3 High-Yield Dividend Stocks That May Be Safer Than They Seem

Texas Instruments (NASDAQ: TXN), Philip Morris International (NYSE: PM), and W.P. Carey (NYSE: WPC) are key names across semiconductors, tobacco, and real estate with strong dividend yields. These three names not only have yields between 2% and 6% but also just increased their payments. At first glance, their dividend sustainability looks questionable, with all three having elevated payout ratios. However, adjusting for future growth and using the appropriate payout metric shows that their dividends are on solid footing.

Top-Yielding Chip Stock Texas Instruments Lifts Dividend

Texas Instruments is one of the world’s largest players in analog and embedded semiconductors, which perform functions like power management and system control.

TXN has performed very well in 2026, delivering a return near 70%. Strong growth across industrial and data center end markets, and accelerating growth in automotive, have contributed to strong overall growth.

Notably, sales increased by 23% year-over-year (YOY) last quarter, its fastest growth rate since 2021, and its operating margin increased by 700 basis points to 42%.

Amid its improving underlying fundamentals, the company has announced a solid 7% increase to its quarterly dividend. Its next $1.52 payment has a record date of Oct. 30 and a payable date of Nov. 10. The stock’s indicated dividend yield now sits near 2.1%, which is one of the highest yields among U.S. large-cap chip stocks.

The company’s payout ratio near 92.5% looks elevated, but this is a backward-looking metric. Notably, earnings estimates for next year show its payout ratio decreasing to a comfortable level near 62%. Of course, the company needs to actually achieve these earnings for the ratio to fall. However, a moderate miss would likely still leave its earnings substantially above its dividend.

Texas Instruments commits to returning all of its free cash flow (FCF) to shareholders over time through dividends and buybacks. With this, growing FCF is likely to lead to further dividend increases. The company notes that it will easily beat $8 of FCF per share in 2026, a huge jump from $3.23 per share in 2025. It targets FCF generation of 25% to 35% of trailing 12 months' revenue, making topline growth and its ability to successfully convert within this percentage key factors to watch.

Phillip Morris’s Yield Sits Above 3% as Smoke-Free Success Continues

Phillip Morris International is by far the most valuable stock in the tobacco industry, with a market capitalization of nearly $300 billion. The stock has put up a solid performance this year, with a return of approximately 17%.

This comes as the company has been expertly navigating the transition to smoke-free nicotine use. Smoke-free products accounted for 42% of total sales last quarter and grew by 11.7% YOY compared to the overall growth of 10.4% YOY. Its international smoke-free business was particularly strong, growing 14.2% YOY, while the company’s ZYN nicotine pouches held 57.1% retail value market share in the United States.

Phillip Morris just announced a notable 8.8% dividend increase. The record date for its next $1.60 payment is Oct. 2, and the payable date is Oct. 26. The stock’s forward dividend yield now sits at a sizable 3.4%.

Based on the last 12 months' earnings, the company’s payout ratio looks worrisome, sitting near 92%. However, as with Texas Instruments, analysts expect this figure to fall materially. Current-year estimates show the figure dropping to around 76%, while next-year estimates imply another large drop to around 70%.

Higher Rates Hurt W.P. Carey as Yield Approaches 6%

W.P. Carey is a mid-sized real estate investment trust (REIT) with a market capitalization near $15 billion. The company invests in a diversified set of properties, including industrial, warehouse, and retail spaces, with significant exposure to both U.S. and European assets.

WPC shares have fallen greatly over recent months, leaving shares only slightly positive for the year. Rising interest rates, which make it more difficult for REITs to profitably invest in new properties and increase refinancing costs, have hurt the stock. Still, the company expects solid growth in 2026, with its guidance implying an adjusted funds from operations (AFFO) increase of 5.2%.

W.P. Carey is also adding more weight to its dividend, increasing its payment by 1% to 95 cents per share. Despite the small increase, the stock’s dividend yield is very high, now near 5.9%. Its payout ratio appears unsustainable at near 130%, but improves drastically when replacing earnings per share with AFFO, the standard profitability metric for REITs.

At the midpoint, the firm’s AFFO guidance for 2026 is $5.23. Based on this number, the company’s forward payout ratio would move down to around 73%. This is still somewhat high compared to many stocks, but it is right within acceptable territory for REITs, which typically pay much higher dividends. Although the Sept. 30 record date for the stock has passed, this comfortable payout ratio supports future dividend payments.

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