High-yield dividend stocks can seem attractive at first glance. However, investors looking to create a sustainable stream of passive income should look beyond a company’s high dividend yield and further analyze its fundamentals to see whether its shareholder payout is sustainable across market cycles.
In the last two years, macro headwinds such as rising interest rates, sticky inflation, and a sluggish global economy have resulted in dividend cuts for companies in capital-intensive sectors such as real estate and utilities - and even former Dividend Aristocrats, like the recently removed Dow Jones Industrial Average ($DOWI) component Walgreens Boots Alliance (WBA).
As many of these macro challenges linger into the first half of 2024, here are seven other high-yield stocks at risk of dividend cuts in 2024. Taking a cue from Wolfe Research, this list focuses on high-yield consumer discretionary stocks with high balance sheet debt, and shareholder payouts that account for a disproportionate amount of earnings and/or free cash flow.
1. Vail Resorts Stock
Valued at $8.6 billion by market cap, Vail Resorts (MTN) operates mountain resorts and ski areas in the U.S. Vail Resorts stock has returned 307% to shareholders in the last decade, after adjusting for dividends.
The company pays shareholders an annual dividend of $8.24 per share, offering a dividend yield of 3.5%. MTN is forecast to end fiscal 2024 with earnings of $8.95 per share.
2. Hasbro Stock
Hasbro (HAS) operates as a play and entertainment company in the U.S. and other international markets. In the last 10 years, HAS stock has returned less than 24% to shareholders. Hasbro offers investors a dividend yield of 5.75%, or $2.80 per share annually, compared to its estimated earnings per share (EPS) of $3.27 in 2024.
3. Cracker Barrel Stock
Cracker Barrel (CBRL) is another stock that has significantly underperformed the broader markets over the past 10 years, rising less than 14% after adjusting for dividends. The company operates the Cracker Barrel Old Country Store in the U.S., consisting of a chain of restaurants with attached gift shops.
The stock currently pays shareholders an annual dividend of $5.20 per share, indicating a yield of almost 7.2%. Wall Street expects CBRL to report earnings of $4.71 per share in fiscal 2024 (ending in July).
4. Wendy’s Company Stock
Among the most popular quick-service restaurant chains in the U.S., Wendy’s Company (WEN) is valued at $3.8 billion by market cap. Since February 2014, the stock has returned 129% to shareholders.
WEN currently pays an annual dividend of $1.00 per share, indicating a forward yield of 5.49%, while analysts expect it to end 2024 with earnings of $0.99 per share.
5. Movado Group Stock
A component of the Russell 2000 Index (RUT), Movado Group (MOV) is valued at $625 million by market cap. Movado designs, sources, markets, and distributes watches worldwide. MOV stock pays an annual dividend of $1.40 per share, indicating a yield of almost 5%. Wall Street expects Movado's earnings to narrow to $1.93 per share in fiscal 2024 (ended in January), down by more than 50% from fiscal 2023.
6. Universal Corp. Stock
Valued at $1.2 billion by market cap, Universal Corp (UVV) processes and supplies leaf tobacco and plant-based ingredients. It pays shareholders an annual dividend of $3.20 per share, indicating a yield of 6.5%. During the most recent quarter, UVV paid out roughly 99.8% of its cash on hand as dividends.
7. Wolverine World Wide Stock
The final stock on my list is Wolverine World Wide (WWW), valued at $766 million by market cap. The company designs, manufactures, markets, and sells footwear, apparel, and accessories in the U.S. and other international markets.
WWW pays shareholders an annual dividend of $0.40 per share, indicating a yield of 4.16%. Earlier this month, WWW said that it expects to report fiscal year 2024 EPS of $0.65 to $0.85, on an adjusted basis, which fell short of Wall Street's expectations.
