Dump These Dividend Stocks NOW!
We’re always optimistic about every investment we make.
But sometimes it doesn’t work out, even for our dividend investments.
Companies cut and suspend payments all the time.
Don’t they know we’re expecting these dividends in our bank account?!
It’s a good idea to keep tabs on our dividend-payers to make sure our payments keep rolling in.
The following stocks are either cutting payments or are about to…
Now is a great time to sell.
First up is Crown Castle (ticker: CCI), a $43 billion telecommunications REIT based in Texas.
Crown Castle is a very popular dividend pick, but it recently made the cardinal sin of cutting its dividend.
It cut its dividend payment by more than 30%!
The reason? Crown Castle is selling its fiber business and focusing entirely on cell towers.
Maybe you’re okay with Crown Castle selling some of its business.
But the dividend is moving in the wrong direction so investors should dump it.
And if the dividend cut doesn’t convince you, maybe Fitch will.
Fitch, one of the top credit ratings agencies, recently warned Crown Castle’s rating might fall to BBB+.
A lower Fitch rating means they think Crown Castle is more likely to default on its debt. It will certainly make financing more expensive.
Still want a telecom REIT?
Consider American Tower (ticker: AMT), a $100 billion telecom REIT, which operates cell towers as well as radio and TV antennas.
And American Tower has increased its dividend by an average of 16% each year over the last decade.
Don’t be fooled by Annaly Capital Management’s (ticker: NLY) really high 14% dividend yield.
Annaly’s 14% yield looks really great but should be treated as a major red flag.
Annaly is a mortgage REIT, which invests in mortgages and loans rather than actual real estate properties.
Holding mortgages is a business I wouldn’t want to be in at the moment.
The average 30-year mortgage rate has been over 6% for the last two and a half years and is currently creeping closer to 7%.
A 7% mortgage rate will keep homebuyers on the sidelines, which will drive down home prices and lead to foreclosures.
Side note: Just this weekend I was talking with a real estate agent who said they were dealing with their first Short Sale in over 12 years… an ominous sign.
Mortgage REITs, like Annaly, will be caught holding the bag on those foreclosed mortgages.
Is the 14% yield still too enticing?
Consider other high-yielding investments like Altria Group (ticker: MO) and Verizon (ticker: VZ).
Granted, their yields are between 6-7%, but their businesses are much more stable than residential mortgages.
Clorox (ticker: CLX) was everywhere during the COVID pandemic.
Here’s the good news: Clorox has almost 50 years of consecutive increases to its dividend, which is amazing.
But the bad news is awful: earnings have taken a nosedive in just 5 short years, dropping almost 70%!
A drop in earnings means Clorox’s payout ratio is over 80%, which is WAY too high.
Clorox might be able to keep its dividend increase streak alive, but it won’t be for much longer.
Still want to own some stocks in household products?
Colgate-Palmolive (ticker: CL) and Kimberly-Clark (ticker: KMB) have increased their dividends for 63 and 54 straight years, respectively.
And both companies have much lower payout ratios, so those dividends have a lot more room to grow!
What dividend trades are you making?
Michael Jennings, Editor
Dividend Stocks Research
Category: Dividend Bust
