These Dividend Stocks Look Safe Until You See Their Capital Spending Plans

A dividend set when a company’s capital needs were smaller now has to compete for the same cash against a bigger spending bill. That is how a safe-looking payout becomes stretched. Take AT&T (NYSE:T | T Price Prediction). Its stock dropped 16.82% over the trailing one-month window, which pushed its yield to about 5.32%. A high yield is only as good as the company’s ability to keep paying it once the new capex bill arrives.

Quick test: a dividend is unsustainable when the right earnings base doesn’t cover it, when free cash flow after capital spending falls short, or when borrowing has to fill the gap. (We cataloged seven warning signs a big yield is about to be cut in a free report you can grab here.)

Ford Motor Company: Cash Flow Halved as the EV Bill Keeps Growing

Ford Motor Company (NYSE:F) pays $0.15 a quarter, or $0.60 a year. That works out to roughly 5.18% at $11.58. Part of that yield comes from a falling share price: the stock is down 12.48% over 12 months.

Ford posted a second-quarter GAAP net loss of $1.327 billion, and free cash flow fell 50.48% to $2.094 billion. Trailing earnings are negative (P/E of -6), so free cash flow is the right coverage test. Net debt to EBITDA sits at 16.91 and interest coverage at 2.02. On top of that, management has flagged new investment in its UEV platform and Ford Energy, plus “preparing for an all-new U.S. truck lineup.” That spending is unregulated and uncontracted, so its returns are uncertain. Ford’s records also show no dividend between 2020-01-29 and 2021-11-18.

For the payout to hold, truck pricing and Ford Pro have to keep funding the turnaround. Chief executive Jim Farley says “every dollar must earn durable returns.”

AT&T: A Frozen Payout and Spectrum Debt

AT&T pays $0.2775 per share quarterly, or $1.11 per year. The yield has risen mostly because the stock has slid 13.03% over 12 months.

The dividend has stayed flat since it was cut from $0.52, and guidance keeps it flat through 2028. Capital needs have stepped up: second-quarter capital investment hit $6.1 billion versus $5.1 billion a year earlier as fiber construction sped up. A spectrum deal lifted total debt to $159.6 billion, and net debt to adjusted EBITDA to 3.13x, above the 2.5x target not expected until 2029. Third-quarter free cash flow slipped 5.93%, and buybacks of $24B+ planned through 2028 compete for the same cash.

The bull case is free cash flow guidance of $18B+ for 2026, which covers the dividend comfortably. To hold, fiber has to grow faster than the legacy business shrinks.

Verizon Communications: Rising Leverage Behind a 6.57% Yield

Verizon Communications (NYSE:VZ) pays $2.83 a year, about 6.57% at $43.10. Verizon earned that yield by raising its payout from $0.665 to $0.7075 per quarter, while shares rose 18.59% over 12 months.

Verizon paid about $3.2 billion for AWS-3 spectrum. Net unsecured debt to adjusted EBITDA rose to 2.5x from 2.2x at the end of 2025, and cash fell 49%. Second-quarter GAAP net income dropped 21.07%, despite wireless momentum.

Free cash flow rose 27.12% to $6.426 billion, and the company contracted a dark-fiber deal worth “over $1 billion” for return-generating spending. Leverage has to resume falling.

Dominion Energy: Offshore Wind Overruns Meet a Payout Already Cut Once

Dominion Energy (NYSE:D) yields about 4.10% on $2.67 a year. The payout has been unchanged since it was reset from $0.94 to $0.63 in 2020, then raised to $0.6675.

For a utility, operating EPS is the right coverage base, and guidance of $3.45 to $3.69 clears the dividend. GAAP EPS, though, fell to $0.37 from $0.84 after the company wrote down a renewable natural gas facility by $820M. The offshore wind project’s cost estimate rose to $11.65 billion from $11.4 billion, and the company filed air permits for two gas plants totaling nearly 5 gigawatts. This is regulated spending that earns a return. The pending $66.8B merger adds uncertainty.

To hold, FFO to debt has to stay above 15%, and regulators have to keep approving cost recovery.

CenterPoint Energy: A $70.7 Billion Plan Funded Partly by Dilution

CenterPoint Energy yields only about 2.33%. It makes the list because its spending step-change is the clearest of the group: the 10-year capex plan rose $4B to $70.7B, with roughly $5.6B of new common equity planned through 2035. Higher financing costs took $0.04 a share out of the third quarter.

Coverage is solid: 2026 EPS guidance is $1.90 to $1.92 against a $0.96 annualized payout. The risk is that dilution and a tight FFO-to-debt cushion squeeze the 6% dividend-growth target.

Kinder Morgan: Contracted Growth Keeps It the Safest Name Here

Kinder Morgan (NYSE:KMI) yields about 3.51% after shares climbed 27.02% since the end of 2025. For midstream companies, cash flow after capital spending is the right test. Second-quarter capex jumped 51.78%, and in the first half Kinder generated $3.45 billion in operating cash flow, with $1.315 billion in dividends and $1.92 billion in capital spending. Net debt rose $311 million over that stretch.

Leverage of 3.6x and a $9.6B backlog of contracted projects give Kinder real support. The 2% dividend raise reflects discipline, and investors who lived through the 2016 cut to $0.125 know why that matters.

Check the Capex Bill Before Trusting the Yield

When a company cuts its dividend, the share price usually falls with it, so income investors lose twice. Spending that earns a regulated or contracted return can justify a tighter payout. Defensive or speculative spending makes a tighter payout harder to defend. Before relying on any yield, compare the dividend with the new capital bill.

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