A Record-High Dividend Yield Can Be a Warning Sign. Just Ask Pfizer
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Several dividend stocks have recently hit record yields in their own history, and a high yield matters only if the payout is sustainable. Pfizer (NYSE:PFE) shows what that can mean. In 2009, its shares closed one month at $12.31 while paying four quarterly dividends of $0.32, a 10.40% yield, the highest in its record back to 1999. Later payments that year were mostly $0.16.
A dividend is sustainable when earnings and free cash flow cover it with room to spare and the company isn’t borrowing to fund it.
Why Each Stock’s Own Yield History Is the Tougher Test
Comparing a yield to its sector lets a broken company hide inside a broken sector. The stock’s own history asks a harder question. Has the market ever required this much income to hold this company? A record yield can come from a falling share price or from a rising payout. Only the first is a warning sign. For all six stocks below, we compared dividend history with monthly closing prices.
Clorox (CLX)
Using its $5 forward dividend and its lowest monthly close of 2026, $81.01, Clorox (NYSE:CLX | CLX Price Prediction) yielded 6.17%. In 2022, the yield was 3.29%. Over the same stretch, the quarterly payout rose only to $1.25 from $1.16, so the falling price produced the record. A 28.1% one-month rally has since pulled the yield back to 4.69%.
The payout takes 89.57% of trailing EPS of $5.56. Cash is tighter: fiscal first-quarter operating cash flow was $143 million, while one quarter’s dividend costs about $151 million. Shareholders’ equity is negative at -$39 million, and interest expense more than doubled to $52 million after the debt-funded GOJO deal. The payout depends on GOJO cost savings exceeding input-cost inflation.
Hormel Foods (HRL)
At its lowest 2026 monthly close of $19.94, Hormel Foods (NYSE:HRL) yielded 5.87% on its $1.17 annual dividend. In the 2008 crash, the yield peaked at 2.79%. The quarterly payout moved only from $0.29 to $0.2925 while the shares fell 39.8% over five years. The yield is now 5.36%.
The dividend equals 188.71% of trailing GAAP EPS of $0.62. Full-year GAAP EPS guidance of $1.06 to $1.12 is also below the payout. Third-quarter free cash flow of $172.4 million barely covered $161 million in dividends. Revenue fell 2.36%. The incoming CEO said the consumer environment is “not improving.” On the other side, Hormel holds $840 million in cash, and adjusted EPS guidance of $1.45 to $1.51 covers the dividend if the one-time charges ease.
FMC Corp. (FMC)
For FMC (NYSE:FMC), the record came just before the cut. A late-2025 close of $15.17 against a $0.58 quarterly payout implied a yield of 15.29%. The payout was then reset to $0.08. Even that small amount yields 6.23% because the stock is down 94.3% over five years.
Nothing covers the smaller payout either. Guidance calls for an adjusted per-share loss of -$3.66 to -$3.50 and free cash flow of -$350 million to -$150 million. The company has $4.18 billion in total debt, and interest coverage of 2.3x stands just above a 2.0x covenant floor. The payout lasts only if the India sale is completed and 2027 adjusted EBITDA comes in at the guided $650 million to $730 million.
LyondellBasell (LYB)
LyondellBasell (NYSE:LYB) closed 2025 at $43.30 while paying $1.37 a quarter, a yield of 12.66%. The payout was then halved to $0.69. After a 55.81% one-year rally, the forward yield is 4.35%.
Trailing EPS of $4.13 covers the reduced dividend. The cycle is the risk. O&P Americas EBITDA fell to $641 million from $1.267 billion, and European operating rates are guided to 60%. Third-quarter free cash flow of $1.397 billion got help from a working-capital release that won’t repeat every quarter.
Pfizer (PFE)
Pfizer’s yield has pulled back from its record. Its 5.94% yield is below the 7.39% it made at its lowest 2025 close, and the shares rose 19.31% over one year. Coverage is still the weak spot. The dividend equals 245.71% of trailing GAAP EPS. The free-cash-flow yield of 5.52% trails the dividend yield, and net debt runs 2.76 times EBITDA. Adjusted EPS guidance of $2.95 to $3.05 covers the payout. Pfizer needs that guidance to hold as Paxlovid sales fall (-63%), and Eliquis faces generic competition.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (NYSE:BMY) is the best case on this list. Its 4.02% yield is below the 5.73% at its lowest 2025 close and the 6.74% it reached in 2009, and the payout takes only 55.88% of trailing EPS. Risks to watch include about $42.9 billion of debt, operating cash flow down 33.45%, and an expected Eliquis step-down of $1.5 billion to $2 billion.
What a Dividend Cut Does to the Share Price
FMC and LyondellBasell both cut their dividends after their yields hit record highs, and FMC’s shares kept falling after the cut. When a yield makes its own record, the market may be pricing in risk before the dividend reflects it. Yield alone says little about dividend safety (we pulled together seven warning signs that a fat yield is about to be cut, detailed in a free report: Dividend Traps). First, check whether earnings and cash flow cover the payout.
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.
