Where to Find Durable Dividends in Today’s Stock Market

“Dividend cuts keep me up at night,” a longtime Morningstar.com reader emailed me recently. I had written a column about companies with at-risk dividends after Conagra Brands CAG announced a 50% reduction in its quarterly payout to shareholders. Conagra’s cut was understandable. The maker of Slim Jim, Healthy Choice, and other grocery store staples faces serious challenges and chose to redeploy cash to reduce debt.

I get why investors hate reductions, suspensions, and eliminations of dividends, though. Obviously, they translate into a lower cash payout, which many retirees use to fund living expenses. Then there are the share price declines that tend to accompany cuts. In the case of Conagra, its stock price is down roughly 17% so far in 2026. In 2025, the company lost nearly one-third of its market value.

In this column, I’ll focus on durable dividends. It’s not easy out there for equity-income investors: Yields are low in both absolute and relative terms. But there are stocks in today’s market with reasonable yields belonging to companies well-positioned to maintain their payouts. With the help of my colleague Saumya Gattani, I’ll share a list of US payers that pass forward-looking screens employed by Morningstar dividend indexes.

Investing for Equity Income Safely

First, let’s discuss the challenges equity-income investors currently face. In aggregate, today’s US stock market offers a paltry dividend yield. The market-level payout is well below the inflation rate and even further below bond yields.

Why is the stock market’s yield so low? It owes partly to years of share price appreciation. Then there’s the fact that companies have spent far more on repurchasing their own shares than they have on returning cash to shareholders in the form of dividends.

Bond yields, of course, have climbed to levels not seen since the early 2000s. In September, the US Federal Reserve raised its funds rates for the first time in three years. Inflation remains elevated; US national debt crossed the psychological threshold of $40 trillion; and fiscal deficits show no sign of subsiding. More rate hikes could be in the offing.

While income from bonds is plentiful right now, equity income is challenged. In such an environment, dividend investors can be tempted into stocks with impressive-looking yields that are ultimately illusory. Conagra was a prime example of such a “yield trap.”

How We Identify Durable Dividends

Earlier this year, I wrote about three screens used in Morningstar dividend indexes to sidestep yield traps. None is foolproof. But Gattani, a quantitative researcher on Morningstar Indexes, showed that over the past 20 years, each has tilted the odds in equity-income investors’ favor.

First is the payout ratio, which measures the degree to which the dividend is covered by a company’s earnings. If the ratio is too high, the dividend may be unsustainable. Morningstar dividend stock indexes screen out companies with payout ratios above 100%.

Another dividend screen, distance to default, measures financial health. It gauges the risk that a company’s assets will fall below the sum of its liabilities, considering equity value and share price volatility on the theory that the market can sniff out weakness before it shows up in balance-sheet disclosures. Companies are compared with sector peers. The bottom half of the universe on distance to default is ineligible for dividend indexes.

Finally, we use the Morningstar Economic Moat Rating as a dividend screen. Assigned by our equity research team, moats signify a durable competitive advantage. Moats protect the profits that fund dividends. Some of our dividend indexes exclude companies rated no-moat by Morningstar analysts.

Stocks With Decent Yields and Durable Dividends

Gattani ran the numbers as of our September index reconstitution and compiled a list. Below are 20 stocks that might attract income investors with their impressive yields and also tick the boxes on the three metrics discussed above. They have payout ratios below 100%, distance-to-default scores better than half their sector peers, and moats that protect the profits that fund their dividends.

Unsurprisingly, many of these stocks come from sectors like utilities and consumer defensive, which tend to be well-represented in dividend indexes. Interested investors should conduct supplemental research. Some of these companies are master-limited partnerships. Others may be undergoing mergers and acquisitions.

Don’t Sacrifice Total Return for Income

Chasing the stock market’s highest yields can be dangerous. High yields often belong to troubled companies that end up cutting their dividends. Conagra is a recent example of a stock whose high yield ultimately proved illusory. A dividend cut on top of serious share price depreciation made for a bad investor experience.

When investing in dividend payers, it’s crucial to be risk-aware. Diversification across multiple dividend payers is wise, and so is screening for yield traps. Forward-looking screens for corporate quality and financial health can help equity-income investors home in on durable dividends. I hope investors find the durable dividend list useful.