Dividend Duds: 3 Stocks to Dump Before They Drain Your Portfolio
Not all dividend stocks are good, and you should always keep an eye out for dividend stocks to sell if they don’t perform well. Dividend payments from publicly traded companies reached a record $164.3 billion in this year’s first quarter, up 7% from a year ago. Data from the Janus Henderson Global Dividend Index shows that many U.S. companies are returning excess cash to shareholders. Blue-chip companies such as Microsoft (NASDAQ:MSFT) and Chevron (NYSE:CVX) have raised their quarterly dividends. Other companies, such as Costco Wholesale (NASDAQ:COST), have paid special one-time dividends.
Still, other companies, such as Walt Disney Co. (NYSE:DIS), have reinstated their dividend after suspending it during the pandemic. Some companies, such as Meta Platforms (NASDAQ:META), have paid their first dividend ever this year. While distributions to stockholders seem to be popular, not every company is joining the party. Some companies have dramatically reduced their dividend or stopped paying one altogether, drawing the ire of investors.
Here are dividend duds: three dividend stocks to sell before they drain your portfolio.
Dividend Stocks to Sell: Cracker Barrel Old Country Store (CBRL)
The only thing U.S. restaurant chain Cracker Barrel Old Country Store (NASDAQ:CBRL) had going for it was a dividend with one of the highest yields on Wall Street at 9.08%. Unfortunately, Cracker Barrel cut its quarterly payout by 80%, sending investors running for the exits and its share price spiraling downwards. The cut has previously reduced the dividend to 25 cents per share from $1.30.
The company, which operates a chain of restaurants and gift stores, said the dividend payout is being cut to reallocate capital towards overhauling its brand and stores. The company also warned that its upcoming fiscal third- and fourth-quarter results will likely be below expectations due to weak customer traffic. Cracker Barrel Old Country Store provided no guidance. CBRL stock is down 55% in the last 12 months.
Walgreens Boots Alliance (WBA)
Retail pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) also saw its stock take a big hit after the company cut its quarterly dividend payout to shareholders by nearly 50%. Walgreens lowered its dividend to 25 cents a share from 48 cents, a reduction of 48%. The company said the dividend cut strengthened its long-term balance sheet and cash position.
Before the cut, Walgreens paid a dividend that yielded more than 7%, which made it the highest-paying dividend stock in the Dow Jones Industrial Average. Note: Walgreens was kicked out of the Dow this spring and replaced by Amazon (NASDAQ:AMZN). The dividend cut also marked the first time in nearly 50 years that Walgreens reduced its distribution to stockholders. WBA stock has fallen 50% in the past 12 months.
Intel (INTC)
Intel (NASDAQ:INTC) cut its dividend by 66% to 12.5 cents per share as it looks to redirect cash into building foundries that will design the microchips and semiconductors it and other companies design. While the dividend cut has hurt shareholders’ returns, there is little evidence that it has helped the company or its pivot to become a chip foundry business.
Intel continues to report disappointing financial results and a poor showing for its foundry operations. For this year’s first quarter, the company announced that Intel Foundry had $4.4 billion in revenue, down 10% from a year earlier. Intel also continues to report forward guidance that is below Wall Street expectations. All the bad news has conspired to hurt INTC stock, which has declined 37% in 2024.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
