Source Post

5 Dividend Traps to Avoid Now (How to Spot Yield Cuts)

Jul 26, 2026

The Dividend Diplomats discuss five dividend traps to avoid, focusing on red flags that can lead to dividend cuts. The first trap highlighted is a high dividend payout ratio, where a company pays out more than 100% of its earnings in dividends over several quarters, indicating unsustainability. The second trap involves negative free cash flow resulting from dividend payouts.

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Tickers discussed in this post

GISNeutralLow ConvictionResearch Only

General Mills is mentioned as a company that might fit the bill of having spotty dividend growth.

SMGNeutralLow ConvictionResearch Only

Scotts Miracle-Gro is mentioned as a company that could be one where the dividend doesn't grow.

ORCLNeutralLow ConvictionResearch Only

Oracle is mentioned as a company that might fit the bill of having spotty dividend growth.

MDUNeutralLow ConvictionResearch Only

MDU Resources is mentioned as a company that might fit the bill of having spotty dividend growth.

TNeutralLow ConvictionResearch Only

AT&T is presented as another example of a company with a huge debt balance that required asset sales to manage.

KHCNeutralLow ConvictionResearch Only

Kraft Heinz is cited as an example of a company that took on significant debt for a merger, leading to stifled revenue and a dividend cut.

TGTNeutralLow ConvictionResearch Only

Target is mentioned as a company that has been in a territory of unsustainable yield.

UPSNeutralLow ConvictionResearch Only

UPS is mentioned as a company that has been in a territory of unsustainable yield.

INTCNeutralLow ConvictionResearch Only

Intel is mentioned as a company that had a high yield before a dividend cut, and also as a pre-dividend cut example.

LEGBearishMedium ConvictionSignal-backedSecondary

Leggett & Platt is mentioned as a potential example of a company that might be experiencing issues leading to a dividend reduction.

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Tracked calls opened from this post

WEN
sell opened Jul 26, 2026
+0.00%
DOW
sell opened Jul 26, 2026
+0.00%