $68.29. At this step, you give up price growth. The stock rose 3.42% over the past year, while Texas Instruments gained 61.57%. You get calm in exchange: Alliant’s beta is just 0.515.
Dividend safety: The quarterly dividend rose to $0.535 from $0.5075. Trailing dividends of $2.085 per share sit well below trailing EPS of $3.16. Management’s 2026 ongoing EPS guidance of $3.36 to $3.46 is tracking toward the upper half. The dividend history is steady: the quarterly payout has stepped up every year from $0.315 in 2017 to the current rate. Like most regulated utilities, Alliant pays for heavy capital spending with debt and new stock. That makes earnings coverage the right way to judge this payout, rather than free cash flow.
Bull case: Alliant has about 3.4 GW of contracted data center load across five agreements and projects 60% load growth by 2031. That growth expands the rate base its regulators let it earn on. At 17 times forward earnings, income investors get regulated cash flows plus a growth driver most utilities lack.
The catch: Rising interest expense and depreciation are weighing on earnings, and data center customers could delay or cancel projects that the spending plan depends on.
U.S. Bancorp: Most Balanced Rung on the Ladder
U.S. Bancorp (NYSE:USB) yields 3.67% at $58.87. What you give up here is proof that the dividend lasts through a crisis. The bank cut its quarterly payout to $0.05 in 2009 from $0.425 in 2008, and has rebuilt it ever since.
Dividend safety: The latest raise lifted the quarterly dividend to $0.54 from $0.52. Trailing dividends of $2.10 per share compare with trailing EPS of $5.14, which is a deep earnings margin. Third-quarter GAAP diluted EPS was $1.34, or $1.41 excluding the provision for acquired loans. EPS has beaten estimates in each of the last six reported quarters. Return on tangible common equity was 18.5%, the net charge-off ratio improved to 0.51%, and shareholders’ equity stands at $66.4B. The dividend has climbed from $0.125 in 2011, with increases in most years since.
Bull case: Management expects revenue to grow 8% to 9% this year, and the BTIG acquisition adds about $200M in quarterly revenue. The stock trades at 11 times trailing earnings and 10 times forward earnings. It is the cheapest name on the ladder by earnings multiple, and it still rose 33.77% over the past year.
The catch: Commercial real estate loans, especially office loans, remain a credit risk that could force higher loss provisions if property values fall.
United Parcel Service: Ultra-High Yield With a Thin Cushion
United Parcel Service (NYSE:UPS) yields 6.66% at $98.65, which makes it the only ultra-high-yield name here. To get that yield, you give up dividend growth and most of your safety margin. The stock is down 36.03% over five years, and that drop is a big reason the yield is so high.
Dividend safety: The quarterly dividend of $1.64 has not changed since the ex-dividend date of 2025-02-18. That last raise was just one cent, up from $1.63. Trailing dividends of $6.56 per share are higher than trailing GAAP EPS of $5.38, though raised guidance calls for adjusted EPS of about $7.22. Cash is tighter. Free cash flow so far this year was $1.6 billion, while dividends paid came to $2.7 billion. For the full year, UPS expects free cash flow of about $5.5 billion against roughly $5.4 billion in dividends. The CFO confirmed the plan: “We are still planning to pay out around $5.4 billion in dividends in 2026, subject to Board approval.” The balance sheet helps, with $4.7 billion in cash and no outstanding commercial paper.
Bull case: The Amazon glide-down is finished. Second-quarter revenue rose 7.6%, and operating profit grew 12%. Automated buildings now handle 68.5% of U.S. volume, and the company expects about $3 billion in transformation benefits this year. At 12 times forward earnings, any margin gain goes straight toward making the dividend safer.
The catch: Free cash flow covers the payout after $3 billion of capital spending and a $1.3 billion pension contribution. A miss on fuel, tariffs, or volume would leave the board choosing between taking on debt and holding back the dividend. That is the setup that shows up again and again in the warning signs we cataloged in a free guide to dividend traps.
Which Rung Pays You Best for the Risk
The pattern is consistent. As yields rise, ten-year price gains shrink from Texas Instruments’ 422.28% to UPS’s 35.85%, and the coverage margin thins. U.S. Bancorp offers the best balance of income and safety: a 3.67% yield, earnings well above the dividend, a fresh raise, and the lowest valuation in the group. UPS pays the most, but only a perfect year keeps that payout fully funded by cash flow.
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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.
