{"id":4226,"date":"2026-08-04T13:46:21","date_gmt":"2026-08-04T13:46:21","guid":{"rendered":"https:\/\/smartinvestingschronicle.com\/index.php\/2026\/08\/04\/3-dividends-to-sell-as-the-bond-market-calls-warshs-bluff\/"},"modified":"2026-08-04T13:46:21","modified_gmt":"2026-08-04T13:46:21","slug":"3-dividends-to-sell-as-the-bond-market-calls-warshs-bluff","status":"publish","type":"post","link":"https:\/\/smartinvestingschronicle.com\/index.php\/2026\/08\/04\/3-dividends-to-sell-as-the-bond-market-calls-warshs-bluff\/","title":{"rendered":"3 Dividends to Sell as the Bond Market Calls Warsh’s Bluff"},"content":{"rendered":"
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Kevin Warsh is talking tough on inflation. The bond market is calling BS.<\/p>\n

Whenever the Fed and the bond market face off, it pays to remember the words of “Ragin’ Cajun” James Carville:<\/p>\n

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“I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter. But now I would want to come back as the bond market. You can intimidate everybody.”<\/p>\n<\/blockquote>\n

Until this fight gets straightened out, we’re in for some turbulence.<\/p>\n

We contrarians are here for it. When markets roil, the crowd tosses perfectly good payers over the side. Our time is coming.<\/p>\n

Meantime, we’re clearing the decks, purging any precarious payers hiding in the corners of our portfolios. Here are three:<\/p>\n

UPS’s Stock Is Stuck in Reverse<\/b><\/p>\n

Mainstream investors are bearish on United Parcel Service (UPS)<\/b>, and for once they’re right! They sold after the company’s July 28 earnings report, even though it hiked its full-year revenue guidance.<\/p>\n

The drop caused the stock’s yield to pop to 6.4%. If you think such a high yield from a blue chip stock in a competitive market is a red flag, you’re onto something.<\/p>\n

As you might expect, that towering yield is built on shaky ground: Dividends account for 99% (!) of the last 12 months of UPS’s free cash flow. And it looks no better going forward: In its latest earnings report, management guided to $5.5 billion in FCF on the year, and $5.4 billion in payouts. (FCF, by the way, is our key profitability gauge, since it can’t be manipulated as easily as EPS.)<\/p>\n

That coverage squeeze is playing out in UPS’s slowing payout growth. It’s effectively shut off the stock’s “Dividend Magnet”–or a rising payout’s tendency to pull share prices higher:<\/p>\n

This Is Not a “Dividend Gap” We Want to Buy<\/b><\/p>\n

Worse, CFO Brian Dykes made it official in the latestearnings call when he said the dividend will not be raised this year.<\/p>\n

Management has made a lot of noise about the company’s efforts to wean itself off low-margin Amazon.com (AMZN)<\/b> packages and move toward higher-margin deliveries like those related to healthcare. That helped boost its non-GAAP operating margins to 9.2% from 8.8% a year earlier.<\/p>\n

It’s a smart move, but other companies are doing this, as well. Moreover, Amazon continues to build its own delivery business, which is now the top parcel-delivery outfit in the US, passing the US Postal Service last year, according to ShipMatrix.<\/p>\n

So we’re left with a shipping company turning away from a major customer who has itself become a rival. Not a good setup–and yet another reason why we’re out.<\/p>\n

Nike’s Dividend Aristocrat Status Might Be Short-Lived<\/b><\/p>\n

Nike (NKE) <\/b>doesn’t get our hearts racing with its 3.8% yield, but there’s a fascinating story on the dividend-growth side here.<\/p>\n

In a nutshell, the company has raised its dividend annually for 24 straight years. To hit Dividend Aristocrat status, it needs to run that to 25. If it follows its usual pattern, the landmark dividend hike will arrive this November.<\/p>\n

But the stock’s stay in the dividend penthouse may not last!<\/p>\n

As I write this, the payout accounts for 110% of the last 12 months of FCF. And even though its FCF payout ratio has eased lately, the trend is not what we want to see, up from just 27% of FCF five years ago:<\/p>\n

Nike’s Sliding Free Cash Flow Has Its Payout on the Ropes<\/b>\"\"<\/p>\n

The payout is slowing in response. And as you can see below, the stock parted ways with the dividend years ago, when the crowd caught the hint that Nike’s dividend “juice” had run out:<\/p>\n

Investors Foresaw Nike’s Payout Whiff<\/b>\"\"<\/p>\n

UPS and Nike tell us something about the Dividend Magnet: Yes, a rising payout does pull share prices higher, but there needs to be faith in continued dividend growth. Which is why we demand payouts that are not only growing but accelerating when adding these stocks to my Hidden Yields dividend-growth service.<\/p>\n

So what’s gone wrong at Nike? For one, it’s been whacked by tariffs. It does expect $986 million in refunds due to the Supreme Court striking down President Trump’s IEEPA levies. While this will help cover the dividend–and get Nike into the Aristocrats’ club–that’s about all it will do.<\/p>\n

That’s because a much bigger problem remains: Nike’s slowing sales in China, where consumers have taken to cheaper domestic brands. Once those buying patterns are established, they’re very hard to turn over.<\/p>\n

As I write this, the stock is down 31% this year and 72% in the last five years. The best time to sell was back then. The second-best time is now.<\/p>\n

This 5.8% Dividend Is (Literally) as Fickle as the Weather<\/b><\/p>\n

Sometimes investors like to buy shares of products they know. Tesla (TSLA) <\/b>and Apple (AAPL)<\/b> fanboys and girls come to mind.<\/p>\n

If you’re a skier or snowboarder, I sure hope you don’t follow that logic and own Vail Resorts (MTN)<\/b>. Shares yield 5.8%, but the business is as tough to predict as the winter snowfall on which it depends.<\/p>\n

A historically dry season in the western US last year sent revenue down across Vail’s operations, prompting the company to cut forward guidance. Moreover, last year’s dry winter has hit season-pass sales for the 2026\/2027 season. They’re down 10% from the same period last year (for the quarter ended April 30), the number of days sold is down 8%, and overall revenue collected for next season so far is down 5%.<\/p>\n

All of this has pinched cash flow in the last 12 months, sending the payout ratio to an unsustainable 183% of FCF–not good for a tourism-based firm that needs to constantly invest in its operations to attract visitors.<\/p>\n

As a result, the dividend has flatlined–and investors have given up hope on further growth: As you can see in the chart below, they started filing out post-pandemic and have continued to do so since.<\/p>\n

Vail’s Dividend Magnet Loses Its Pull<\/b>\"\"<\/p>\n

There’s no help coming from the balance sheet, either: Vail’s long-term debt has jumped from $3 billion to $3.22 billion in the last three years, while cash and short-term investments have shrunk from $573 million to $387 million. The net amount–$2.83 billion–is higher than I’d like to see from a company with just a $5.4-billion market cap.<\/p>\n

My take? Waiting for this stock to recover is like being in a lift line with no end. Sell it if you hold it.<\/p>\n

Where does that leave us? We’re getting set for the bargains we’re going to see on the other side of this volatility.<\/p>\n

In fact, we don’t have to wait, because I’ve got 5 stocks with powerful Dividend Magnets that are prime buys right now.<\/p>\n

My Top 5 Dividend Magnet Plays Are Prime “Fed Vs. Bond Market” Buys<\/b><\/p>\n

All 5 of these stocks have surging dividends backed by the strong cash flows they need to keep those payouts growing–and accelerating–well into the future.<\/p>\n

I’m forecasting 15%+ annualized returns over the long haul — enough to double our investment every five years.<\/p>\n

Sure beats buying a shaky 6.4% payer like UPS!<\/p>\n

And I’m going to give you the names and tickers of these 5 top Dividend Magnet picks in an exclusive report.<\/p>\n

Click here and I’ll tell you more about these 5 overlooked dividend (and growth) plays<\/b> and give you your copy of that report for free, so you can grab these 5 “lagging” stocks now–and start collecting their growing payouts while we wait for their prices to follow suit.<\/p>\n

Further NKE Research:<\/h3>\n

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Kevin Warsh is talking tough on inflation. The bond market is calling BS. Whenever the Fed and the bond market face off, it pays to remember the words of “Ragin’ Cajun” James Carville: “I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or a […]<\/p>\n","protected":false},"author":1,"featured_media":4204,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-4226","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/posts\/4226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/comments?post=4226"}],"version-history":[{"count":0,"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/posts\/4226\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/media\/4204"}],"wp:attachment":[{"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/media?parent=4226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/categories?post=4226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/smartinvestingschronicle.com\/index.php\/wp-json\/wp\/v2\/tags?post=4226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}