Key Takeaways
- UPS yields 7.0% and General Mills 7.7%, but neither dividend grew much in its latest fiscal year: up 0.6% at UPS in fiscal 2025 and 1.7% at General Mills in fiscal 2026.
- UPS’s dividend took 99% of its free cash flow over the twelve months to June 30, 2026, against 85% at General Mills over the twelve months to Aug. 30, 2026.
- UPS raised its 2026 outlook after finishing its Amazon glide-down, while General Mills expects adjusted operating profit to fall 8% to 13% in fiscal 2027.
- General Mills plans to hold its dividend flat while it brings its debt back down to its 3x net debt to EBITDA target.
Any investor hunting for a 7% yield is going to come across United Parcel Service (UPS) and General Mills (GIS) sooner or later.
UPS raised its 2026 outlook on July 28, after wrapping up the planned shrinking of its Amazon business. General Mills, by contrast, told investors on Sept. 23 that its dividend will stay flat while it pays down debt. Its stock fell almost 22% in September.
So which is the better high-yield dividend stock?
| Metric | UPS | General Mills |
|---|---|---|
| Dividend yield | 7.0% | 7.7% |
| Annual dividend | $6.56 | $2.44 |
| Dividend growth, 5 years | 10.2% a year (fiscal 2020–2025) | 3.9% a year (fiscal 2021–2026) |
| Cash dividend payout ratio, TTM | 99% (to June 30, 2026) | 85% (to Aug. 30, 2026) |
| Cash dividend payout ratio, forward | 96% (fiscal 2026 consensus) | 76% (fiscal 2027 consensus) |
| Net debt / EBITDA | 1.63x | 3.67x |
| Interest coverage | 7.56x | 4.94x |
UPS is growing again, with little to spare
In July, CEO Carol Tomé said UPS has “successfully completed our Amazon glide down and related network reconfiguration initiatives as designed.” Second-quarter revenue rose 7.6% from a year earlier to $22.8 billion.
The dividend has almost no cushion. It took a razor-thin 99% of free cash flow over the twelve months to June 30, 2026. In fiscal 2023 and fiscal 2025, UPS paid out more in dividends than it brought in as free cash flow.
Free cash flow is climbing: $1.57 billion in the first half of 2026, up from $742 million a year earlier. Management expects about $5.5 billion for the full year. Against about $5.4 billion of planned dividends, that leaves only a sliver of room, and little for raises. UPS grew its dividend 10.2% a year from fiscal 2020 to fiscal 2025 ($4.04 to $6.56 a share), but just 0.6% in fiscal 2025, and it didn’t raise it in February 2026: it has paid $1.64 a quarter since February 2025.
General Mills pays more from a shrinking business
General Mills has the opposite problem: plenty of cash behind its dividend, and a business that’s shrinking. In its fiscal first quarter, ended Aug. 30, 2026, net sales fell 3% to $4.4 billion after the sale of its U.S. yogurt business, and organic net sales were flat. For fiscal 2027, General Mills expects adjusted operating profit to fall 8% to 13% in constant currency, and adjusted EPS of $3.00 to $3.20, against $3.55 in fiscal 2026.
Still, the dividend is well-covered, at 85% of free cash flow over the twelve months to Aug. 30, 2026. Free cash flow has topped dividends paid in every fiscal year since 2017, though it fell to $1.63 billion in fiscal 2026 (the year ended May 2026) from $2.29 billion…
…which pushed that year’s ratio up to 80.9%.
General Mills raised its dividend 1.7% in fiscal 2026, and raises are now on hold. As CFO Kofi Bruce put it, “we remain fully committed to our dividend, and in the near term, we expect to maintain the current rate per share while we prioritize deleverage.”
So which dividend wins?
General Mills is the better high-yield dividend stock. What decides it for me is the room between the check and the cash paying it, and General Mills has far more of it. Its payout ratio is 85% over the trailing twelve months and 76% forward, against 99% and 96% at UPS. It pays the bigger check too: $770 a year on $10,000, against $700. At each dividend’s pace now, General Mills pays more in every one of the next 10 years, reaching about $894 in year 10 against about $740 from UPS. Neither is raising right now, but even held flat, $770 beats $700.
The catch is debt. General Mills’s net debt to EBITDA climbed from 2.7x in fiscal 2022 to 3.7x in fiscal 2026, above its own 3x target.
On the company’s own count it’s a little over 4x, Bruce confirmed, and he expects “at least a couple of years to work ourselves back to our target of 3x net debt to EBITDA.” The dividend stays frozen in the meantime.
This isn’t to say UPS’s dividend is in trouble. Its business is growing and its outlook just went up. At its 5-year rate, UPS’s income would pass General Mills’s in about 2028. It’s just that a 96% forward payout leaves no room to keep that pace. I’d rather own the dividend with cash to spare.
Of course, that could change if UPS’s free cash flow pulls well ahead of its dividend. General Mills is counting on at least $750 million of savings in fiscal 2027 to keep its free cash flow ahead of the $330 million it paid out in dividends last quarter.
So what is General Mills stock actually worth?
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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!
