3 Dividend Stocks That Could Cut Their Payouts in 2026
Key Points
The stocks listed here pay between 3.9% and 6.6% in dividends.
Over the past five years, these stocks have crashed by more than 50%.
While these companies are profitable, their level of earnings may not be strong enough to support their payouts for much longer.
Dividend payments are never a guarantee. That's something investors always need to consider, especially if you're looking to buy stocks for their high yields. As attractive as a payout may be, if it's not sustainable, then it may not last, and a cut could be around the corner. When a cut happens, it can be sudden and come without warning.
Three dividend stocks that don't look all that safe right now are Clorox (NYSE: CLX), Nike (NYSE: NKE), and United Parcel Service (NYSE: UPS). They all offer investors some attractive payouts, but I wouldn't be surprised if they were cut this year. Here's why these could be risky options for income investors to consider.
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Clorox
Clorox is known best for its cleaning products, which are essential in households all over the world. The problem, however, is that this is a business that doesn't generate much growth. In its most recent fiscal year, which ended on June 30, the company's revenue was flat at $7.1 billion.
The company's financials aren't all that bad, but the problem is that the payout may have gotten too high. Clorox's stock yields 5.6%, which is more than five times the rate of the S&P 500 average (1.1%). Its quarterly dividend is $1.24 per share, which translates into an annual dividend of $4.96. However, for the current fiscal year, it forecasts that diluted earnings per share (EPS) will be between just $4.78 and $4.98. And over the trailing 12 months, its free cash flow has totaled $380 million, which is well short of the $602 million it paid out in dividends.
Investors appear worried about the stock and its dividend, as it has declined by more than 50% over the past five years. If the payout were seen as safe, then there's little reason to expect investors wouldn't be loading up on it for its high yield. This isn't a stock I'd rely on for dividend income. While a dividend cut isn't necessarily inevitable, it is a possibility given the state of the company's finances, which is why investors should tread carefully with Clorox.
Nike
Apparel giant Nike doesn't offer as high a yield, but at 3.9%, it's still far above average. But that isn't the reason investors should be worried about its dividend. Instead, it's the company's turnaround effort to improve its sales and attempt to make this a good growth stock again.
Nike's margins have been declining, and demand isn't as strong as it used to be. Over the nine-month period ending Feb. 28, Nike's sales rose by just 1% to $35.4 billion. More concerningly, however, is the 32% decrease in net income, which fell to $2 billion. During the past three quarters, its diluted EPS was $1.38, which is not a whole lot higher than the $1.22 it declared in dividends per share over that time frame.
As Nike continues to invest in its growth, I think there's a possibility that it may need to cut its dividend for the sake of freeing up cash and putting it toward its growth strategy, which is arguably much more important for the stock. Shares of Nike are down nearly 70% over the past five years, and while it may seem like a deal right now, the problem is that there's plenty of risk here.
United Parcel Service
Logistics giant United Parcel Service, or UPS, offers a yield of 6.6% -- the highest one on this list. It's a mammoth payout, which also doesn't look terribly safe these days. The company recently reported earnings for the first quarter of 2026, and its diluted EPS was $1.02, which is a significant decline from $1.40 a year ago. The company has gotten smaller by cutting back on business with Amazon in an effort to improve margins. But at $1.02, its EPS is well shy of the $1.64 it pays in dividends per share each quarter.
UPS has been cutting jobs and slashing expenses in an effort to become leaner, and it'll need to do more of that to convince investors that its dividend is truly safe. Given challenging geopolitical and macroeconomic conditions, it'll likely be difficult for the business to grow, especially with the reduction in volume with Amazon.
While UPS recently declared another dividend, indicating that it's intact for now, there's no guarantee that will remain the case this year. The dividend looks shaky, which is why, despite the seemingly attractive yield, investors haven't been eager to buy the stock. This year, the stock is up around 1%, but over the past five years, it has also lost more than half of its value.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Nike, and United Parcel Service. The Motley Fool has a disclosure policy.