Jim Cramer has a warning for investors hunting dependable income: Generous dividend might be hiding a costly problem.
On the Sept. 28 episode of “Mad Money,” he argued that some high-yield stocks have become increasingly dangerous as rising bond yields and weakening businesses undermine their appeal.
Those quarterly checks offer little comfort when share prices keep falling. For investors accustomed to treating dividend payers as a financial cushion, that challenges a familiar playbook.
Buy an established company, collect the income, and wait out the turbulence. But what happens when the turbulence hits both the stock and the payout?
Cramer examined multiple recognizable companies whose sizable yields have failed to protect shareholders.
His concern goes beyond disappointing stock performance. With Treasury bonds offering increasingly competitive income, investors have greater reason to question the risks they are accepting. And the biggest yields deserve the toughest scrutiny of all.
Cramer says big dividends can hide bigger problems
Cramer’s warning is that a big dividend just can’t rescue a weakening business, especially as government bonds offer investors a compelling alternative.
“But lately, high-yielders no longer represent safety,” he said on Sept. 28. “If anything, they represent complacency, even danger.”
He cited a 10-year Treasury yield of 5.24%. Separately, the Associated Press reported the benchmark at 5.23% Monday, after it touched its highest level since 2007.
That competition matters. Investors need a reason to accept uncertain dividends and volatile share prices when Treasury income becomes increasingly attractive.
Cramer pointed to VICI Properties (VICI), yielding 7.93% but down nearly 18% for the year, and General Mills (GIS), yielding roughly 7.3% while down 28%, according to his figures.
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His concern was the businesses underneath those payouts. This includes sluggish growth at VICI and declining sales, earnings pressure, and higher input costs at General Mills.
UPS (UPS) faces another combination of threats, including lost Amazon business, competition, and fuel costs. Edison International (EIX) carries wildfire liability risk.
“Who cares about a high dividend yield if the earnings estimates are coming down?” Cramer asked.
The danger can eventually reach the payout itself.
He cited Campbell’s dividend reduction and the company’s projection of annual sales declines of 2% to 4% as reported by Reuters.
Still, Cramer remained optimistic about Kraft Heinz’s (KHC) turnaround, showing his argument is selective. A high yield needs operating support.
Otherwise, investors risk collecting income from a business that is losing the financial strength needed to sustain it, while a falling share price erodes their invested capital.
The S&P 500’s 10 highest dividend yields demand a closer look
Dividend yield is a measure of a stock’s annual dividend per share divided by its share price, expressed as a percentage.
For example, a stock yielding 7% would provide $70 in annual dividends on a $1,000 investment, assuming the payout remains unchanged.
But a bigger yield doesn’t necessarily mean a better investment. Falling share prices can push yields higher, even as a company’s outlook weakens.
That said, these are the S&P 500’s 10 highest-yielding stocks, according to Quant500’s September 28 closing data:
- VICI Properties (VICI): 7.93%
- General Mills (GIS): 7.26%
- United Parcel Service (UPS): 6.96%
- Edison International (EIX): 6.82%
- Kraft Heinz (KHC): 6.79%
- Altria Group (MO): 6.42%
- Crown Castle (CCI): 6.33%
- Clorox (CLX): 6.14%
- Amcor (AMCR): 6.08%
- Healthpeak Properties (DOC): 6.07%
- Source: Quant500’s S&P 500 dividend rankings, as of Sept. 28, 2026. Yields fluctuate with share prices and dividend changes.
Make the dividend prove it deserves your money
Investors have to treat Cramer’s warning as a reason to review their income holdings, starting with how each company funds its dividend.
Compare annual dividend payments with free cash flow after capital spending.
If payouts consistently exceed that cash, investigate if borrowing or asset sales are filling the gap. For property REITs, examine adjusted funds from operations and its calculation.
Next, check debt maturities and earnings forecasts. Refinancing at higher rates can squeeze cash available for shareholders, particularly when sales are weakening.
Then ask whether the yield adequately compensates for those risks.
Against a 5.23% Treasury benchmark, a stock yielding 7% offers 1.77 percentage points more headline income. That comparison excludes dividend growth, price changes and taxes but exposes how small the apparent cushion can be.
Focus on total return. A hypothetical $10,000 investment paying $700 in dividends still loses $800 overall if its share price falls by 15% before taxes.
Avoid building an income portfolio around one troubled sector simply because its yields look generous. Consider spreading essential spending reserves across cash and treasuries, with maturities that match upcoming needs.
Longer Treasury bonds can also lose market value before maturity. For stocks, prioritize sustainable payouts and cash-generation improvements over yield rankings.
Related: Bank of America has a blunt message for S&P 500 investors
