These High-Yield Dividend Stocks Could Be Traps for Retirement Investors

Mortgage REIT AGNC Investment (NASDAQ:AGNC) now yields about 16.2%, even though its tangible book value per share fell 16.9% in a single quarter. A high yield only matters when the payout is sustainable. Jim Cramer summed up the risk on Mad Money: “Often, super high yields are a signal that the payout simply can’t be maintained.”

Quick test for sustainability: check the payout ratio (the share of profit paid out as dividends), check free cash flow (the cash left over after running and maintaining the business), and check whether debt is quietly covering the gap.

AGNC Investment (AGNC): A 16% Yield Running on a Shrinking Book

AGNC pays $0.12 every month, or $1.44 a year, and has held that rate since 2020. For monthly income seekers, that yield is hard to ignore.

For a mortgage REIT, spread income and book value matter more than EPS payout ratios. In the third quarter, net spread and dollar roll income came in at $0.37 per share against $0.36 in dividends declared, so coverage was nearly gone. The comprehensive loss reached $1.28 per share, tangible book value fell to $7.13, and the net interest spread narrowed to 1.86% from 2.00%. Leverage rose to 7.9 times tangible equity. AGNC also sold $992 million of new stock. Shares are down 9% over the past month, and AGNC has cut its payout from $0.22 to the current level over several steps. Our deep dive on AGNC’s monthly dividend covers the mechanics in more detail.

Management says the dividend remains “well-aligned with the economics of our business,” and its hedge ratio is 97%. For the payout to hold, rate volatility has to calm down.

Newell Brands (NWL): A Cut Dividend Still Looks Exposed

Newell Brands (NASDAQ:NWL | NWL Price Prediction) pays $0.07 a quarter, for a yield of about 5.2%. That payout was already cut from $0.23 in 2023. A big reason the yield is high: the stock has fallen 69.72% over five years.

Trailing diluted EPS is -$0.53, which means the dividend is paid out of a GAAP loss. Gross debt is about $5.0 billion, much larger than the market cap of about $2.32 billion, and interest expense hit $87 million in the second quarter alone. First-quarter operating cash flow was -$233 million. The strong second-quarter EPS of $0.42 included about $0.21 per share from tariff refunds, which management says won’t recur in 2027.

Management guides to about $400 million in operating cash flow and $200 million in capex. That leaves around $200 million against a dividend that costs about $119 million a year. That math assumes the company takes in substantially all of its tariff recovery.

Carter’s (CRI): A Yield Inflated by Years of Price Damage

Carter’s (NYSE:CRI) pays $0.25 a quarter, a yield of about 3.1%. The headline yield is modest, but the stock is down 61.92% over five years. The dividend was also cut from $0.80 in 2025.

Management guides fiscal 2026 adjusted EPS down from $3.47, with a high-single-digit to low-double-digit decline, and higher refinancing costs alone take out about $0.30 per share. Second-quarter adjusted EPS was $0.26, just above the $0.25 quarterly payout. Fiscal 2025 free cash flow fell 71.71%, and the company has gone through two CEO departures in recent quarters.

Cash exceeded $650 million, and the CFO says “to maintain more liquidity in this environment is absolutely the prudent thing to do.”

Altria (MO): Rising Payouts on a Shrinking Base

Altria (NYSE:MO) just raised its quarterly dividend to $1.11 from $1.06, for a yield of about 6.0%. The shares are up 35.06% year to date, so dividend growth drives this yield.

The forward payout uses about 93% of trailing diluted EPS of $4.75, and about 79% of the low end of adjusted guidance. Shareholders’ equity is negative at -$2.618 billion, which means debt-funded payouts over the years have left liabilities larger than assets. Domestic cigarette shipments fell 3.2%, oral tobacco volume dropped 8.5%, and second-quarter net income declined 3.36%.

2026 adjusted EPS guidance of $5.61 to $5.72 still covers the dividend, and pricing power has offset volume losses so far.

Omega Healthcare Investors (OHI): Covered for Now, with Tenant Risk

Omega Healthcare Investors (NYSE:OHI) raised its dividend to $0.68, the first increase since the payout settled at $0.67 in 2020. That puts the yield near 5.8%.

The right measure here is adjusted funds from operations (AFFO). At the center of 2026 AFFO guidance of $3.22 to $3.26, the dividend takes about 84%, so it is covered. The concern is tenant concentration. Genesis Healthcare is still in Chapter 11 with $148.5 million in loans outstanding; the Ciena Laurels portfolio covers its rent at only 0.87x, and cash fell 94.68% to $39 million. Medicaid reimbursement risk and the CEO’s planned retirement add uncertainty.

Portfolio rent coverage improved to 1.65x from 1.55x. If one large tenant fails, the buffer gets smaller.

Protect the Income Before Chasing It

When a dividend gets cut, the stock usually falls too, so investors lose income and capital together. We counted seven warning signs that a big yield is about to be cut in a free dividend trap guide, and most of the names above check more than one box. For more names under pressure, see our earlier list of dividend stocks with huge yields and bigger warning signs. On each of these five, keep an eye on coverage, cash flow, and debt every quarter. A high yield alone is never a reason to buy.

Contact [email protected] for any questions or corrections.