Are Your Dividends Safe? 4 Companies Whose Debt Is Competing With the Payout
Bondholders get paid first, and shareholders get whatever the board leaves behind. Four high-yield stocks, from a hospital landlord to a telecom giant, are now squeezed between rising interest costs and the checks sent to investors. Which payout bends first?
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When a heavily indebted company has to refinance at higher rates, every extra dollar of interest comes out of the same cash pool that funds the dividend. Bondholders have a legal claim on that cash. Shareholders only get what the board decides to declare. You can see the pressure at one hospital landlord that just refinanced at 9.25% after its debt had carried a weighted average rate of 5.369%. A big yield often means the market is pricing in risk. It is rarely a bargain.
Here’s a quick check: a dividend is in trouble when the right earnings measure covers it, free cash flow falls short, and debt payments keep taking a bigger cut of the cash. Seven warning signs show a big yield is about to be cut, and we list them all in a free report.
Medical Properties Trust (MPT)
Medical Properties Trust (NYSE: MPT) owns hospitals and leases them to operators in nine countries. Its $0.36 annualized dividend works out to about 17.3% at the current price. Most of that yield comes from a falling stock. Shares are down 55.75% year to date, including 24.36% in the past week alone.
For a REIT, the right coverage measure is normalized FFO. EPS is the wrong yardstick. Third-quarter NFFO was $0.11 per share against a $0.09 quarterly dividend, which leaves a thin margin. Leverage is 8.7x adjusted net debt to EBITDAre, interest coverage was just 1.9x in the second quarter, and interest expense rose to $153.1 million from $132.4 million. The company’s revolver comes due December 30, 2026, with an optional six-month extension. Meanwhile, tenant Healthcare Systems of America missed September rent, costing NFFO 2 cents. This payout has already been cut from $0.29 to $0.08 before a small raise.
To keep the payout intact, about $680 million in sale proceeds would need to go toward debt, and management’s goal of cash rents above $1.0 billion in 2027 would have to come through.
AT&T (T)
AT&T (NYSE: T | T Price Prediction) pays $1.11 a year, a yield of about 5.0%. On adjusted earnings, the payout looks safe next to full-year EPS guidance of about $2.40.
Debt is the issue. Total debt stands at $159.6 billion after the EchoStar spectrum deal, and net debt to adjusted EBITDA is 3.13x. The company doesn’t expect to get back to its 2.5x target until 2029. Cash fell to $10.8 billion from $18.2 billion at the end of 2025. Third-quarter free cash flow of $4.95 billion was down 5.93% from a year earlier, and it now has to fund dividends, fiber spending, and about $10 billion in 2026 buybacks. The dividend has been frozen at $0.2775 a quarter since the 2022 cut from $0.52.
The counter-case: buybacks give management room to adjust before the dividend is affected, and the company targets $18 billion-plus in free cash flow this year.
Pfizer (PFE)
Pfizer (NYSE: PFE) yields 5.57% on a $1.72 annual payout. The quarterly rate has held at $0.43 since early 2025. Shares are up 30.8% this year, so the high yield isn’t coming from a falling price.
The weak spot is coverage. The dividend yield is higher than Pfizer’s 4.43% earnings yield, and third-quarter GAAP EPS was only $0.56. In 2025, free cash flow of about $9.08 billion fell short of the $9.77 billion paid in dividends. Total debt is $62.7 billion, and return on invested capital is negative at -1.29%. Paxlovid sales dropped 63%, and the company expects a $1.1 billion hit from generics. The company has said it needs to keep paying down debt, and it has ruled out buybacks in 2026. All free cash flow goes to debt and the dividend. We looked at that stress in Pfizer’s dividend freeze.
For balance, debt is down from $67.4 billion at the end of 2025, interest coverage is 6.52x, and adjusted EPS guidance was raised to $2.95 to $3.05.
Kraft Heinz (KHC)
Kraft Heinz (NASDAQ: KHC) pays $1.60 a year, a yield of about 6.2%. The stock is down 50.88% over 10 years.
The business behind the payout is shrinking. Third-quarter revenue fell 2.0%, adjusted operating income dropped 15.2%, and a $7.4 billion impairment in the second quarter pushed retained earnings down to -$8.7 billion. Interest expense is expected to run about $890 million this year, against debt of $18.0 billion and cash of $1.9 billion. The company has also put its planned split into two companies on hold. The dividend has sat at $0.40 a quarter since it was cut from $0.625.
The counter-case is real. Free cash flow of about $3.66 billion in 2025 covered $1.9 billion in dividends, and the company has repaid $3.98 billion of long-term debt so far this year. It’s also selling its coffee business.
What Income Investors Holding These Should Watch
Keep track of three things every quarter: the right coverage measure (NFFO for Medical Properties, free cash flow for the rest), leverage compared with management’s own targets, and refinancing terms as maturities come up. If cash gets tighter, a board will usually cut buybacks first so that a buyback pause can be an early warning. Dividend cuts tend to drag the share price down too, which is why our recent dividend trap roundup starts with yield. A big yield on its own shouldn’t sway your decision.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
