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

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

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Since then, the company has maintained its quarterly dividend at $1.90.

While the dividend has remained stable, the same can’t be said for the stock price. It’s been cut in half in the past year.

That has jacked the yield all the way up to 13.6%.

Can Innovative Industrial Properties keep paying this double-digit yield?

When we last evaluated the landlord to cannabis operators, it was steadily growing its funds from operations (FFO), which is the measure of cash flow used by REITs.

It was estimated that the company would bring in $250 million in FFO last year. Instead, FFO totaled $231 million. This is important – not because it fell short of the estimate, but because it was slightly lower than 2023’s figure of $232 million.

Lower FFO earns a company a one-grade penalty in the Safety Net model.

Making matters worse, FFO is forecast to decline again this year to $191 million.

That will cost Innovative Industrial Properties another point toward its Safety Net rating.

And the bad news continues… If the company’s FFO in 2025 is just $191 million, it won’t be enough to cover the expected $211 million in dividends. (I raise my payout ratio threshold from 75% to 100% for REITs, because they are required to pay out the vast majority of their earnings to shareholders. But even with the adjustment, Innovative Industrial’s 110% payout ratio is still too high.)

So that’s yet another downgrade.

Now, the company has boosted its dividend every year for nine straight years. That’s a solid track record that I’m sure it would like to extend. But it can’t afford to at the moment.

If Innovative Industrial Properties is able to get FFO growth moving in the right direction again, that would be a big plus. But until then, the dividend is at risk of being cut.

Dividend Safety Rating: D

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

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The winner was Iron Mountain (NYSE: IRM), a real estate investment trust, or REIT, that’s focused on data management and storage.

The company pays a $0.785 per share quarterly dividend, which comes out to a 3.2% yield.

Is the dividend safe, or should investors consider getting off the mountain?

Since the company is a REIT, we’re going to use adjusted funds from operations (AFFO) as our measure of cash flow.

Over the past several years, Iron Mountain’s AFFO has been steadily growing. In 2024, AFFO totaled $1.3 billion, up from $1.2 billion the prior year. This year, AFFO is forecast to grow to $1.5 billion.

For most companies, I want to see a payout ratio of 75% of their cash flow or less.

However, with REITs, I am comfortable with a company paying out all of its cash flow in dividends. By law, REITs must pay 90% or more of their earnings in dividends, and they often exist for the purpose of paying dividends to shareholders. Therefore, they usually have higher payout ratios than a typical company.

Iron Mountain paid shareholders 59% of its AFFO in dividends in 2024. According to forecasts, the payout ratio should dip to 54% this year. So its payout ratio is healthy. As long as a REIT’s payout ratio is below 100%, I’m fine with it.

The company also has a solid dividend-raising track record.

It began paying a dividend in 2010 and has raised it every year since, except during the pandemic between 2020 and 2022. It began boosting the dividend again in 2023.

Iron Mountain doesn’t have the highest yield in the REIT space, but its dividend is reliable and growing. With increasing cash flow and a solid history of annual dividend raises (as long as there isn’t a pandemic happening), the company’s dividend has a very low risk of being cut in the near future.

Dividend Safety Rating: A

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

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Looking at Dynex’s stock chart, we see quite an up-and-down ride. The shares climbed steadily from around $11 in October to nearly $14 in March, but then suffered a dramatic plunge back to $11 in April before partially recovering to around $12.24 today. This volatility reflects the sensitivity of mortgage REITs to interest rate expectations and market turbulence.

Dynex delivered mixed performance in the first quarter of 2025. The company reported comprehensive income of $14.4 million despite posting a net loss of $3.1 million. Book value per share slipped slightly to $12.56, down $0.14 from the previous quarter, resulting in a modest economic return of 2.6% for the quarter.

The company also maintained its monthly dividend of $0.17 per common share, which translates to an annual yield of over 16% at current prices.

Management is preparing for what they call a “more dynamic market.” In the first quarter, Dynex raised $240 million by issuing new stock while buying $895 million in residential mortgage securities and $55 million in commercial mortgage securities.

The company also increased its “to-be-announced” investments – which allow them to gain exposure to mortgage securities without immediately taking ownership – by $430 million. The company maintains solid financial flexibility, with $790 million in available liquidity and a leverage ratio – a key measure of how reliant a company is on borrowed money – of 7.4. (In other words, it’s borrowing $7.40 for every $1 of its own capital. That may seem like a lot, but it’s a reasonable number for a mortgage REIT.)

When we run Dynex through The Value Meter, we see that the stock’s enterprise value-to-net asset value (EV/NAV) ratio sits at 6.38, a bit higher than the average of 5.72 for similar companies.

Meanwhile, its free cash flow-to-net asset value (FCF/NAV) is 0.49% – better than the average of -0.65% for companies with similarly inconsistent cash flow. (Dynex has generated positive cash flow in just two of the last four quarters.)

While Dynex’s premium valuation might raise some eyebrows, its above-average cash flow generation helps justify the price. The company’s economic net interest income rose significantly from $18.8 million to $28 million in the first quarter, showing improving fundamentals despite market challenges.

The Value Meter rates Dynex Capital as “Appropriately Valued” – not a screaming bargain, but fairly priced for investors seeking high dividend income from a company that’s actively positioning for changing market conditions.

What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.

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But once in a while, we come across a stock whose dividend safety rating is pristine.

At first glance, today’s Safety Net stock appears to have one of the safest dividends I’ve seen this year. Let’s take a closer look to see how it stacks up.

Stag Industrial (NYSE: STAG) is a real estate investment trust, or REIT, that owns warehouses, manufacturing facilities, and other industrial properties.

The company currently pays a monthly dividend of $0.1242 per share, which equals $1.49 per year or a 4.7% yield.

Stag has steadily grown its funds from operations (FFO), which is the measure of cash flow we use for REITs. That’s what we want to see. Rising cash flow means there is an increasing supply of cash to pay the dividend.

Last year, the company paid $370 million in dividends while generating $447 million in cash flow for a payout ratio of 83%. This year, because cash flow is forecast to grow to $487 million and the total dividends paid are projected to rise by a smaller amount to $385 million, the payout ratio is expected to dip to 79%.

I am comfortable with REITs paying out as much as 100% of their FFO in dividends, because REITs are obligated by law to pay out 90% of their profits in dividends in order to receive favorable tax treatment. Keep in mind, profits are not the same as cash flow or FFO. But because REITs must pay out such a high percentage of their profits, their payout ratios are usually higher.

Also, the purpose of most REITs is to pay shareholders a healthy amount of income, so it makes sense that their payout ratios are on the high side.

In short, as long as the REIT is not paying out more in dividends than it takes in in cash flow, I’m OK with it – and so is the Safety Net model.

Stag’s management has returned more cash to shareholders every year since it began paying a dividend in 2011. Granted, the increases lately have been small. In 2025, the monthly dividend was raised by $0.0009 per share, or a penny per share annually.

In fact, the dividend is only half a cent higher per month – or $0.06 higher per year – than it was in 2019.

But an increase is an increase, and it shows a commitment to paying and raising the dividend.

Stag Industrial is growing its cash flow, has a decade-plus history of annual dividend increases, and creates more cash flow than it pays out. When it comes to dividend safety, it doesn’t get any more perfect than that.

What stock’s dividend safety would you like me to analyze next? Let me know here.

Dividend Safety Rating: A

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

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Its properties include…

• HCA Houston Healthcare Medical Center
• Mercy Hospital Campus in Miami, Florida
• Thomas Jefferson University Hospital Campus in Philadelphia

The company’s cash flow has been steadily climbing since 2022. Funds from operations, or FFO, is the cash flow metric we use for REITs. FFO jumped from $611 million in 2021 to $905 million the following year, then rose to $995 million in 2023, and is expected to come in at $1.1 billion this year.

Meanwhile, the company paid out $657 million in dividends last year for a 66% payout ratio. In 2024, the total dividend payout is forecast to drop to $638 million, which would lower the payout ratio to 57%.

For REITs, I’m comfortable with payout ratios of up to 100%, because REITs must pay out 90% of their profits in dividends. Profits are different from cash flow, but since REITs are required to distribute so much of their profits, their payout ratios tend to be higher.

A 57% or even 66% payout ratio for a REIT is nice and low. That tells me Healthpeak can easily afford its dividend.

But that hasn’t always been the case.

The company has paid a dividend every year since 1989 and has paid out $0.30 per share every quarter since February 2021, which comes out to a 5.8% yield at current prices.

However, the dividend was $0.37 before that, so the dividend got a pretty decent haircut in early 2021.

Healthpeak also slashed the dividend in 2016, when it paid $0.575 per share.

So we have a company that is growing its cash flow and can easily afford its dividend… yet it has shrunk its payout twice in the past 10 years.

I’m not worried about another dividend cut in the immediate future, but management has proven that the dividend is not sacred. It will reduce the payout to shareholders if necessary, as it did in 2021 when FFO fell by nearly 13%.

Because of the company’s willingness to lower the dividend when times get tough, the payout can’t be considered rock-solid safe.

Dividend Safety Rating: C

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

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As far as the Safety Net model is concerned, though, the statute of limitations has expired. Safety Net considers companies’ dividend activity over the past 10 years only. Anything beyond that is ancient history.

Arbor Realty began paying a dividend again in 2012 and has raised it every year since 2015. It has regained its status as a respectable member of dividend-paying society.

But does that make its 12.7% yield safe?

Arbor Realty is a mortgage real estate investment trust, or mortgage REIT, that lends money to owners and buyers of apartment buildings.

Last year, the company’s net interest income (NII), the measure of cash flow that we use for mortgage REITs, was up sharply from the previous two years. The $391 million total was 54% higher than the 2021 figure of $254 million and more than double 2020’s $170 million.

There are no official estimates for Arbor Realty’s NII in 2023 or 2024. But over the first three quarters of this year, it totaled $324 million, and it looks to be on pace to surpass $400 million for the full year.

The company paid out $282 million in dividends over the first three quarters of 2023, which gives it a payout ratio of 87%.

When it comes to REITs, I’m fine with a payout ratio of 100% or lower because REITs, by law, must pay at least 90% of their profits to shareholders in the form of dividends.

Over the past decade, Arbor Realty has an excellent dividend-paying (and dividend-raising) track record. Its payout ratio is reasonable, so the dividend appears safe.

The only question is… how safe?

Since there are no NII estimates available for 2023 or 2024, the next-best figure to use is revenue, which is forecast to decline by 4% from this year to next year. So I’m going to be just a little bit cautious with this one.

I’m not worried about a dividend cut in the next 12 months, but if 2024 turns out to be worse than expected, we’ll want to revisit this rating next year.

Dividend Safety Rating: B

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker symbol in the comments section below. You can also take a look to see whether I’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

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It’s done so every year since it began paying a dividend in 1994, which puts its streak at 29 years and counting. Even more impressively, it has boosted its dividend for 104 consecutive quarters – that’s 26 years, for those not doing the math at home.

The company pays dividends monthly (it even calls itself “The Monthly Dividend Company”), and thanks to a drop in its stock price this year, it sports a 6% yield.

But can investors expect this nearly three-decade streak to continue? Or do they have to worry that the stock price decline is signaling a cut in the dividend?

Realty Income is a real estate investment trust, or REIT. It owns more than 13,000 retail properties in the U.S. and another 300 across Europe.

Walgreens and Dollar General are its largest tenants. Other well-known names include Dollar Tree, 7-Eleven and Wynn Resorts.

Since Realty Income is a REIT, we’ll look at funds from operations (FFO), which is the figure REITs use to measure their cash flow.

Realty Income’s FFO has been on a steady march higher.

You can see FFO has been rising… and is expected to jump again next year.

And even though the company has been consistently raising its dividend, FFO has more than kept up with the rising payouts.

This year, Realty Income is forecast to pay shareholders $2.2 billion, which is 85% of its FFO. Next year, that figure is projected to fall to 70%. That means for every dollar of cash flow the company generates, it will pay out an estimated $0.70 in dividends.

Realty Income has one of the best dividend-raising track records you’ll find. Combined with plenty of cash flow to support the dividend, that means Realty Income’s 6% yield is very safe.

Dividend Safety Rating: A

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker symbol in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

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That’s referring to the company’s ability to generate income from its commercial tenants. Thanks to a juicy 16% yield, it’s been generating income for shareholders as well… but let’s see whether they can expect to keep receiving that much in the future.

Global Net Lease is a real estate investment trust (REIT) that focuses on commercial properties. It has more than 1,300 properties in the U.S. and Europe across a wide variety of industries. Its top three tenants are automaker McLaren, FedEx and Imperial Reliance.

Since Global Net Lease is a REIT, we look at funds from operations (FFO) when analyzing cash flow.

Last year, Global Net Lease’s FFO took a small dip from $170.4 million to $166.9 million. But the Safety Net model is unforgiving of even the smallest reduction in cash flow. No matter how tiny the reduction, Safety Net will bring down its wrath in the form of a downgrade.

There is some good news, however… This year, due to a merger, the company’s FFO is expected to spike to $261.2 million.

Last year, Global Net Lease paid out nearly every penny of its FFO in dividends. Its payout ratio was 99.94%.

By law, REITs, business development companies and master limited partnerships must pay out at least 90% of their income, so I’m comfortable with a payout ratio of up to 100% for Global Net Lease.

Because of the recent acquisition, the total amount paid in dividends is expected to skyrocket to $303 million in 2023. That seems like great news. But remember, the company’s FFO is projected to be $261 million. That means Global Net Lease will be $42 million short of what it needs to pay the dividend and will have a payout ratio that exceeds 100%.

No bueno.

Lastly, the company recently cut its dividend. In 2020, Global Net Lease reduced its quarterly dividend from $0.5325 to the current $0.40. Now, that was during the pandemic, and commercial real estate suffered more than most sectors. But if Safety Net is unforgiving of a minor decline in cash flow, it most definitely will not be generous toward a dividend cut, pandemic or not.

Global Net Lease has a big dividend that, if the projections for 2023 are even in the right ballpark, will be difficult for it to afford.

The company’s management may consider its income to be stable, but I suspect shareholders soon won’t be able to say the same.

Dividend Safety Rating: D

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker symbol in the comments section. You can also take a look to see if I’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

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At the time, the company had plenty of cash flow, a low enough payout ratio and a solid history of annual dividend raises – everything Safety Net looks for in a dividend stock.

Despite its then-high 9.7% yield, Safety Net gave Medical Properties Trust an “A” for dividend safety.

Today, it’s a different story.

Medical Properties Trust, an Alabama-based real estate investment trust (REIT), is a landlord for hospitals and is the second-largest nongovernmental owner of hospitals in the world.

The REIT’s yield is still over 9%, despite the stock having fallen roughly 40% since December 2022. Even though the company was still generating plenty of cash flow, Medical Properties Trust slashed the dividend, which is a cardinal sin when analyzing dividend safety.

The company lowered the most recent quarterly dividend to $0.15 from $0.29 as it reduced debt and dealt with lower funds from operations (FFO), the measure of cash flow we use for REITs.

FFO isn’t expected to be much lower this year, just a $7 million drop from $934 million to $927 million. While we never want to see FFO go down, Medical Properties Trust can still easily afford the expected $628 million in dividends this year. And the amount paid in dividends will be even lower than that next year, as the company paid a higher dividend in the first two quarters of this year.

Management said it wants the payout ratio to be less than 60%, which is a reasonable number.

So the main issues here are declining cash flow and the just-imposed dividend cut. Once a company gets comfortable reducing the dividend, it is very likely to do so again if business doesn’t improve. Despite declining cash flow, Medical Properties Trust still pays a higher dividend yield than its peers, and it could easily cut its dividend again.

Dividend Safety Rating: D

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker symbol in the comments section. You can also take a look to see if I’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

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