We recently published a list of These Were Last Week’s 10 Worst Dividend Stocks. In this article, we are going to take a look at where Essent Group Ltd. (NYSE:ESNT) stands against other last week’s worst dividend stocks.
Dividend stocks have historically been the top preference for many investors seeking stable income. However, as the years progress, the markets and the companies go through changes that affect the value of the investments made by the investors. It becomes necessary to review companies’ performance in the market at frequent intervals. In this regard, the list we have put together will show the worst performances of some high dividend-paying companies. The list might help you make informed decisions with your investment.
The second week of February 2025 was not favorable for some dividend stocks. Multiple factors contributed to these stocks’ fall in performance, including sector-wise challenges and broader economic trends. Shifts in monetary policy, like interest changes, could have a notable effect on dividend-paying stocks. The impact would be multifold for companies in specific sectors like utilities or real estate. Macroeconomic conditions like geopolitical tensions or decreasing consumer demand have also imprinted on particular companies.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Though the dividend stocks may have perceived stability, it is necessary to remember that they are not immune to market volatility. Consistency in the dividend payouts can be viewed as a good sign. However, with declining stock prices, there will be a fall in the dividend benefits. In other words, even if a company maintains its payout, the return on investment for the investor could still become negative. Hence, there arises a need to assess the factors contributing to the stock performance in addition to evaluating a company’s dividend yield.
By understanding the reasons behind the poor performances of the stocks in our list, investors can redefine their investment strategy. Consecutively, the information in this article helps identify the companies that lagged in their performances in the last week and also assists the investors in learning from these instances. A disciplined approach to portfolio management always includes learning from the examples. It ensures that we are better prepared to handle market fluctuations in the future. You can be a seasoned investor or a newcomer to dividend stocks. Understanding the factors driving the performance of the company’s value would be immensely useful to you in achieving long-term financial success.
When going through the list, the investors may consider the fitting of these companies in their broader investment strategy. It is important to remember that the performances we will look at in this article are only one week’s performance and do not reflect the future performance of these stocks. It is up to the investors to decide whether these stocks are worth holding onto despite recent setbacks or if their struggles are signaling deeper issues. The article is only an opportunity to reassess the portfolio to match your financial goals.
Our Methodology
In this article, we focused on identifying dividend stocks that have underperformed during the last week, between 10th February and 14th February 2025. The selection criteria required stocks to have a minimum dividend yield of 2%. It helps in keeping the article relevant for income-focused investors. Additionally, we took into our list, only companies with a market capitalization of at least $300 million. With this, we were able to maintain a focus on widely traded companies. Another criterion is that the stocks must have experienced a decline of at least 3% during the specified period as this will help in ensuring the inclusion of significant underperformers in the market. The stocks are ranked according to their dividend yields.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Essent Group Ltd. (NYSE:ESNT)
Dividend yield: 2.20%
Dividend payout ratio: 15.80%
Ex-Dividend Date: March 14, 2025
Number of Hedge Funds: 24
Essent Group Ltd. (NYSE:ESNT) saw a 3.69% decline in its value during the last week, between February 10 and February 14, 2025.
The EPS of Essent Group Ltd. (NYSE:ESNT) during the fourth quarter of 2024 stands at $1.58, which missed the estimated EPS of $1.65 by approximately 4.2%. However, the company realized a positive trend in its revenue. The company reported a revenue of $315 million which was more than the expected value of $313.64 million. The performance is mixed and reflects the challenges faced by Essent Group Ltd. in missing its profitability goals despite experiencing growth in its revenue. Mark A. Casale, Chairman, and Chief Executive Officer stated:
“We believe Essent is well positioned to continue producing strong returns and growing book value per share. The increased dividend and new share repurchase authorization demonstrate our confidence in the stability of Essent’s cash flows and our commitment to a balanced approach to capital management moving forward.”
You can read more about the Essent Group Ltd. (NYSE:ESNT) Q4 2024 Earnings Call Transcript here. Essent Group Ltd. (NYSE:ESNT) offers a dividend yield of 2.20%. The dividend payout ratio is 15.80% – one of the lowest payout ratios on our list. Such a low ratio may attract criticism from investors. While the ratio indicates that the company is retaining a substantial portion of its earnings for reinvestment purposes, it may disappoint the investors who are focused on income and seeking higher returns. A strong institutional interest is recognized with 24 hedge fund portfolios listed in Insider Monkey, owning stakes in the company at the end of Q3 2024.
Overall, ESNT ranks 9th on our list of last week’s worst dividend stocks. While we acknowledge the potential for ESNT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ESNT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
