High yield, stretched cover — built by a falling price. A 7.09% yield that takes about 76.0% of expected next-year earnings ($3.21) is stretched: $0.61 a quarter, raised only a cent in 2025 and flat since, while revenue and profits fell in fiscal 2025 and free cash flow slipped. Cash still covers the rate — dividends were about 58% of free cash flow last year, expected near 62% this year — so the payout holds for now, but the yield was built by the price falling, not the dividend rising.
Key risk: Falling cash flow — free cash flow has fallen from $2.75 billion toward an expected $2.16 billion, so each year of decline narrows the cushion between cash generated and the $1.3 billion-plus dividend bill.
Changes if: Free-cash-flow coverage pushes past about 75%, or expected earnings fall below the $2.44 annual dividend. Either would move this card from warn to bad.
- !Payout-coverage check: About 76.0% of expected next-year EPS of $3.21 — $2.44 indicated against a $34.39 close on Oct. 23, 2026. Trailing payout is not meaningful after charges; cash coverage (about 58% of free cash flow last year) is the firmer leg.
- !Yield check: 7.09% indicated — $0.61/qtr × 4 at the $34.39 close on Oct. 23, 2026. High because the price has fallen over two years, not because the payout jumped; the dividend itself is ordinary, not return of capital.
- !Dividend growth check: 6 consecutive years of increases on paper, but the last raise was a single cent (from $0.60 to $0.61) in 2025, and the rate has been flat since. Growth in name, not in substance, lately.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.