PEY's 50 Stocks Create 4.95% Income But Three Major Holdings Are Waving Red Flags

"Invesco High Yield Equity Dividend Achievers ETF ( NYSEARCA:PEY) generates income the straightforward way: by holding dividend-paying stocks. The fund's 4.95% yield comes from a portfolio concentrated in traditionally stable sectors, with Financials and Utilities combining for 41% of assets-sectors known for consistent cash generation and regular payouts. The key question for income investors: can these companies sustain their payouts? PEY's largest position, Perrigo ( NYSE:PRGO) at 3.75%, presents the fund's most significant risk."

"The company is paying out more than it earns-a red flag for dividend sustainability. The root cause is deteriorating business performance across both revenue and profitability, creating pressure on the dividend that won't ease without operational improvement. The second-largest holding, LyondellBasell ( NYSE:LYB) at 3.62%, tells a more stable story. The petrochemical company has steadily increased its dividend, most recently raising the payout in 2025."

"United Parcel Service ( NYSE:UPS), the sixth-largest holding at 2.97%, shows warning signs. UPS is stretching to maintain its dividend, with payouts now exceeding current earnings. The logistics giant faces headwinds as its business contracts, though its strong return on equity provides some financial cushion. The question is whether operational challenges prove temporary or signal a longer-term shift in the shipping industry. Pfizer ( NYSE:PFE) at 2.59% demonstrates healthier fundamentals."

Invesco High Yield Equity Dividend Achievers ETF (PEY) yields 4.95% from a portfolio concentrated in traditionally stable sectors, with Financials and Utilities making up 41% of assets. Several top holdings show mixed dividend fundamentals. Perrigo is paying out more than it earns amid declining revenue and profitability, pressuring its dividend and requiring operational improvement. LyondellBasell has steadily increased its payout and maintained discipline through cycles, recently raising its dividend in 2025. UPS is stretching to sustain its dividend as payouts exceed earnings while facing contracting volumes. Pfizer shows normalized earnings and consistent earnings beats, supporting dividend coverage.

Read at 24/7 Wall St.