Key Takeaways
- Verizon yields 6.8% after an 8.7% drop on Oct. 9, and Kraft Heinz yields 7.2%.
- Both dividends are well-covered today, using 54% and 50% of free cash flow over the trailing-12 months.
- Analysts expect Kraft Heinz’s ratio to rise to 69% in fiscal 2026 as its free cash flow falls, while Verizon’s holds at 54%.
- Verizon’s dividend grew 1.9% a year from fiscal 2020 to fiscal 2025, while Kraft Heinz’s was $1.60 a share in both years.
Any income investor hunting for a yield north of 6% is going to come across Verizon (VZ) and Kraft Heinz (KHC).
Both managements put the dividend near the top of their priority lists. Verizon’s talks about growing its payout, while Kraft Heinz’s talks about sustaining it.
So which is the better high-yield dividend stock?
| Metric | Verizon (VZ) | Kraft Heinz (KHC) |
|---|---|---|
| Dividend yield (at the current rate) | 6.8% | 7.2% |
| Annual dividend | $2.83 | $1.60 |
| Dividend growth, fiscal 2020 to 2025 | 1.9% a year | 0.0% a year |
| Cash dividend payout ratio, TTM | 54% | 50% |
| Cash dividend payout ratio, fiscal 2026 consensus | 54% | 69% |
| Net debt/EBITDA | 3.35x | 2.71x |
Verizon’s dividend has a growing business behind it
Verizon’s service business is growing while its phone sales shrink. In the second quarter of 2026, mobility and broadband service revenue rose 2.8% from a year earlier to $23.4 billion.
Free cash flow has topped dividends paid every year from fiscal 2018 to fiscal 2025. The cash dividend payout ratio ran between 57% and 59% from fiscal 2023 to fiscal 2025.
Over the twelve months to June 30, 2026, the dividend used a well-covered 54% of free cash flow. Analysts expect the same 54% in fiscal 2026, and management guides to free cash flow growth of 9% to 10% this year. That backs up what management said on its July call: “We are growing our dividend, and we are paying down our debt.” Verizon describes its record as “the 20th consecutive year of dividend increases, a track record we’re extremely proud of.”
The main risk is debt: at 3.35x EBITDA, Verizon’s net debt is the heavier of the two.
The newest risk is competition. SpaceX agreed on Oct. 8 to buy nationwide low-band spectrum for its Starlink phone service, and Verizon’s stock fell 8.7% the next day, which is why it now yields 6.8%. The deal still needs the FCC’s approval, and Verizon says spectrum alone “does not provide the network or infrastructure to offer true nationwide coverage.” It’s a threat to the business behind the dividend, not yet a dent in its cash.
Kraft Heinz is spending to win shoppers back
Kraft Heinz’s dividend is about as well covered today, but the business behind it is shrinking. Net sales fell 1.4% to $6.3 billion in the second quarter of 2026. Organic sales fell 2.7% in North America, and adjusted EPS fell 18.8% to $0.56. Management raised its extra investment, mostly marketing, to about $700 million for fiscal 2026. CEO Steve Cahillane’s reasoning: “We have seen that our brands respond well when we invest behind them.”
The dividend’s longer record is shakier. Free cash flow fell short of dividends paid from fiscal 2016 to fiscal 2018, and dividends paid then dropped from $3.18 billion in fiscal 2018 to $1.95 billion in fiscal 2019.
Over the twelve months to June 27, 2026, the cash dividend payout ratio was a comfortable 50%. Analysts, though, expect free cash flow to fall 25% from fiscal 2025’s $3.66 billion to $2.76 billion in fiscal 2026. That would lift the ratio to 69%: still covered, but with much less room. The estimate fits management’s own guidance for adjusted operating income to fall 16% to 18% in constant currency. On the second-quarter call, management said: “Our priorities are unchanged and remain very clear, sustaining the dividend and protecting our investment-grade credit profile.”
The main risk: retailers investing in private-label prices could widen the price gap with its brands.
So which dividend wins?
Verizon is the better high-yield dividend stock.
Kraft Heinz pays more today: $720 a year on $10,000, against Verizon’s $680. But Verizon’s dividend grows and Kraft Heinz’s doesn’t. At their 5-year rates, Verizon’s income would pass Kraft Heinz’s around 2029. By year 10, $10,000 in Verizon would pay about $808, an 8.1% yield on the original cash, against a flat $720.
The bigger difference is in the earnings behind each check. Analysts expect Kraft Heinz’s normalized EPS to fall from $2.60 in fiscal 2025 to $2.05 in fiscal 2026, in line with the company’s own $2.03 to $2.09 guidance.
Even in fiscal 2028, consensus puts it at $2.21, still below fiscal 2024’s $3.06. Verizon, meanwhile, guides to adjusted EPS of $4.99 to $5.04 this year, up 6% to 7%.
This isn’t to say Kraft Heinz’s dividend is in trouble. It pays the bigger check, it carries less debt, and management has made sustaining the dividend its first priority. It’s just that Verizon covers its dividend as well going forward, keeps raising it, and has earnings that are still climbing.
Of course, if Kraft Heinz’s extra marketing turns North America around faster than analysts expect, that gap narrows. Its third-quarter report and its Nov. 12 investor day are the next tests.
So what is Verizon 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!
