6 Dividend Stocks With Sky-High Yields and Serious Warning Signs
Some of the most tempting dividend yields on the market right now belong to stocks carrying serious internal warning signs, and the gap between what these companies pay out and what they actually earn tells a story most income investors…
At $10.80 a share, Blackstone Mortgage Trust (NYSE:BXMT) yields about 17.4%, and most of that yield comes from a stock that has fallen 38.11% year to date. A high yield is only worth something if the company can keep paying it. The six names below have tempting payouts and clear warning signs.
A quick test you can run yourself: a dividend is on solid ground when the right earnings measure covers it, cash flow left after capital spending pays for it, and the company doesn’t have to borrow to keep it going.
Blackstone Mortgage Trust (BXMT): A 17% Yield on Thin Coverage
Blackstone Mortgage pays $1.88 a year. Shares are down 33.93% over the past year, and that drop drove the yield so high.
Mortgage REITs are best judged on distributable earnings (DE). Second-quarter DE came in at $0.31 per share, against a $0.47 dividend. That is a payout of about 152%. If you strip out realized losses, DE was $0.48, covering the dividend by a penny. CECL loan-loss reserves climbed to $410M, book value fell to $19.31 from $20.20, and debt-to-equity rose to 3.9x. The company already cut its payout to $ 0.47 from $ 0.62 in 2024. On the July call, chief executive Tim Johnson warned that the portfolio overhaul could hit “book value and earnings, which, as always, we will take into account” when the board sets the dividend.
On the positive side, office exposure has dropped to 21% from 36%, and new money is going into residential, industrial and net lease.
Starwood Property Trust (STWD): A Payout Frozen Since 2014
Starwood Property Trust (NYSE:STWD) yields about 15.4% on its $1.92 annual dividend after a 24.87% slide over the past year.
Second-quarter distributable EPS was $0.40, while the quarterly dividend is $0.48. That works out to about a 120% payout. GAAP net income fell to $6.56M, down 94.95%, as credit provisions reached $30.2M. Management is also working through $900M of underperforming assets. The dividend has stayed at $0.48 every quarter since 2014. A payout held flat through this much stress is a red flag.
The payout’s best support comes from $6.7B invested through July at what management calls double-digit returns on equity, plus $2.1B of corporate debt that has been refinanced.
Alexandria Real Estate Equities (ARE): Already Cut, Still Under Pressure
Alexandria Real Estate Equities (NYSE:ARE) yields about 6.5%, even after cutting its quarterly dividend from $1.32 to $0.72. Shares are down 72.89% over five years.
For an equity REIT, FFO is the right metric. The $2.88 annual dividend comes to just 45% of the $6.40 FFO guidance center. Operating metrics weakened. Occupancy slipped to 86.9%, same-property NOI fell 10.6%, and leverage hit 7x. Impairments totaled $222.5 million. Leases carrying $100.5 million of rent expire in 2027, and management expects 12 to 24 months of downtime on that space. Fourth-quarter FFO is expected at the lower end of $1.40 to $1.50.
Edison International (EIX): Profits Cover the Dividend, Cash Flow Falls Short
Edison International (NYSE:EIX | EIX Price Prediction) yields about 6.0%. The stock trades at $58.07, well below its 52-week high of $80.30.
On an EPS basis, coverage holds up: second-quarter core EPS of $1.54 easily covers the $0.8775 quarterly dividend. Cash is where it gets tight. In 2025, operating cash flow of $5.8 billion fell short of $6.515 billion in capital spending. That left a $715 million gap before $1.378 billion in dividends, so borrowing is effectively funding the payout. Liability from the Eaton Fire is still open, and the company flags credit-rating downgrade risk if California doesn’t pass wildfire legislation in time. Only 3 analysts rate the stock a buy.
UGI Corporation (UGI): The Propane Unit Has Stopped Sending Cash Up
UGI Corporation (NYSE:UGI) yields 3.8%, and shares have gained 20.81% over the past year. That rally means the yield reflects the size of the payout itself.
The pressure is coming from inside the business. In the June quarter, operating cash flow of $242 million left only $16 million after capital spending, against $80 million in dividends. The company posted an adjusted loss of $0.20 per share, missing expectations. AmeriGas posted a $53M EBIT loss, carries 4.3x leverage, and has suspended distributions to the parent until FY27. The dividend has been stuck at $0.375 since mid-2023. In full fiscal year 2025, free cash flow of $390 million covered $322 million in dividends.
W. P. Carey (WPC): A Past Cut Worth Remembering
W. P. Carey (NYSE:WPC) yields about 5.9%, and its second-quarter AFFO of $1.34 covers the dividend at a payout of about 70%. That makes it the safest name here. Still, it cut the payout to $0.86 from $1.071 in 2023. Second-quarter impairments reached $79.4M, and same-store rent in Europe fell 2.6%.
Check Coverage Before You Chase Yield
When a dividend gets cut, the stock usually falls too, so that income investors can lose on both. Yield alone shouldn’t drive your decision to buy. Before counting on a payout, check it against the right earnings measure, free cash flow, and the balance sheet (we laid out the key signs a big yield is about to be cut in a free report you can grab here).
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.
