3 Risky Dividend Stocks to Sell Before 2026

In the world of investing, the siren song of high yields can be irresistible. Yet, as the adage goes, "If it sounds too good to be true, it probably is." Three stocks-Cross Timbers Royalty Trust (CRT), InPlay Oil Corp (IPOOF), and PermRock Royalty Trust (PRT)-have drawn attention for their generous dividends, but their financial underpinnings tell a story of fragility. With commodity markets in flux and production trends deteriorating, these names may soon expose the perils of high-yield traps.

1. Cross Timbers Royalty Trust (CRT): A Trust on the Precipice

Cross Timbers Royalty Trust, a classic example of a passive-income vehicle, operates on a 100% payout ratio, distributing nearly all of its cash flow to unitholders. However, this structure leaves it vulnerable to the whims of oil and gas prices. In Q2 2025, CRT reported an 18% year-over-year decline in oil volumes and a 35% drop in natural gas volumes. The average realized oil price fell by 14%, dragging distributable cash flow (DCF) per unit down 17%.

The trust's asset base-spanning Texas, Oklahoma, and New Mexico-is aging, with production declines accelerating. While CRT's payout ratio is structurally high, it is no longer aligned with its shrinking cash flows. Investors should note that a 100% payout ratio in a declining asset pool is a recipe for insolvency. As one analyst put it, "CRT is a trust in reverse: It's paying out more than it's earning."

2. InPlay Oil Corp (IPOOF): A High-Yield Mirage

InPlay Oil Corp has captivated income-seekers with a 8.6% dividend yield in 2025. The company's transformative acquisition of Cardium-focused light oil assets in Alberta initially seemed to validate this optimism, boosting production by 170% and raising 2025 guidance to 16,900–17,100 boe/d. However, the math doesn't add up.

Despite a 659% surge in free adjusted funds flow in the first half of 2025, the dividend remains underfunded. Forecasts of a 10.8% annual earnings decline over the next three years suggest the company is borrowing against future cash flows to sustain payouts. The acquisition, while accretive, has not yet translated into stable, low-decline cash flows. In fact, InPlay's free cash flow has swung wildly, from -$2.66 million in March 2025 to $5.73 million by year-end, reflecting operational volatility.

The danger here is twofold: a high yield paired with a fragile balance sheet and a business model that relies on aggressive drilling to offset natural production declines. As oil prices waver and the Canadian dollar strengthens, InPlay's ability to maintain its payout is increasingly in question.

3. PermRock Royalty Trust (PRT): A Declining Cash Cow

PermRock Royalty Trust, like CRT, is a 100% payout ratio entity. But where CRT's struggles are tied to production declines, PRT's woes stem from a sharper revenue drop. In Q3 2025, the trust reported a 19.23% year-over-year revenue decline, driven by lower oil volumes (59,142 Bbl vs. 70,584 Bbl) and a 19% drop in realized oil prices.

Despite a robust 85.76% net profit margin, PRT's cash flows are shrinking. Distributable income fell 11% to $1.20 million in Q2 2025, and the November 2025 distribution of $0.028839 per unit appears increasingly precarious. The trust's minimal operating expenses and lack of development costs are assets, but they cannot offset the reality of dwindling production.

The key risk for PRT is its exposure to a single commodity-oil-without the operational flexibility to hedge against price swings. As one report noted, "PRT's high margin is a double-edged sword; it amplifies losses as quickly as it magnifies gains."

Conclusion: The Cost of Complacency

These three stocks exemplify the dangers of conflating yield with value. CRT's structural vulnerability, IPOOF's underfunded payout, and PRT's declining cash flows all point to a common theme: unsustainable models. Investors who cling to these names in 2026 may find themselves on the wrong side of a dividend cut or, worse, a collapse.

The lesson is clear: High yields must be backed by durable cash flows, not just aggressive accounting or optimistic forecasts. As the energy sector grapples with macroeconomic headwinds, prudence-not greed-will be the hallmark of resilient portfolios.