Four High-Yield Stocks Pass the First Cash-Coverage Test

A high dividend yield is not evidence of safety. The first useful test is whether recent operating cash or a sector-appropriate earnings measure covers the distribution. Enterprise Products Partners, Realty Income, Altria and VICI Properties passed that initial screen in their latest reported periods, but the quality of the cushion varied.

Enterprise Products produced a record $2.3 billion of operational distributable cash flow in the second quarter, up 21%, and covered its declared distribution 1.9 times. It retained $1.1 billion after distributions. That is the strongest near-term cash cushion in the group, although the partnership still carries large project commitments and energy-market exposure.

Realty Income reported second-quarter adjusted funds from operations, or AFFO, of $1.09 per share against roughly $0.81 of quarterly dividends. Its portfolio occupancy was 98.8%. The coverage looks comfortable, but a REIT's cost of capital matters: higher interest rates can make acquisitions less profitable and depress the valuation investors assign to long leases.

Altria's $4.24 annual dividend equals about 74% to 76% of its 2026 adjusted earnings guidance of $5.61 to $5.72. The payout is covered, yet cigarette volumes continue to decline. Altria depends on pricing, cost control and smoke-free products to protect earnings as its core volume base contracts.

VICI Properties reported $0.62 of second-quarter AFFO per share and paid a $0.45 dividend for that quarter. The company estimated full-year AFFO of $2.44 to $2.47 per share. Coverage is solid, but tenant concentration remains material because Caesars and MGM account for much of rent. A noncash charge of about $271 million in the source report also shows why AFFO must be reconciled with GAAP results rather than treated as cash itself.

The cited yields, about 6.1% for Enterprise, 6.0% for Realty Income, 5.9% for Altria and 7.8% for VICI, are snapshots that change with price. They should be compared with the risks creating them. Enterprise offers the widest cash cushion but partnership tax complexity. Realty Income and VICI offer contractual rent with rate and tenant risks. Altria offers pricing power against structural volume decline. Coverage eliminates some obvious yield traps, not the need to choose which risk an investor is willing to own.