These 3 Dividend Stocks Yield Over 6%. Can Their Payouts Last?
A 6% yield looks great until the check stops coming. These three high-payers clear the income bar, but their coverage ratios, leverage levels, and payout histories tell very different stories about which ones you can actually count on.
A 6% yield is where portfolio income stops being a rounding error and starts covering real bills. All three names below clear that bar at today’s prices, and the top payer yields about 8.2% on its forward distribution. Ultra-high yields only matter if they last (we laid out the seven warning signs that a big payout is about to be cut in a free dividend trap report), so each section starts with coverage, free cash flow, and leverage before it gets to the upside.
Western Midstream Partners: Record Cash Flow Behind a Rising Payout
Western Midstream Partners (NYSE:WES | WES Price Prediction) pays $0.93 per unit each quarter, or $3.72 annualized. At the current unit price of $45.13, that works out to a forward yield of roughly 8.2%, the highest of this group. Western Midstream is a master limited partnership, so it pays distributions and issues unitholders a K-1 tax form instead of a 1099.
Dividend safety: The full-year distributable cash flow (DCF) midpoint was raised to $2.15 billion. That covers the annual cost of the current distribution on units outstanding about 1.4x. The free cash flow midpoint rose to $1.2 billion, and second-quarter adjusted EBITDA hit a record $736.5 million, up 19% from the prior year. Finances are in good shape: pro forma net leverage of about 3.15 times, more than $1.8 billion of liquidity, and investment-grade ratings. It issued $700 million in new 10-year notes priced at a 123-basis-point spread to Treasuries, which management called the tightest 10-year spread in the partnership’s history.
The track record shows regular raises lately, with a few bumps further back. The quarterly payout rose from $0.875 to $0.91 and then to $0.93. Further back, the distribution was cut from $0.622 to $0.311 in 2020. That’s a long-term growth story with pauses.
Bull case: Management guides to produced water throughput rising about 85% this year, and the Brazos Delaware deal should add about $100 million of adjusted EBITDA in the second half. The CEO says the partnership only deploys capital that “sustains or grows the distribution over time.” The Pathfinder water pipeline and the North Loving II processing train start up in the first and second quarters of 2027, which gives the payout its next leg of support. Units trade at about 11 times forward earnings after rising 21.81% year to date.
Risk: Growth spending is outpacing cash for now. Second-quarter free cash flow after distributions was negative $111 million, and capex is heading toward the high end of the $850 million to $1.0 billion range.
United Parcel Service: Management Says the Blue-Chip Payout Is “Safe and Secure”
United Parcel Service (NYSE:UPS) pays $1.64 per share each quarter, or $6.56 a year. Shares rose 4.31% to $104.64 after today’s third-quarter report, and the forward yield is still about 6.3%.
Dividend safety: Adjusted EPS of $1.69 came in ahead of the $1.6244 consensus, and revenue rose 6.7% to $22.85 billion. UPS raised its full-year outlook to adjusted EPS of about $7.28 and free cash flow of about $6.1 billion, against planned dividend payments of about $5.4 billion. That puts the dividend at roughly 90% of adjusted earnings and free cash flow coverage at about 1.13x. Coverage is tight but positive. Year to date, $4.2 billion in free cash flow funded $4.1 billion in dividends. Cash on hand at quarter end was $6.8 billion with no commercial paper outstanding. The CFO put it: “So clearly, our dividend is safe and secure.”
On the track record, payments have run without pauses since 1999, and the record shows no cuts. The quarterly payout has stayed at $1.64 for seven straight payments, so for now income holders are collecting a regular check and no raise.
Bull case: Domestic operations are turning. U.S. revenue per piece rose 6.1%, and the segment’s adjusted operating margin expanded to 7.0% from 6.4%. Management guides to a fourth-quarter domestic margin near 10.5%. The $1.4 billion cash cost of the Driver Choice Program also drops away, and the CFO expects free cash flow to “continue to move up and improve our dividend coverage.” At about 13 times forward earnings, investors get a 6%-plus yield on a business whose margins are moving back up.
Risk: Volume is still shrinking as UPS cuts back on Amazon deliveries. U.S. domestic daily volume fell from 16,150 to 15,621 thousand pieces, and transformation costs of $1.4 billion to $1.6 billion this year continue through the fourth quarter of 2027.
Plains All American Pipeline: Annual Raises With a Cleaner Balance Sheet
Plains All American Pipeline (NASDAQ:PAA) pays $0.4175 per unit each quarter, or $1.67 annualized. At $26.35, that’s a forward yield of about 6.3%. The yield has fallen mainly because the price rose: units are up 55.29% year to date. Like Western Midstream, Plains is a partnership that issues K-1 tax forms.
Dividend safety: Management expects about $1.75 billion of free cash flow this year, roughly 1.5x the annual cost of common distributions before preferred payouts. Full-year adjusted EBITDA guidance is $2.88 billion, plus or minus $75 million. Finances improved sharply after the sale of the Canadian NGL business. About $2.9 billion of debt came off, and pro forma leverage fell to 3.3x, which the CEO described as the low end of the target range.
The track record shows a clear before-and-after. Plains increased its distribution every year from 2022 through 2026, from $0.18 a quarter to today’s $0.4175. It also cut the distribution in 2016, 2017, and 2020, when the payout fell from $0.36 to $0.18.
Bull case: First on the capital allocation list is returning cash through “targeted $0.15 per unit annual increases.” The Cactus III expansion adds 75,000 barrels a day, bringing capacity to 725,000 barrels a day. Plains also expects Permian output to grow 100,000 to 200,000 barrels a day this year, which sets up momentum for 2027. On top of that, efficiency targets of $50 million by year-end and another $50 million by the end of 2027 add to cash flow. Units trade at about 13 times forward earnings.
Risk: Contract rates on long-haul Permian pipelines are falling lower, which pressures the crude segment as legacy contracts roll off.
Three Paychecks Above 6% With Cash Flow to Back Them
Western Midstream offers the biggest yield, backed by about 1.4x DCF coverage. Plains matches a rising payout with leverage at the low end of its target range, and UPS gives income investors a 6%-plus yield from a blue chip whose margins are improving. All three are trading on cash flow coverage this year. Investors should track Western Midstream’s 2027 project starts, Plains’ next raise, and whether UPS can expand its thin dividend buffer as transformation spending winds down.
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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.
