Why these yields right now
Market volatility has pushed yields for several sectors into the 7% to 9% range, creating a complex landscape for income-focused investors. Many of these elevated yields are a direct result of price depreciation rather than fundamental dividend growth.
Investors must distinguish between companies with structural cash flow advantages and those suffering from deteriorating business models. A high yield is only valuable if the underlying payout remains covered by free cash flow or distributable cash flow.
The top yielders
The following companies maintain high yields, though their safety profiles vary significantly based on payout metrics and sector stability. Investors should prioritize cash flow coverage over simple earnings-based payout ratios, which can be misleading for capital-intensive industries.
See the chart below for a visual comparison of these yields.
- Ares Capital (ARCC): 9.51% yield, 142.22% payout ratio, Moderate safety.
- Sanofi (SNY): 9.41% yield, 74.91% payout ratio, High safety.
- Telefonica Brasil (VIV): 8.61% yield, 35-43% payout ratio, High safety.
- Telkom Indonesia (TLK): 8.23% yield, 123.5% payout ratio, Low safety.
- Western Midstream (WES): 7.62% yield, 115.72% payout ratio, Moderate safety.
- Enbridge (ENB): 7.52% yield, 127% payout ratio, Moderate safety.
- JBS N.V. (JBS): 7.51% yield, 19% payout ratio, High safety.
- BCE Inc (BCE): 7.50% yield, 26.37% payout ratio, Improved safety.
Yield traps
A yield trap occurs when a stock price falls to inflate the dividend percentage while the company's ability to pay that dividend is fundamentally compromised. These names currently exhibit red flags that suggest the current payout level may not persist.
Investors should monitor these specific risks before committing capital to high-yield positions.
- Telkom Indonesia (TLK): Under investigation for financial reporting and currently paying out more than 100% of earnings.
- Ares Capital (ARCC): NAV pressure and a high payout ratio relative to earnings create sensitivity to the broader lending environment.
- Enbridge (ENB): Regulatory and legal challenges to infrastructure projects threaten long-term cash flow stability despite a 70-year payment history.
- BCE Inc (BCE): High leverage and intense competition forced a 56% dividend reset in 2025.
Build an income sleeve
Constructing a resilient income sleeve requires balancing high-yield exposure with companies that possess low payout ratios. Diversification across sectors like healthcare and consumer staples can mitigate the volatility inherent in telecom and midstream energy.
Focus on companies like Sanofi (SNY) or JBS (JBS) where cash flow coverage remains robust. Avoid chasing the highest headline yield without verifying the underlying payout sustainability against free cash flow metrics.