The article compares two high-yield dividend stocks: UPS yields 7.0% and Altria 6.2% at the October 9, 2026 close. The author argues Altria is the better choice because its free cash flow covers the dividend more comfortably, with a 78% payout ratio over the twelve months to June 30, 2026, versus 99% for UPS. Altria's dividend also grew faster in fiscal 2025 at 4.0% against UPS's 0.6%, though UPS grew its dividend 10.2% a year from fiscal 2020 to 2025. The author acknowledges UPS's first-half 2026 free cash flow rose sharply and says its 7% yield could look safer if free cash flow keeps catching up with the dividend.
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Pfizer yields 6.3% and UPS yields 7.0%, and both raised their 2026 revenue guidance this summer. In the twelve months to June 2026, dividends took 89% of Pfizer's free cash flow and 99% of UPS's, leaving little cushion for either. Pfizer's Q2 2026 revenue rose 3% (1% operationally) as newer products grew 18%, while COVID-19 sales shrink and patent losses weigh on revenue through 2028; its CEO says dividend growth returns after that period. UPS's Q2 2026 revenue rose 7.6% to $22.8 billion after it finished cutting Amazon volume, though its dividend per share rose only 0.6% in fiscal 2025. The article concludes UPS is the better high-yield pick because of faster growth and lower leverage (1.63x vs 1.97x net debt/EBITDA), while noting Pfizer's dividend is better covered.
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The article argues AbbVie (ABBV) is not a high-yield trap, since its free cash flow comfortably covers its $1.73-per-share quarterly dividend and most of its $70.8 billion debt is fixed-rate. The company has raised its dividend for 54 consecutive years, qualifying it as a Dividend King. Skyrizi and Rinvoq together brought in over $7.5 billion in Q2 2026, more than the $6.1 billion paid in dividends that quarter, and AbbVie has about 90 clinical-development programs, roughly 60 of them in mid- or late-stage studies. Its 2.5% yield is lower than before mainly because the share price has risen sharply, and the article notes that pipeline setbacks remain a risk.
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The Schwab U.S. Dividend Equity ETF (SCHD) is up 21.7% year to date versus 10.9% for the Vanguard High Dividend Yield ETF (VYM), and yields 3.2% compared with 2.4%. Its strong return is largely due to a 14.1% energy weighting, well above the S&P 500's 3.4%, as the energy sector gained 50.2% this year, although SCHD has cut its energy stake from 23.9% in late March. SCHD rebalances quarterly with a 40.6% portfolio turnover rate and now has heavy weightings in healthcare (20.7%) and consumer staples (20.4%). VYM, by contrast, keeps its largest holding, Broadcom at 6.9%, even though Broadcom's yield has fallen to 0.7%, and has more balanced sectors including 21.1% in financials and 13.7% in technology. The author argues VYM is the better long-term buy because its broader mix includes sectors that tend to grow faster over the long term.
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The article argues AbbVie is not a high-yield trap, because its free cash flow is sufficient to cover its quarterly dividend of $1.73 per share, and most of its $70.8 billion debt is in fixed-rate notes. AbbVie has raised its dividend for 54 consecutive years, qualifying it as a Dividend King, a group of stocks that have raised dividends for at least 50 years. Skyrizi and Rinvoq together brought in over $7.5 billion in the second quarter of 2026, more than the $6.1 billion paid in dividends that quarter, and the company has about 90 programs in development, around 60 of them in mid- or late-stage studies. The dividend yield of 2.5% is lower than before because the share price has risen faster than dividends, and the article notes that pipeline setbacks remain a risk.
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