It’s no secret that as the dollar continues to strengthen, multinationals are suffering as profits are pinched. We’ll see the real impact of this during first-quarter earnings season, which kicks off in early April.
In the meantime, investors are flocking to stocks with high dividend yields, which are especially attractive in this low interest rate environment. The in-flows into quality high dividend stocks are so strong now, that I recently recommended two big dividend plays in my Blue Chip Growth newsletter.
Now, not all dividend stocks are created equally; many dividend plays are becoming increasingly risky due to erratic sales and earnings growth. For example, Chevron Corporation (NYSE:CVX) recently suspended all of its stock buyback activity due to recent operating losses and declining sales. Suspending buyback activity is a big red flag as far as I’m concerned.
So, predicting that many big multinational companies may cut their dividends is not a far-fetched possibility, and if a flagship stock cuts its dividend due to eroding sales and/or earnings, a lot of yield-seekers will be unhappy. The truth of the matter is that dividends are still rising, but I’m worried that yield seekers will become nervous when they see sloppy sales and earnings with some of their favorite multinationals.
So, right now I recommend sticking with dividend stocks that have good sales and earnings and avoiding stocks that have poor buying pressure. As always, you can do this quickly and easily by running any potential new buys through Portfolio Grader.
I’ve been monitoring big dividend payers and found that the following five companies are struggling in the current strong dollar market. If you currently own any of these five stocks I strongly recommend you find a good time to take profits.
Dividend Stocks to Sell: Caterpillar Inc. (NYSE:CAT)
If you’re not familiar with Caterpillar Inc. (NYSE:CAT) is the world’s largest manufacturer of earth-moving equipment.
With a workforce of more than 114,000, Caterpillar brings in $55 billion in annual sales. CAT products range from industrial gas turbines to mini excavators. So, if you need heavy equipment to mine, build or do just about anything, you need Caterpillar.
CAT currently pays a dividend yield of 3.32%. CAT fairs slightly better in Portfolio Grader, but not by much, earning a D-grade.
Sell Caterpillar stock.
Dividend Stocks to Sell: Garmin Ltd. (NASDAQ:GRMN)
Founded in 1990, Garmin Ltd. (NASDAQ:GRMN) is based in Schaffhausen, Switzerland. Garmin manufactures and designs portable GPS products.
Garmin has five segments: Auto/Mobile, Aviation, Marines, Outdoor and Fitness. Garmin brings in more than $2 billion in revenue each year and has a workforce of more than 10,000 worldwide.
GRMN pays a dividend yield of 3.64%. Portfolio Grader rates GRMN as a D-rated sell, thanks to Garmin’s poor buying pressure and lackluster fundamental metrics.
Dividend Stocks to Sell: Mattel, Inc. (NASDAQ:MAT)
Founded in 1945, Mattel, Inc. (NASDAQ:MAT) manufactures, creates and markets a wide array of toy products worldwide.
Mattel is broken into three segments: North America, International and American Girl. MAT is probably most well-known for its Hot Wheels, Fisher Price and Disney product lines.
Mattel has a workforce of 31,000 employees worldwide and brings in more than $6 billion in revenue each year.
MAT pays a dividend yield of 6%. However, Mattel also suffers from poor buying pressure and also earns an F-grade in Portfolio Grader. I’d advise selling MAT stock at this point.
Dividend Stocks to Sell: Transocean LTD (NYSE:RIG)
Transocean LTD (NYSE:RIG) is an offshore contract drilling company that operates worldwide. Transocean specializes in in deep-water and harsh-environment drilling.
As of 2014, RIG owns or has partial ownership interests in 79 mobile offshore drilling units. Transocean has more than 15,000 employees worldwide.
RIG currently pays a hefty dividend yield of 18.81%. However, the incredibly high dividend is a result of Transocean having lost over half of its value in the past six months.
So, while RIG stock’s yield is very impressive, Transocean’s overall score in Portfolio Grader is pretty dismal — earning an F-grade.
Like the other stocks, Transocean’s buying pressure seems to be weighing RIG stock down. Sell RIG now.
Dividend Stocks to Sell: Wynn Resorts, Limited (NASDAQ:WYNN)
Wynn Resorts, Limited (NASDAQ:WYNN) operates luxury casino resorts in Las Vegas, Macau and Singapore. Macau is dominating Wynn Resorts’ growth and is the only place in China where gambling is legal.
WYNN has expanded its two major markets, Las Vegas and Macau, with the Encore next to the Wynn Las Vegas, and the Encore adjacent to Wynn Macau. In total, Wynn Resorts brings in more than $5 billion in revenue each year.
WYNN pays a dividend yield of 4.08%. WYNN currently earns an overall F-grade in Portfolio Grader, mainly due to Wynn Resorts’ failing buying pressure.
Sell WYNN stock now.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.