Several companies are at risk of cutting their dividends, according to Wolfe Research. Income investors rely on dividend payments from stocks, and a reduction means less money in their pocket to spend, or to reinvest in the market. Yet companies facing financial strain sometimes are forced to reduce their dividends, or suspend them entirely. For instance, Whirlpool said in May it would suspend its dividend so it could pay down its debt and navigate what it called a “recession-level industry decline.” Flowers Foods and LyondellBasell Industries cut their payouts this year as well. As investors look to avoid the next companies in line to slash payouts, they’ll want to focus on those with a lot of debt on their balance sheets, and above-average dividend payout ratios as a percentage of profits. With that in mind, Wolfe chief investment strategist Chris Senyek screened for stocks with yields above 3.5% and at least one of the following: a payout ratio above 80%, greater than 80% dividends/free cash flow to equity coverage or higher leverage of more than 3.5x. Here are some of the stocks that Wolfe found. Nike has been struggling in recent years and now its dividend payout is potentially at risk of being reduced, according to Senyek. Shares, which yield 3.79%, are down 32% year to date. The sports apparel and footwear maker recently posted an earnings and revenue beat for its fiscal fourth quarter, despite declining sales in China. Analysts like the stock, giving it an average rating of overweight, according to FactSet. It has 17% upside to the average price target. PepsiCo also appeared on the Wolfe screen, despite increasing its payout in June. The snack and beverage giant, which has a 4.14% dividend yield, is expected to report second-quarter earnings on Thursday. It beat on both the top and bottom lines for its first quarter. PEP YTD mountain PepsiCo year to date The stock has an average rating of overweight and 16% upside to the average price target, according to FactSet. Pepsi is down fractionally so far this year. Meanwhile, Blackstone shares have been under pressure, losing roughly 20% year to date amid concerns over liquidity in the private markets. The alternative asset manager in June announced it was restricting withdrawals from Blackstone Private Credit, or BCRED, following a spike in investor redemption requests. Blackstone, which yields 4.01%, has an average analyst rating of overweight, according to FactSet. It has 15% upside to the average price target. The company is set to report its latest earnings on July 23. Lastly, United Parcel Service yields 5.95% and is up 11% year to date. UPS YTD mountain UPS year to date The package delivery giant is in the middle of a turnaround plan, looking to reach $3 billion in year-over-year cost savings in 2026. It is expected to release second-quarter earnings at the end of the month. In April, it posted a beat on both the top and bottom lines . Analysts covering UPS give it an average rating of overweight. The stock has 3% upside to the average price target, per FactSet.
Dividend cuts could be coming for these stocks, Wolfe warns
