Covered on adjusted earnings, compounding fast. A 2.34% yield on a $0.39 quarterly dividend, raised 11.4% in June 2026 for a 19th consecutive year, is about 30% of fiscal 2026 adjusted EPS guidance of $5.10–$5.30. The trailing GAAP payout looks far worse only because a $2.6 billion automation impairment crushed fiscal Q3 2025 GAAP earnings — on the adjusted basis the dividend is comfortably covered.
Key risk: Razor-thin grocery margins — a $2.6 billion impairment and related charges on the automated fulfillment network wiped out fiscal Q3 2025 on a GAAP basis (EPS –$2.02). Price competition or another automation reset can do the same again, even while adjusted earnings cover the dividend.
Changes if: Adjusted EPS guidance falls so the $1.56 annualized dividend approaches 50% of adjusted earnings, or identical sales turn negative. On the adjusted basis the dividend is well covered today; a second GAAP-scale reset would change that read.
- ✓Payout-coverage check: $1.56 annualized against $5.10–$5.30 of fiscal 2026 adjusted EPS guidance is about 30% — well covered. Trailing GAAP ratios are distorted by the $2.6 billion fiscal Q3 2025 impairment (about $3.00/share).
- ✓Yield check: 2.34% indicated — $0.39/qtr × 4 at the $66.77 close on Oct. 23, 2026. A regular quarterly cash dividend, not a special.
- ✓Dividend growth check: 19 consecutive years of increases; the latest raise, declared June 25, 2026, lifted the quarterly dividend 11.4%, from $0.35 to $0.39.
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.