3 High-Yielding Dividend Stocks That Could Cut Their Payouts This Year

Core Viewpoint - High-yielding dividend stocks can present attractive investment opportunities, but recent events with Walgreens Boots Alliance highlight the risks associated with dividend sustainability, as several companies may face similar challenges in maintaining their payouts [1]. Group 1: Innovative Industrial Properties (IIP) - Innovative Industrial Properties (IIP) is a REIT focused on the cannabis industry, currently offering a yield of nearly 11%, but its shares have declined by nearly 40% in the past six months, indicating investor skepticism about its payout sustainability [3][4]. - The cannabis industry's prospects have dimmed, particularly after PharmaCann, a key tenant contributing 17% of IIP's rental revenue, defaulted on all leases, raising concerns about the REIT's ability to maintain its quarterly dividend of $1.90 per share [4][5]. - In Q3, IIP reported funds from operations per share of$2.02, which provides little buffer against its current dividend, suggesting a potential cut in the near future [5][6]. Group 2: Wendy's - Wendy's currently offers a dividend yield of 6.7%, but its revenue growth was only 2% over the first nine months of 2024, with total sales just under $1.7 billion [7]. - The company reported diluted earnings per share (EPS) of$0.71, while its quarterly dividend of $0.25 totals$0.75 over three quarters, exceeding its EPS, and free cash flow has been insufficient to cover the dividend in two of the past four quarters [8][9]. - Wendy's dividend is at risk of being unsustainable, and while management may not cut it immediately, a reduction could occur if financial performance does not improve [9]. Group 3: BCE - BCE, a Canadian telecom giant, has announced plans to acquire U.S.-based Ziply Fiber, aiming for growth in the U.S. market, but this move may incur significant costs [10]. - Despite a long history of annual dividend increases, BCE has stated it will not raise its payout this year, leading to investor dissatisfaction and a stock price decline to levels not seen since 2009 [11]. - Over the past 12 months, BCE paid out CA$3.8 billion in dividends, significantly exceeding its CA$3 billion in free cash flow, raising concerns about the sustainability of its nearly 12% yield [12].