Key Takeaways
- Kraft Heinz yields 7.2% and Realty Income 6.1%, but Kraft Heinz’s $1.60 dividend hasn’t grown from fiscal 2020 to fiscal 2025.
- Realty Income has raised its dividend for over 31 consecutive years, and its AFFO payout ratio was 75% in fiscal 2025 and is 73% on fiscal 2026 consensus.
- Kraft Heinz paid out 50% of its free cash flow over the twelve months to June 27, 2026, and that rises to 69% on fiscal 2026 consensus as free cash flow falls.
- Analysts expect Kraft Heinz’s normalized EPS to drop from $2.60 in fiscal 2025 to $2.05 in fiscal 2026.
On Aug. 5, Realty Income (O) raised its 2026 guidance for AFFO per share to $4.44 to $4.45, from $4.41 to $4.44.
The same day, Kraft Heinz (KHC) said it expects adjusted operating income to fall 16% to 18% in constant currency this year. That’s the business behind a 7.2% yield, more than a point above Realty Income’s 6.1%.
So which is the better high-yield dividend stock?
| Metric | Realty Income (O) | Kraft Heinz (KHC) |
|---|---|---|
| Dividend yield | 6.1% | 7.2% |
| Dividend growth, fiscal 2020–2025 | 2.9% a year | 0.0% a year |
| Coverage, last reported | AFFO payout ratio: 75% (fiscal 2025) | Cash dividend payout ratio: 50% (TTM to June 27, 2026) |
| Coverage, fiscal 2026 consensus | AFFO payout ratio: 73% | Cash dividend payout ratio: 69% |
| Net debt/EBITDA (LTM) | 5.74x | 2.71x |
| Interest coverage (LTM) | 2.35x | 4.93x |
Realty Income keeps the raises coming
Realty Income calls itself “The Monthly Dividend Company,” and the record backs that up: on Sept. 8, it announced “the 136th dividend increase since Realty Income’s listing on the New York Stock Exchange in 1994.” By its own count, it has raised its dividend for over 31 consecutive years.
The business behind it is still growing. AFFO per share rose 3.8% to $1.09 in Q2 2026 from Q2 2025. Management also raised its 2026 investment guidance to $10.0 billion from $9.5 billion, with industrial properties making up about 65% of its Q2 real estate investments.
AFFO per share has grown faster than the dividend, from $2.88 in fiscal 2016 to $4.28 in fiscal 2025. Over the same years, the dividend went from $2.39 to $3.22…
…so the AFFO payout ratio eased from 83% to 75%, and consensus puts it at a well-covered 73% for fiscal 2026.
The risk is the debt. Net debt is 5.74x EBITDA over the last twelve months, more than twice Kraft Heinz’s, and Realty Income lists its reliance on capital markets to fund growth among its risks.
Kraft Heinz’s dividend is standing still
Kraft Heinz pays the bigger check, but its dividend has been $1.60 a share every year from fiscal 2020 to fiscal 2025. Management said in August that its “priorities are unchanged and remain very clear, sustaining the dividend and protecting our investment-grade credit profile.” Sustaining is the operative word.
The business is shrinking. Net sales fell 1.4% to $6.3 billion in Q2 2026 from Q2 2025, and adjusted EPS fell 18.8% to $0.56. Management is raising its incremental investment to about $700 million for 2026, mostly in marketing. As CEO Steve Cahillane put it, “We have seen that our brands respond well when we invest behind them.”
For now, the cash is there. Free cash flow covered the dividend in every fiscal year from 2019 to 2025 except fiscal 2022, when it was $1.55 billion against $1.96 billion paid out…
…and over the twelve months to June 27, 2026, the cash dividend payout ratio was a comfortable 50%. On fiscal 2026 consensus, it rises to 69%. Analysts expect free cash flow to fall to $2.76 billion from $3.66 billion in fiscal 2025, which tracks the company’s guidance for lower operating income and its extra investment. Five analysts make that estimate, and last year’s final consensus came within 4% of the actual.
Management also flags retailers widening price gaps with private label as a risk.
So which dividend wins?
Realty Income is the better high-yield dividend stock. What decides it for me is where each check is headed, and only one of these businesses is growing into its dividend.
Put $10,000 in each today, and Kraft Heinz pays $720 a year against Realty Income’s $610. That’s a $110 head start. But at Realty Income’s 2.9% five-year rate (fiscal 2020 to fiscal 2025), its check reaches about $790 in year 10, a 7.9% yield on the original $10,000. It passes Kraft Heinz’s flat $720 around 2032.
Meanwhile, Kraft Heinz’s normalized EPS went from $3.06 in fiscal 2024 to $2.60 in fiscal 2025. Analysts expect $2.05 for fiscal 2026, in line with management’s adjusted EPS guidance of $2.03 to $2.09…
…and even the fiscal 2028 estimate, $2.21, sits below fiscal 2025’s. That leaves the flat $1.60 little room to grow.
This isn’t to say Kraft Heinz’s dividend is unsafe. It pays the bigger check, and free cash flow covers it today and on fiscal 2026 consensus. Its debt is also much lighter, at 2.71x EBITDA. It’s just that a high yield has to hold up for years, and I trust the business that keeps raising its payout.
Of course, Kraft Heinz expects consumption to improve in Q3 and again in Q4. If the extra marketing gets sales growing again, its earnings could turn sooner than analysts expect. Its third-quarter report and its Nov. 12 investor day will show whether that’s working.
So what is Realty Income stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Realty Income could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
