10 Stocks Whose Dividends Are at Risk

There’s an old saying that goes along with investing in dividend stocks: A bird in hand is worth two in the bush.

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There’s an old saying that goes along with investing in dividend stocks: A bird in hand is worth two in the bush. The idea is that investors prefer the certainty of dividends hitting their account over the uncertainty of capital gains, which can be fleeting.

All of that is fine and dandy, assuming the dividend actually gets paid. Unfortunately, that’s not always a sure thing.

Cases in point: Midstream master limited partnership (MLP) operator Plains All American Pipeline (PAA (opens in new tab)) – a mainstay in a lot of income portfolios – slashed its distribution by 45% earlier this year. And business development company Prospect Capital Corporation (PSEC (opens in new tab)) cut its dividend by a good 28% last quarter. If you were depending on those payouts to fund your retirement, that’s a big problem.

The best way to avoid dividend traps is to take a skeptical view of exceptionally high yields. If a stock’s yield seems too good to be true, that could mean the market is pricing in a cut. (Also, dividend cuts are often like cockroaches. Where there’s one …)

Today, we’re going to look at 10 dividend stocks whose payouts are in varying levels of danger. Some are at imminent risk of a drastic cut. Others are stocks that may be fine now, but should be viewed with caution going forward. Some are venerable old names you might recognize from your grandmother’s account, but these companies were a lot healthier back when she owned them.

Data is as of Nov. 3, 2017. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Click on ticker-symbol links in each slide for current share prices and more.

Charles Lewis Sizemore, CFA
Contributing Writer, Kiplinger.com

Charles Lewis Sizemore, CFA is the Chief Investment Officer of Sizemore Capital Management LLC, a registered investment advisor based in Dallas, Texas, where he specializes in dividend-focused portfolios and in building alternative allocations with minimal correlation to the stock market.