7 Sorry Dividend Stocks to Sell in February Before It’s Too Late

  • These dividend stocks to sell are lackluster income bets with troubling financials
  • Big Lots (BIG): Net income and FCF margins are firmly entrenched in the negative
  • Campbell Soup Company (CPB): Seven years of consistent earnings decline, with its massive debt dwarfing its cash balance
  • Intel (INTC):  Cash flows have dropped by 50% on a year-over-year basis
  • Dominion Energy (D): Faces rising fuel costs, utility worker shortages which continue to weigh down its uncertain business climate.
  • Takeda Pharmaceutical (TAK): A long-term speculative investment, with a so-so dividend profile
  • Altria Group (MO): Reliance on cigarettes business, is a massive drawback.
  • Camping World (CWH): Wholesale RV sales dropped by more than 50% in December compared to last month
Dividend Stocks to Sell - 7 Sorry Dividend Stocks to Sell in February Before It’s Too Late

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When it comes to dividend stocks, the consensus is that the higher the yield, the better. High dividend yields can often be an indication that something is wrong. Dividend stocks are not always as safe and secure as some assume. Despite what conventional wisdom may lead you to believe, high dividends should not necessarily be seen as a sign of a surefire investment. Therefore, investors should always know which dividend stocks to sell and which to wager on.

Unusually high dividend yields may initially appear attractive when assessing a stock, but it should be considered a red flag of financial distress. Unfortunately, there is no guarantee that these high yields will remain consistent; dividend payments are almost always subject to the discretion of a board of directors who can discontinue them without warning or notice. With that said, let’s look at seven sorry dividend stocks to sell now.

BIG Big Lots $16.02
CPB Campbell Soup $51.86
INTC Intel $27.94
D Dominion Energy $62.67
TAK Takeda Pharmaceutical $15.88
MO Altria $44.41
CWH Camping World Holdings $24.73

Big Lots (BIG)

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Shares of Big Lots (NYSE:BIG) experienced unprecedented success in 2020 and 2021, as the pandemic had created a unique set of circumstances that highly favored big-box retailers. This allowed Big Lots to take full advantage of the surge in consumer spending during that period, pushing its stock price to record highs.

Unfortunately, the conditions of the economy have drastically changed, resulting in rising inflation and lower consumer demand. Growth and profitability metrics for the firm are down in the doldrums for the firm, with conditions only expected to get worse for the retail sector. Its net income and free cash flow margins are firmly in the negative, which suggests a dividend cut could be on the cards. Big Lots is unfortunately one of the top dividend stocks to sell.

Campbell Soup Company (CPB)

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Campbell Soup Company (NYSE:CPB) is a popular consumer staples stock that has been a lackluster performer over the years. It’s another one of the top dividend stocks to sell.

When it comes to dividend stocks, Campbell Soup is one to avoid. It has had seven years of consecutive decline in its earnings since 2005, with its debt dwarfing its meager cash balance. Further, it offers investors a paltry yield of just under 3%, with no hope for payout growth. If you’re seeking a long-term reliable dividend option, Campbell Soup should not be anywhere on your shortlist.

Moreover, it faces immense pricing pressure, given its five largest customers account for almost 50% of its net sales. It has to start growing its revenue volume; otherwise, it will continue to wither in the high inflationary environment.

Intel (INTC

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Intel’s (NASDAQ:INTC) future is a major cause for concern as it continues to suffer diminishing market share, hampered profitability, and a deteriorating cash flow situation that has dropped by almost 50% on a year-over-year basis. Inevitably, dividends may take the biggest hit, given Intel’s massive cash outflow. Moreover, Intel will be investing immensely in expanding its foundry business through new production facilities, worsening its cash flow problem.

Intel finds itself in a tough situation. While the company may benefit from CHIPS Act funding, they face the dilemma of abandoning its plans to manufacture chips in China. This would have the firm leave a sizeable market, a sacrifice that may not be sustainable for Intel’s long-term success. It’s certainly a conundrum as Intel wrestles with how best to balance the scales.

Dominion Energy (D)

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Dominion Energy (NYSE:D) is a leading utility giant and a powerhouse in the energy industry. It caters to seven million customers across eleven states, including the District of Columbia.

Its stock has been rough over the past year, and it looks like it may continue to struggle soon. Many analysts have been sour on Dominion due to a litany of issues, such as utility worker shortages and rising fuel costs, which strain its already uncertain business climate. Moreover, the company has been investing heavily in its renewable energy investments, though these projects are not likely to generate nearly as much electricity as conventional sources. Most investors regard these initiatives with skepticism, which should weigh down its dividend-paying ability and cash flows.

Takeda Pharmaceutical (TAK)

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Takeda Pharmaceutical’s (NYSE:TAK) expectations of revenue growth and operating margin improvement over the mid-term have been met with skepticism from the markets, who remain unconvinced that the Japanese pharma giant can withstand the immense competitive pressure from generics on key products such as Vyvanse and Trintellix.

This has been compounded by the flagging of overall growth for the company, which in turn has led to investors becoming increasingly concerned about Takeda’s ability to produce real revenue gains in the near future. It remains to be seen how Takeda will overcome this market fatigue and turn it into a tangible bottom-line expansion. Though it yields a decent 4.1%, its 5-year dividend growth rate is at a negative 3.75%. Given the circumstances, it’s tough to expect much from TAK stock.

Altria Group (MO)

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Altria Group (NYSE:MO) has long been considered a great dividend provider, yet its ventures and investments have failed to diversify its revenue base. This has left it as dependent as ever on cigarette sales, which continue to see declining demand each year.

Altria’s dividends have been a key element of its bull case over the years, but they might not remain attractive for long. The cigarette giant has been struggling to cope with declining volumes, and cost hikes have been its strategy to offset this problem. It appears its old model of relying primarily on cigarettes is breaking down. With further increasing volume exits, another price hike may no longer be enough to keep its dividends attractive and sustain its business over the long term.

Camping World (CWH)

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Camping World (NYSE:CWH) is an excellent choice in the recreational vehicle niche and has taken proactive steps to grow its revenue base. Its expansion has included services related to RVs, contributing substantially to its top and bottom-line results. To put its success into perspective, the company’s top line grew by 13.4% over five years, significantly higher than most of the market. Additionally, investors are looking toward its attractive dividend yield of over 9%.

With the economy in shambles and the pandemic firmly in the rear-view mirror, RV demand is rapidly declining, posing a major obstacle for the company. According to Baird reports, December saw a 51% decrease in wholesale RV shipments compared to the same month last year. Unfortunately, other macroeconomic factors remain an issue for both demand and the camping industry as a whole.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Article printed from InvestorPlace Media, https://investorplace.com/2023/01/7-sorry-dividend-stocks-to-sell-in-february-before-its-too-late/.

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