It’s starting to sound like a broken record — the uncertain U.S. economy, the slowdown in China and, of course, the good ol’ eurozone. Nothing’s a sure bet right now, and so, investors have been all over dividend stocks.
The proof is in the pudding: While the S&P 500 is in the red about 1% in the past three months, numerous telecoms, utility and tobacco stocks have been marking new high territory. Or look at ETFs: The iShares Dow Jones Select Dividend Index (NYSE:DVY) is up 3%, and the popular Treasury fund iShares Barclays 20+ Year Treasury Bond Fund (NYSE:TLT) is up almost 11%.
People aren’t just running to safety — they’re sprinting.
So it’s some wonder, then, that a number of stocks with nice dividends — including some truly defensive names — haven’t fared nearly as well. Here’s a look at 10 dividend stocks that the market has left behind:
McDonald’s (NYSE:MCD, 3% yield) has had a rough 2012 — it’s down 5% in the past three months, not to mention 8% year-to-date losses vs. the same move up for the S&P 500. You could say things simply had to go down after a 30% run-up in 2011 made it the best stock in the Dow Jones Industrial Average. However, the increasing cost of beef and worsening global economic conditions also could be playing a role in the lackluster performance.
General Dynamics (NYSE:GD, 3.2%) is down 7.5% year-to-date after dropping 3.5% in the past three months. GD would seem a reliable buy with its hearty yield, but a sluggish economy and a ballooning federal deficit means that calls for hefty cuts in defense spending are getting louder — especially in the midst of election-year politics.
Procter & Gamble (NYSE:PG, 3.5%) has dropped 3% in the past three months, a little more than the 2.5% loss it has suffered since the year started. Why? Rising commodity costs are partly to blame, as P&G was forced raised prices while its competitors didn’t follow suit. But all the restructuring at the company hasn’t done anything to help either, and CEO Bob McDonald is taking the heat for it.
Best Buy (NYSE:BBY, 3.6%) has been one of the biggest losers, down 13% since mid-April and almost 20% for the year. Its 3% yield even before the past few months’ losses hasn’t been enough to make investors ignore the business it’s hemorrhaging to online giant Amazon (NASDAQ:AMZN) — and that yield has been driven up to almost 3.6% on losses alone. Now, there’s even talk that the company might be taken private.
Kellogg (NYSE:K, 3.5%) was looking good to start the year, but has ridden a 10% loss in recent months — mostly fueled by poor earnings guidance in April — to drop 5% in the red YTD. Rising commodity costs and the European slowdown also have been no friend to Kellogg. Kellogg recently acquired the Pringles brand from fellow straggler Procter & Gamble, which hopefully should turn things around for both companies.
GlaxoSmithKline (NYSE:GSK, 5%) boasts the largest yield of the group, and even it hasn’t been able to get investor support, basically tracking the S&P 500 to slight losses. However, it recently purchased biotech firm Human Genome Sciences (NASDAQ:HGSI) — a possible turnaround catalyst for GSK after it was hit hard by a sharp decline in Avandia sales because of user risks and the loss of patent protection for another key drug.
Applied Materials (NASDAQ:AMAT, 3.5%) got crushed in the past few months with a 12% fall in shares, good for year-to-date losses of 3%. AMAT has a hand in the saturated solar industry, making semiconductor wafer systems used in the production of panels. It also was among a host of stocks to recently slash forecasts, which caused its most recent dip.
Walgreen (NYSE:WAG, 3.6%) is down 8% for the past three months and for the year. The company hasn’t been quite right ever since selling off prescription benefits manager Express Scripts (NASDAQ:ESRX) in 2011. Walgreen also just acquired European pharmacy and beauty chain Alliance Boots, which doesn’t seem promising given the European market at the moment.
AK Steel (NYSE:AKS, 3.6%) is the worst of the worst in this group, with a 26% three-month decline and 33% YTD drop helping boost its yield. There’s not much to say about AKS: Just when everyone think materials stocks have bottomed out, things just keep getting worse.
ConAgra (NYSE:CAG, 3.9%) has seen a steady drop this year as well, with 4% losses since April contributing to a 6% decline since January. The company’s nearly 4% yield hasn’t helped the packaged-food giant as consumers are trading down from brand names to less-expensive generic products in today’s tough economy — and investors have responded accordingly.
Taiwan Semiconductor (NYSE:TSM, 4%) has struggled with the death of the PC and, whether you call the new age post-PC or PC-plus, it hasn’t been pretty for the world’s largest dedicated semiconductor foundry. TSM has dropped 16% in the past three months alone, completely canceling out gains made through the first half of the year.
As of writing this, Alyssa Oursler did not hold a position in any of the aforementioned securities.