A Tempting 9% Yield — or a Dividend on the Brink?

For income investors, few things are as seductive as a stable, century-old consumer-goods company offering a headline dividend yield near 9%. Add to that a multi-decade streak of uninterrupted quarterly payouts and 23 consecutive years of dividend increases, and the story appears almost too good to pass up. On paper, the company still generates more than $5 billion in annual revenue and remains a familiar brand in millions of households.

But the surface-level appeal hides a growing imbalance. The yield has surged not because the company became significantly more profitable, but because its share price has fallen to multi-year lows. With a trailing dividend of roughly $0.99 per share against a stock price hovering near $11, the payout ratio has crept above 100%, signalling pressure on both earnings quality and cash coverage. Analysts are beginning to warn that rising leverage, shrinking margins and downgraded outlooks may force management to reconsider whether its prized dividend policy…

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The information in this article is for educational purposes only and does not serve as investment advice. The authors present only facts known to them and do not draw any conclusions or recommendations for readers. Read our Terms and Conditions
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