Reliable payer — payout runs high. 64 consecutive annual raises and a 2.29% yield covered by earnings is the reliable base this room is built on. The caution is the share already paid out: about two-thirds of trailing reported earnings, and 70.7% of 2025 comparable EPS at the indicated rate, so raises stay near 4% and free-cash-flow coverage depends on one-off payments not repeating.
Key risk: The payout already claims about two-thirds of earnings — an earnings downturn, or another multi-billion-dollar one-off cash payment like 2025's fairlife contingent consideration, would leave free cash flow short of the dividend.
Changes if: Free cash flow after one-offs falls short of the roughly $9.1 billion indicated annual dividend for a full year, or comparable earnings stall. At a 63.7% reported payout there is little room to keep raising through a flat year.
- !Payout-coverage check: Covered by earnings — 63.7% of trailing reported EPS ($3.33 through Q2 2026), and $2.12 is 70.7% of full-year 2025 comparable EPS of $3.00. Free cash flow is thinner: 2025 free cash flow was $5.3 billion against $8.8 billion of dividends paid, and only covers — about 1.3× — after excluding the $6.1 billion fairlife contingent consideration payment (free cash flow excluding it: $11.4 billion).
- ✓Yield check: 2.29% indicated ($0.53 × 4 ÷ $92.71, the Oct. 23, 2026 close) is real, earned yield — no special dividends inflating it.
- ✓Dividend growth check: 64 consecutive annual increases. The Feb. 19, 2026 raise lifted the quarterly dividend about 4%, from $0.51 to $0.53; dividends per share paid rose from $1.84 in 2023 to $1.94 in 2024 and $2.04 in 2025.
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.