5 Dividend Stocks With High Yields That Are Safer Than You Might Think
2026-11-14 20:15
•Reuben Gregg Brewer •The Motley Fool
•••• •••••• Axe Cap view
High-Yield Dividend Stocks: Safer Than They Look
Five global dividend payers offer attractive yields with manageable risks, offering lessons for South African income seekers.
High dividend yields often scare investors into thinking a payout is at risk, but that’s not always true. Pfizer and Bristol Myers Squibb, for example, face patent expiration risk like anyone in pharma, yet they maintain solid cash flows and manageable payout ratios (around 55-85%). It's a reminder that not all high yields are a red flag — many reflect normal business cycles. Similarly, U.S. REITs like Realty Income and W.P. Carey trade with elevated yields because of rising interest rates, yet historical patterns show these trusts adjust rents and acquisitions to maintain profits. For South African investors, the key takeaway is to consider companies with predictable cash flows and healthy balance sheets, like standard banks (FNB, Standard Bank) or retailers (Shoprite), rather than buying solely based on high yield. A strong yield with structural weakness is a trap. The risk here is that global rate hikes or a deeper pharma pricing crisis hurt these dividends more than expected. this is just our opinion and not financial advice
Watch global REITs and pharma but focus on local blue chips with reliable earnings and steady dividends like Standard Bank and Shoprite. Avoid chasing high yielders without clear cash flow support.
- USD/ZAR
- Standard Bank
- Shoprite
- Further global interest rate hikes severely compress dividend-paying REIT profits
- Unexpected setbacks in pharma pipelines or patent cliffs
6/10
The article examines five high-yield dividend stocks that appear riskier than they actually are. Pfizer and Bristol Myers Squibb face normal pharmaceutical industry headwinds from patent expirations but maintain sustainable dividends through strong cash flows. REITs Realty Income and W.P. Carey are pressured by rising interest rates, but historical market adjustments should protect profitability. Hormel Foods, despite slow turnaround progress, has strong financials and backing from the Hormel Foundation, making its dividend safer than its yield suggests.
Our take is based on reporting first published by The Motley Fool.