Reliable base payer. A 2.7% yield on a 63.2% core payout is real, covered income — $1.0885 a quarter, paid for 136 consecutive years and raised for 70, most recently +3% in April 2026. The payout is fuller than a low-payout grower's, so the safety here is staple cash flow and ~1.5× free-cash-flow coverage, not a low ratio.
Key risk: Earnings growth is running behind the raise — core EPS rose just 1% in fiscal 2026 and 1% again in the September 2026 quarter, so at a 63.2% core payout each raise tightens coverage a little if earnings stay flat.
Changes if: Core EPS keeps growing at about 1% while raises run at 3% — the payout would climb out of the low-60s on core earnings and the ~1.5× free-cash-flow coverage would thin. A freeze, a cut, or a payout past roughly 75% of core earnings would change the read.
- ✓Payout-coverage check: 63.2% on a core basis — $4.354 indicated against $6.89 of FY2026 core EPS (65.8% of $6.62 reported EPS). Free cash flow of about $15.1B covered the $10.23B paid in dividends roughly 1.5×.
- ✓Yield check: 2.7% indicated — $1.0885/qtr × 4 ÷ the $161.02 close on Oct. 23, 2026. Real, earned yield for a single stock — no special dividend or return of capital inflating it.
- ✓Dividend growth check: 70 consecutive years of increases, on a dividend paid for 136 straight years. The latest raise, declared Apr. 14, 2026, lifted the quarterly dividend 3%, from $1.0568 to $1.0885 — slower than the prior 5% raise, but uninterrupted, and the Oct. 13, 2026 declaration held the new rate.
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.