In 2025, Safety Net was once again an excellent resource for evaluating the safety of a company’s dividend.

During the year, 10 stocks were rated “A” for dividend safety. None of them cut their dividends. In fact, since 2023, not one of the 29 “A”-rated stocks has lowered its payout within a year after we evaluated it.

Even more impressive, 50% of 2025’s “A”-rated stocks boosted their dividends during the year, including Iron Mountain (NYSE: IRM), which raised its dividend by 10% six months after my “A” rating was released, Delek Logistics Partners (NYSE: DKL), which raised its distribution each quarter, and MPLX (NYSE: MPLX), which hiked its payout by 12% less than a week after I gave it an “A” rating.

I only gave four stocks a “B” for dividend safety in 2025, but two of them boosted their dividends, while the other two kept them the same. There were no cuts.

Energy Transfer (NYSE: ET) was rated “B” in April and raised its distribution every quarter in 2025.

There were seven stocks whose dividends were considered to have a moderate risk of being cut, receiving a “C” rating. Two raised their dividends; two cut them. The average change to the dividend of those seven stocks was -10.6%.

There were a handful of cuts among the “D” and “F”-rated stocks as well. We gave 12 stocks a “D” grade, and 17 others were rated “F.” Two out of the 12 “D”s lowered their dividends, while three out of the 17 “F”s did so.

“D”-rated stocks had the biggest average drop at 12.4%. “F”-rated stocks only saw a 6.4% average decline, but that number is skewed a bit by one variable dividend that saw a sizable – yet likely temporary – increase.

Back in February, Stellantis (NYSE: STLA) slashed its dividend by more than 50% a week after I issued a “D” rating on the stock.

Advanced Flower Capital’s (Nasdaq: AFCG) dividend wilted in 2025. After I gave it a “D” rating, management proved me right by cutting the dividend twice and then skipping it altogether in the fourth quarter.

In June, Research Analyst John Oravec said there was a strong likelihood that OFS Capital (Nasdaq: OFS) would “have a repeat of 2020 with a cut coming down the line” before slapping the stock with an “F” rating. The dividend was cut in half in December.

All in all, it was another terrific year for Safety Net.

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Gladstone is a real estate investment trust that owns and rents out 151 industrial and office properties in 27 states.

For example…

• It leases 241,000 square feet to Berry Global in Jackson, Tennessee
• It leases 115,000 square feet to Eastern Metal Supply Holdings in Charlotte, North Carolina
• It leases 120,000 square feet to Corning in Horseheads, New York.

Last year, funds from operations (FFO), a measure of cash flow used by REITs, grew by 0.8% to $59.2 million. This year, the growth rate is expected to be nearly identical, as FFO is forecast to rise to $59.7 million. However, that is still lower than 2022’s $60.6 million.

Safety Net wants to see cash flow growth over both one- and three-year periods.

The numbers are close, though, so if FFO comes in a little over expectations, it could show positive growth over three years.

The bigger problem is Gladstone Commercial pays out more in dividends than it takes in.

Last year, the company paid shareholders $62.8 million while generating $59.2 million in FFO. In other words, it paid $1.06 in dividends for every $1 in FFO.

This year, that’s forecast to dip to $1.04.

We always want dividends paid to be below cash flow. Otherwise the company has to dip into cash, borrow money, or sell stock to afford the difference.

Gladstone Commercial pays a $0.10 monthly dividend, which comes out to an impressive 11% yield.

However, there was a cut recently. At the beginning of 2023, management lowered the dividend to the current rate from $0.1254 per share.

So the company can’t afford its dividend, and management showed a willingness to cut the payout less than three years ago.

Until FFO exceeds what the company is paying out, Gladstone Commercial’s dividend is not safe.

Dividend Safety Rating: F

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The breakfast staple’s sky-high prices may have even shifted the presidential election in 2024. By the time voters went to the polls, egg prices were up 46% since the beginning of the year.

Rising prices caused Cal-Maine Foods‘ (Nasdaq: CALM) cash flow to blow the roof off of the hen house. That enabled the company to pay shareholders $8.72 in dividends in 2025, which comes out to a 10.2% yield.

But can the company continue to pay such an eggcellent yield?

Cal-Maine Foods is the largest producer of eggs in the United States, with a 14% market share.

In fiscal 2025, which ended in May, the company’s free cash flow exploded like a hard-boiled egg left on the stove all day, growing 250% from $304 million the prior year to $1.06 billion.

This fiscal year, however, free cash flow is eggspected to be sliced in half to $512 million. That’s not only lower than last year’s total, but it’s significantly lower than 2023’s number.

In the last fiscal year, Cal-Maine paid shareholders $330 million in dividends for a low 31% payout ratio. But this year could be a problem. Wall Street forecasts $789 million in dividends, which is 1 1/2 times the expected amount of cash flow.

So the company’s free cash flow is shrinking, and this year it won’t support the projected dividend payment.

But the biggest threat to the company’s payout is its dividend policy.

Cal-Maine has a variable policy. It pays one-third of its quarterly profits to shareholders in dividends.

On an earnings per share basis, profits are forecast to drop 60% this year.

Any company with a variable dividend policy is going to see fluctuations in its dividend. Cal-Maine’s payout has already been cut in each of the past two quarters, falling from $3.50 in May to $1.38 in November.

Now that the price of eggs has come down, bringing Cal-Maine’s earnings and cash flow with it, the company’s dividend is sure to follow.

Dividend Safety Rating: F

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But can investors rely on the hefty yield while they wait for the stock price to recover?

In fiscal 2024, which ended in February, free cash flow actually increased due to a sharp reduction in capital expenditures (or “capex”) despite declining revenue and profits.

Cash flow from operations fell from $8.6 billion to $7.4 billion in fiscal 2024, but a 40% cut in capex boosted free cash flow by 17% from $3.8 billion to $4.5 billion.

In fiscal 2025, which ends this coming February, capex is forecast to rise by more than $1 billion, which will reduce free cash flow to $2.5 billion.

In fiscal 2024, Target paid $2 billion in dividends for a very comfortable payout ratio of 46%. This year, the retail giant is forecast to pay a little over $2.1 billion. With drastically falling free cash flow, the payout ratio jumps to an uncomfortable 87%.

However, Target has an incredible dividend-paying history. It has raised its dividend every year since 1972. I was still watching Sesame Street back then.

Since the company is a member of the S&P 500 and has raised its dividend for more than 25 years in a row, it is considered a Dividend Aristocrat, which is a prestigious label that attracts income investors.

Target’s numbers are all going in the wrong direction. Free cash flow is down over the past three years and is expected to fall sharply this fiscal year. As a result, the payout ratio in fiscal 2025 is now projected to be above my 75% threshold.

It’s becoming more difficult for Target to afford its dividend.

I suspect that the five-and-a-half-decade run of annual dividend increases is pretty important to management and they’re going to do what it takes to continue to boost the payout to shareholders.

But if free cash flow continues to deteriorate, Target may have a tough decision to make regarding that very long and impressive dividend-hiking track record.

I don’t suspect a dividend cut is imminent, but given the company’s cash flow situation, the payout can’t be considered safe – even for a Dividend Aristocrat.

Dividend Safety Rating: D

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The reason for my skepticism is risk.

When a company pays a double-digit yield, the risk is higher that the stock is going to perform badly or the dividend is going to be cut. It’s not a guarantee that those things will happen, but it is more likely to happen than when the dividend yield is lower.

With that knowledge, let’s find out whether 15% yielder Dynex Capital (NYSE: DX) is in danger of cutting its dividend.

Dynex Capital is a mortgage REIT. It borrows money and then lends it out at higher interest rates. The difference, after expenses, is called net interest income.

Last year, Dynex generated $5.9 million in net interest income while paying out $117.8 million in dividends. That means it paid 20 times more cash in dividends than it took in.

This year, I expect net interest income to rise significantly to $94.5 million. However, dividends paid are still forecast to be substantially higher at $133.2 million.

The dividend track record isn’t great either. Though Dynex has raised the monthly dividend twice in the past year from $0.13 per share to $0.17, it is still well below where it was 10 years ago.

At the time, Dynex paid a quarterly dividend of $0.72, which is 41% more than the current monthly dividend extrapolated to a quarterly dividend ($0.17 per month equals $0.51 per quarter). That $0.72 per share dividend in 2015 was cut to $0.63 in early 2016, and the company lowered the dividend again in 2017 to $0.54.

Two years later, Dynex began paying a monthly dividend, reducing it again to $0.15 ($0.45 quarterly) in mid-2019 and once more to $0.13 ($0.39 quarterly) in 2020.

So we have a stock that can’t afford its dividend and has cut the payout four times in the past 10 years.

Dynex Capital will very likely cut its dividend again soon.

The dividend is not safe.

Dividend Safety Rating: F

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The post Dynex: Will This 15% Yield Get Cut Again? appeared first on Wealthy Retirement.

But can the company continue to boost the dividend, or will the dividend jump the tracks?

Trinity has not generated any cash flow for the past three years. The good news is that’s expected to change this year. Wall Street forecasts free cash flow to reach $34 million in 2025 and climb to $51 million next year.

I’ll give credit where credit is due. That’s a massive improvement.

However, it’s not enough to pay the company’s dividend.

This year, Trinity is expected to pay $94 million in dividends – nearly three times as much as it’s projected to generate in cash flow. Next year, dividends paid is anticipated to be $97 million versus $51 million in cash flow, so the company is still paying out more in dividends than it makes in cash flow.

The projected payout ratio (the percentage of cash flow paid out in dividends) of 190% is much better than this year’s 276%. But when the dividend payout is still nearly double the cash flow the company produces, it’s a very concerning sign.

That being said, cash flow problems haven’t stopped the company from raising the dividend in the past. Trinity Industries’ dividend has increased every year for 14 years – even when it was hemorrhaging cash.

So, on the plus side, Trinity is expected to return to being cash flow positive and to continue growing its cash flow this year and next year. Its dividend-raising track record is also impressive. But the payout ratio is too high. Unless it takes out a loan, the company simply can’t afford the dividend it’s been paying – and it hasn’t been able to for years.

While management seems committed to raising the dividend, the payout has to be considered moderately risky.

Dividend Safety Rating: C

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Part of that total return has been from the company’s dividend yield. The current yield is 3.7%, though Oxford Income Letter subscribers who bought it when it was first recommended are earning over 8% annually on the original price.

Whether you’re earning more than 8% or today’s 3.7% or anything in between, you need to feel confident that the dividend is safe.

Let’s dig in and see if it is.

CareTrust REIT leases nursing homes and assisted and independent living facilities to operators. It has over 400 properties across 35 states and another 130 properties in the U.K.

Because CareTrust is a REIT (real estate investment trust), we use a measure of cash flow called funds from operations, or FFO.

In 2024, FFO grew 66% to $331 million. Over the past three years, it has grown by an average of 17% per year. That’s exceptional.

This year, that growth is forecast to slow to 8%, with FFO coming in at $359 million. In 2026 and 2027, growth is expected to accelerate into the double digits again.

CareTrust REIT paid shareholders $172 million in dividends last year for a payout ratio of just 52%. This year, the projected $189 million in dividend payments should result in a payout ratio of 53%.

So the company generates nearly double the cash flow that it needs in order to pay the dividend. With FFO expected to continue to rise, the company should be able to keep raising the dividend, as it has every year since it began paying one in 2014.

CareTrust REIT has everything you want to see in a Perpetual Dividend Raiser. It has a stellar track record of annual dividend increases, it generates strong cash flow, and it has a low enough payout ratio to ensure that the dividend should remain intact even if the company hits an unexpected obstacle.

It’s no wonder the stock has performed so well over the past several years.

CareTrust REIT’s dividend is very safe.

Dividend Safety Rating: A

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The post This REIT Continues to Reward Investors appeared first on Wealthy Retirement.

The increases aren’t large – a quarter of a penny each time. While they have contributed to the current 13% annual yield, the big reason the stock has such a high yield is that the share price has fallen by two-thirds over the past three years.

Community Healthcare Trust owns 200 properties in 36 states that are leased to doctors, hospitals, and other healthcare organizations.

This is a small cap company that generates a little over $100 million in revenue per year. Despite the weak stock price, the company is profitable and cash flow positive.

Let’s see whether its cash flow is enough to sustain further quarterly raises.

Because Community Healthcare Trust is a real estate investment trust, we use a measure of cash flow called funds from operations, or FFO.

Last year, FFO climbed 7% to $51.2 million. This year, it is forecast to slip slightly to $50.9 million. That projected slight reduction in FFO is enough to earn Community Healthcare a penalty on its Safety Net rating.

Negative cash flow growth is a big red flag.

Since the difference between last year’s total and the current estimate for this year is so small, it is possible the company reports positive FFO growth instead of slightly negative. If that occurs, Community Healthcare will earn an upgrade to its Safety Net rating.

Another area of concern is the payout ratio. Again, the difference between a penalty and no penalty is very small.

Last year, Community Healthcare paid shareholders $51.7 million in dividends against $51.2 million in FFO, so it paid more in dividends than it took in (but barely). This year, the gap is anticipated to widen a bit – to $53.5 million in dividends paid against $50.9 million in FFO.

That would push the payout ratio up from 101% to 105%, still just above my 100% threshold for REITs.

Over the first three quarters of 2025, FFO has totaled just $32.6 million, so the company would need a big fourth quarter to eclipse the current full-year estimate and cover the dividend.

As you can see, this is a dividend story with some problems. FFO has been declining, it’s projected to decline again this year, and the company pays out more in dividends than it takes in.

Though it only needs to beat FFO expectations by $300,000, that doesn’t seem likely given that FFO over the first nine months is pretty far away from that number and rental real estate is a somewhat predictable business due to rents being locked in.

On the plus side, the company has a stellar track record of quarterly dividend increases, and I expect management to do everything in their power to keep that 41-quarter streak alive.

I don’t expect an imminent dividend cut, and if FFO improves, the company’s dividend safety rating could even receive an upgrade or two. But if FFO doesn’t improve, management will have some tough decisions to make.

Dividend Rating Safety: D

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The post Community Healthcare Trust: How Safe Is This REIT’s 13% Yield? appeared first on Wealthy Retirement.

Income investors may have seen B&G come across their radar thanks to the stock’s sky-high 17% dividend yield.

But is that dividend as reliable as a bowl of the company’s Cream of Wheat hot cereal?

We’ll dig into the numbers in just a minute, but first, a word of caution: Anytime you see a dividend yield that high, your guard should be up. It doesn’t automatically mean that the dividend is unsafe or that the stock is a dog, but the risk of both is certainly elevated.

One reason B&G Foods’ yield is so high is that the stock has been a disaster. It’s been just about cut in half in the past year and is down more than 80% over the past five years.

Part of the problem is that cash flow has been very inconsistent.

Last year, it slid 54% from $222 million to $103 million. This year, it is forecast to drop another 10% to $93 million.

The Safety Net model penalizes stocks for declining free cash flow. The reasoning is very simple: You want to see cash flow growth in order to boost your confidence that the company will be able to afford its dividend in the future.

The good news is that B&G’s payout ratio is low enough to not set off any alarms.

Last year, the company paid out 58% of its cash flow in dividends. This year, that number is forecast to remain the same.

In late 2022, B&G Foods slashed its quarterly dividend from $0.475 to the current $0.19. Once a management team has shown a willingness to cut the dividend, the payout is no longer sacrosanct, and investors should be on guard that it could happen again.

The saving grace for the company’s dividend safety rating is that the payout ratio is reasonable. But if cash flow continues to deteriorate, it could become a problem.

B&G Foods’ dividend has a high risk of being cut.

Dividend Safety Rating: D

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The post Is B&G Foods’ 17% Yield Delicious… or Dangerous? appeared first on Wealthy Retirement.

The company did not disappoint, as the dividend was not cut. In fact, it grew by 36% over the next three years.

MPLX is a master limited partnership that processes and transports natural gas and oil. It was spun out from Marathon Petroleum in 2012.

The stock pays a quarterly distribution of $0.9565, which comes out to a 7.8% yield. (MLPs pay distributions, not dividends.) It has boosted the distribution every year since it began paying one in 2013. Can it keep that impressive track record intact?

MPLX and many other MLPs use a measure of cash flow called distributable cash flow, or DCF.

Last year, MPLX’s DCF totaled $5.7 billion. This year, it’s expected to come in at $6 billion. In 2026, DCF is forecast to grow another 6% to $6.4 billion.

Meanwhile, the company paid out $3.6 billion in distributions in 2024 for a payout ratio of just 63%. In other words, it paid investors 63% of the cash flow it generated. For MLPs, I’m comfortable with any number below 100%, so 63% is very reasonable.

This year, even though the distributions paid are expected to increase, the payout ratio is projected to dip to 60%.

MPLX has always done a good job of paying a generous distribution without spending all of its cash flow.

MPLX has been growing its DCF and growing its payout to shareholders, but it’s also left plenty of wiggle room should cash flow ever recede.

The distribution is very safe.

Dividend Safety Rating: A

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