Beware these stocks that could be next to cut their dividend after Whirlpool

Whirlpool's dividend cut to $3.60 from $7 per share, following disappointing Q2 earnings and a 14% stock decline, has heightened investor concern over broader corporate dividend sustainability amidst macroeconomic uncertainty, prompting CNBC Pro to identify other S&P 1500 companies with high yields, declining free cash flow, and high debt as potentially vulnerable. While UPS, a screened company, confirmed its $5.5 billion annual dividend despite a 9% share drop and withheld guidance, analysts remain optimistic; conversely, Wendy's, also on the list, has seen its shares tumble 37% to a 52-week low in 2025.

Analysis

Whirlpool's decision to slash its annual dividend to $3.60 from $7.00 per share, following a disappointing Q2 earnings report that triggered a 14% stock decline, has amplified investor concerns regarding dividend sustainability amid macroeconomic headwinds and tariffs. This event serves as a significant market signal, prompting a screen of S&P 1500 companies for similar vulnerability. The criteria for this high-risk profile—dividend yields above 6%, projected declines in free cash flow, debt-to-equity ratios over 100%, and a dividend coverage ratio below 2.1—highlight specific fundamental weaknesses. United Parcel Service, despite appearing on this list and seeing its shares fall 9% after withdrawing revenue and profit guidance, reaffirmed its plan to pay $5.5 billion in dividends, creating a conflicting signal for investors; Wall Street analysts maintain a 'buy' rating with a projected 21% upside. Similarly, Wendy's, another company flagged by the screen, has experienced a severe 37% share price drop in 2025 to a 52-week low, yet analysts' average price target suggests a potential 29% rally, despite a consensus 'hold' rating. This divergence between negative fundamental indicators and optimistic analyst price targets underscores a critical tension in the market for these specific names.

Key Decisions for Investors

• Investors should immediately scrutinize their high-yield holdings, applying the screening criteria of high debt-to-equity, declining free cash flow, and low dividend coverage to identify positions at risk of a dividend cut similar to Whirlpool's.
• For United Parcel Service, the confirmed dividend provides short-term support, but the withdrawn guidance and weak underlying fundamentals warrant a cautious stance; monitor cash flow reports closely as they will be a leading indicator of dividend safety.
• The 37% decline in Wendy's shares may appear to be a value opportunity given the 29% upside to analyst targets, but its presence on the high-risk list suggests it could be a value trap; it is prudent to await the next earnings report for evidence of fundamental improvement before initiating or adding to a position.