In this article, we will be looking at 10 dividend stocks that are underperforming in 2025.
Two months into 2025, the stock market has already taken a massive hit from macroeconomic factors. The new power in the White House has brought about so many changes, influencing the broader market. For instance, the new tariffs proposed earlier by the U.S. President – a 25% increase on imports from Canada and Mexico and an additional 10% on imports from China – have been perceived by analysts to have a substantial impact on the stock market. Also, the advent of new AI models from China is affecting the trading volume and value in the U.S. Some dividend stocks are also getting caught in these giant waves while others are thriving.
The shifting economic conditions, changing investor preferences, and company-specific challenges have strongly impacted the performances of a few dividend-paying companies, making the year 2025 more challenging.
READ ALSO: These 10 Dividend Stocks are Outperforming the Market in 2025
In the market, the cautious stance of the Federal Reserve regarding the rate cuts has kept borrowing costs elevated. It has negatively reflected companies relying heavily on debt to maintain their dividend payouts. Furthermore, with the investors’ focus shifting toward technology and AI, some sectors, like consumer staples and utilities, which were traditionally considered safe investments, are declining in their performance.
At the same time, investors increasingly prioritize companies with strong earnings growth over yield-focused companies. With limited capital flowing into the market and shifting priorities, dividend stocks struggle to justify their payouts.
However, it is essential to remember that despite the broader headwinds, not all dividend stocks have suffered. Some have maintained strong financials, thereby continuing to reward investors. Others face significant challenges, including weak earnings reports, declining free cash flow, or strategic inefficiency. For instance, CNN has reported a slump in the energy sector caused by rising inflation rates and price hikes, which are affecting the earnings of some companies in the industry. Because of such challenges, many dividend companies are reevaluating their dividend policies, causing either a decline in payouts or a reallocation of capital toward growth opportunities to remain competitive.
The biggest question, however, is, “What does this mean for the investors?” The new developments raise concerns and signify the need to evaluate more than just a stock’s yield. Future guidance, sector outlook, and the company’s financial health should be prioritized before making an investment decision. In this regard, this article presents investors with an opportunity to look into the underperforming stocks in 2025. The companies on our list may recover, so their current undervalued price could be seen as an opportunity for income-focused investors.
Let’s look closer at our 10 dividend stocks that have struggled in 2025. Stick with us as we count them down from 10 to 1 and explore the reasons behind their underperformance. The top 5 on our list may surprise you.
Our Methodology
To compile our list of 10 underperforming dividend stocks in 2025, we considered companies with a market cap of $1 billion or more since we wanted to include those companies that are financially strong. Next, we looked for stocks with a negative year-to-date (YTD) return as of February 28, 2025, indicating underperformance. We did not include stocks with a dividend yield of less than 4% since income-focused investors are interested in a dividend yield of 4% or more. Also, to drive the value of our article upwards in terms of information and usefulness, we looked into dividend yield, payout ratio, and the number of hedge funds to create the list.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Xenia Hotels & Resorts, Inc. (NYSE:XHR)
Dividend yield: 4.17%
Ex-Dividend Date: March 31, 2025
Number of Hedge Funds: 17
Headquartered in Orlando, Xenia Hotels & Resorts, Inc. (NYSE:XHR) is a real estate investment trust (REIT) engaged in owning and operating luxury and upper-upscale hotels in key U.S. markets. The company exclusively partners with top-tier brands such as Marriott, Hyatt, and Hilton and maximizes its long-term revenue growth by focusing on high-demand urban and resort destinations. The company’s properties are in the South Atlantic, West South Central, Pacific, and Mountain regions.
As of the end of February 2025, Xenia Hotels & Resorts, Inc. (NYSE:XHR)’s year-to-date returns reflected a -9.19% decrease. In addition to the consumer spending shifts and rising operational costs in the U.S., the company faced problems with its renovations, causing a decline in value. The renovation of the Grand Hyatt Scottsdale Resort was expected to generate high earnings. However, the impact of Hurricane Milton caused the company to revise its guidance downwards, resulting in a negative outlook during 2024. However, EPS for the fourth quarter stood at $0.39, surpassing the previous year’s $0.07 and the anticipated $0.38. The company repurchased over 500,000 shares of common stock in the fourth quarter, and the renovations are expected to increase the company’s revenue. Both this commitment to stakeholders and anticipated future growth from renovations may positively affect the company’s value.
Xenia Hotels & Resorts, Inc. (NYSE:XHR) offers a 4.17% dividend yield. However, the payout ratio stands at 320%, signaling unsustainability. Institutional interest in stock remains moderate, as represented by 17 hedge funds from the Insider Monkey database holding stakes in the company, as of Q4 2024.
Analysts remain optimistic, with a 22.40% upside of $16.50, providing a Buy rating. Investors purchasing stocks before March 31, 2025, will be eligible for an April 15, 2025, dividend payout.
9. Marriott Vacations Worldwide Corporation (NYSE:VAC)
Dividend yield: 4.19%
Ex-Dividend Date: March 5, 2025
Number of Hedge Funds: 28
Marriott Vacations Worldwide Corporation (NYSE:VAC) is a U.S.-based company developing, marketing, selling, and managing vacation ownership and related products. The company used to be part of Marriott International but now operates independently from Florida. Currently, the company operates resorts and serves owners and members across North America, the Caribbean, Europe, and Asia-Pacific.
Year-to-date return of the company, ending February 28, 2025, saw a downward trend of -16.13%. The business impact of the Maui wildfires from 2023 was huge and still impacts the company’s performance. Additionally, the lower exchange revenue at Interval International further contributes to the decline year-to-date. Marriott Vacations Worldwide Corporation (NYSE:VAC)’s EPS for the fourth quarter stood at $1.86, beating the anticipated value of $1.51 but still behind the previous year’s value of $1.88. However, with a 7% increase in contract sales in the fourth quarter and plans for new developments, including a Marriott Vacation Club in Thailand, additional units in Bali, and the first Hyatt Vacation Club in Orlando, the company gains a positive outlook among the analysts.
Marriott Vacations Worldwide Corporation (NYSE:VAC) offers a 4.19% dividend yield. The 54.72% payout ratio indicates a healthy balance between earnings used for dividend payments and earnings retained for reinvestments or meeting debt obligations. Backed by 28 hedge funds from the Insider Monkey’s database in Q4 2024, the stock remains attractive for income and growth investors.
Analysts maintain a Buy rating, anticipating a 29.32% upside to $97 from the current price as of March 4, 2025. Investors looking to benefit from the next dividend payment can purchase shares before March 5, 2025.
8. Scorpio Tankers Inc. (NYSE:STNG)
Dividend yield: 4.02%
Ex-Dividend Date: March 7, 2025
Number of Hedge Funds: 32
Monaco-based tanker shipping company, Scorpio Tankers Inc. (NYSE:STNG) is a leader in transporting refined petroleum products. The company owns or leases a fleet of product tankers, including LR2, MR, and Handymax tankers. Its current fleet has an average life of 8.8 years. The company prioritizes fuel efficiency and environmental friendliness in its transportation services. The key regions served by the company include the Baltic/North Sea, the Gulf/Mediterranean/Europe/Asia, and potentially others.
As of February 28, 2025, Scorpio Tankers Inc. (NYSE:STNG) records a 20.49% decline in its year-to-date return. The market challenges, including declining tanker rates and oversupply in Europe, contribute to the deterioration of the company’s value. Additionally, the ongoing refinery maintenance decreased seaborne volumes, causing the company’s value to go down further. The company’s EPS during the fourth quarter stood at $0.63, falling short of the anticipated value of $1.68. However, the repurchase of shares amounting to $419 million and the completion of special surveys and dry docking of 54 vessels in 2024 point to a positive outlook for the company.
Scorpio Tankers Inc. (NYSE:STNG) presents a dividend yield of 4.02%, backed by a 12.17% payout ratio, which suggests that the company can fund its payouts using its earnings alone. A strong institutional interest is recognized with 32 hedge funds from the Insider Monkey database on board.
Analysts forecast a massive 72.54% upside to $69 and maintain a Buy rating. Investors interested in the next dividend payout can purchase the stock before March 7, 2025.
7. Virtus Investment Partners, Inc. (NYSE:VRTS)
Dividend yield: 4.79%
Ex-Dividend Date: March 30, 2025
Number of Hedge Funds: 26
Based in Hartford, Connecticut, Virtus Investment Partners, Inc. (NYSE:VRTS) is a multi-boutique asset management company providing diverse equity, fixed income, and alternative investment solutions. The company serves institutional and retail clients across North America. It stands out from its competitors by integrating independent, specialized investment strategies under a single platform.
As of February 28, 2025, the company’s year-to-date return performance showed a decline of -15.19%. The negative market performance caused by factors including the rising costs was a primary contributor to the fall in Virtus Investment Partners, Inc. (NYSE:VRTS)’s YTD performance. As a result, the company’s total asset management decreased by $8.7 billion, leading to a decline in the company’s value. EPS, reported by the company during the fourth quarter, stands at $7.50, missing the anticipated value by $0.12. On the other hand, the new products introduced by the company, including a new ETF from Sykes, are gaining recognition and positive reception.
Virtus Investment Partners, Inc. (NYSE:VRTS) provides a 4.79% dividend yield with a payout ratio of 47.07%. The latter indicates the capability of the company to cover its dividend payouts with less than half its earnings. Twenty-six hedge funds hold positions in the company, according to Insider Monkey’s Q4 2024 database, suggesting strong institutional interest.
Analysts maintained a consensus Sell rating, which raised concerns. The 1-year price target of the stock has a 12.25% upside to $210 from its current price. The ex-dividend date is March 30, 2025, while May 14, 2025, has been announced as the dividend payout date.
6. Northern Oil and Gas, Inc. (NYSE:NOG)
Dividend yield: 5.71%
Ex-Dividend Date: March 28, 2025
Number of Hedge Funds: 42
Northern Oil and Gas, Inc. (NYSE:NOG), an independent energy company based in Minnesota, U.S., is engaged in the business of acquiring, exploring, developing, and producing oil and natural gas properties. The regions covered by the company include Williston, Uinta, Permian, and Appalachian basins within the contiguous United States.
As of February 28, 2025, the stock declined by 17.68% YTD. The decline is primarily attributed to the shift in the company’s focus on expensive acquisitions. For instance, the acquisition of XCL assets cost the company $510 million. The investment was funded through debt, and the resulting interest expense affected the company’s value. The Q4 earnings call indicated an EPS of $1.11, which missed both the estimates and the previous year’s value of $1.13 and $1.61. However, the overall financial performance is high, with an adjusted EBITDA of $1.6 billion and free cash flow of $461 million, reaching the peak in 2024. Northern Oil and Gas, Inc. (NYSE:NOG) expects strong growth in the future, which will be contributed to by their previous acquisitions, including XCL.
The company offers a substantial income stream covered by earnings with a 5.71% dividend yield and a healthy 31.91% payout ratio. With 42 hedge funds from the Insider Monkey database holding the shares of Northern Oil and Gas, Inc. (NYSE:NOG) at the end of Q4 2024, the institutional interest in the stock remains strong.
Analysts maintain a Buy rating based on the projection of a 55.33% upside to $47.50. Investors interested in stock can purchase before March 28, 2025, to benefit from dividends.
5. Polaris Inc. (NYSE:PII)
Dividend yield: 5.97%
Ex-Dividend Date: March 3, 2025
Number of Hedge Funds: 26
Polaris Inc. (NYSE:PII) is an automotive manufacturer headquartered in Minnesota, U.S. The company designs, manufactures, and sells off-road vehicles. This includes All-terrain vehicles (ATVs), side-by-side vehicles, utility vehicles, snowmobiles, and other power-sport vehicles. The company also deals with parts and accessories for automotive and apparel. The company serves many regions through independent dealers, distributors, and online networks, including the U.S., the U.K., France, China, and India.
The company saw a 23.18% decline in its share price in 2025, ending February 28. The company’s plans to reduce production contribute to its decline. The plan was part of a strategy to match production with demand, reducing inventory-related costs. However, it was negatively received by the investors, though it allowed the company to achieve $200 million in structural savings. Polaris Inc. (NYSE:PII)’s EPS, as reported in the Q4 earnings call, recorded a decline of 54% year-over-year to $0.92. However, the company has a positive outlook fueled by introducing new product innovations such as the Indian Motorcycle Scout and RZR Pro.
Polaris Inc. (NYSE:PII) offers a dividend yield of 5.97%. However, this attractive yield is overshadowed by an unsustainable 135.38% payout ratio, signaling the possible use of debts in future payouts. However, with 26 hedge funds invested as of Q4 2024, the institutional sentiment remains cautious.
Analysts still see a 17.43% upside to a 1-year price target of $52, maintaining a consensus Hold rating. Investors who purchased stock before March 3, 2025, were eligible for the dividend payout on March 17, 2025.
4. American Assets Trust, Inc. (NYSE:AAT)
Dividend yield: 6.06%
Ex-Dividend Date: March 6, 2025
Number of Hedge Funds: 16
Headquartered in San Diego, American Assets Trust, Inc. (NYSE:AAT) is a real estate investment trust (REIT) specializing in owning, operating, acquiring, and developing high-quality retail, office, and residential properties. The company distinguishes itself from its competitors by focusing on prime urban and coastal markets. The company uses long-term ownership strategies to maintain substantial asset value and rental growth.
By February 28, 2025, the company’s year-to-date return had declined to 14.58%. The unfavorable economic environment and interest rate fluctuations led to the company’s underperformance. The sale of Del Monte Shopping Center for $123.5 million, a prominent asset of the company, was seen as a sign of the company’s financial distress. The EPS of $0.15 during the company’s fourth quarter surpassed the anticipated $0.14. American Assets Trust, Inc. (NYSE:AAT) has no debt maturity till 2027, thus gaining financial stability between 2025 and 2026. This recent performance may be causing a positive outlook for the company.
American Assets Trust, Inc. (NYSE:AAT) presents a 6.06% dividend yield. However, the payout ratio of 142.55% raises concerns regarding the sustainability of the payouts. The stocks are part of 16 hedge fund portfolios listed in Insider Monkey’s Q4 2024 database, marking a moderate institutional interest.
The stock has a Hold rating from analysts. 16.28% upside to $26 offers some potential, but caution may be required. Interested investors can purchase stocks before March 6, 2025, to benefit from the next dividend payout.
3. Edison International (NYSE:EIX)
Dividend yield: 6.08%
Ex-Dividend Date: April 7, 2025
Number of Hedge Funds: 38
The public utility holding company based in California, Edison International (NYSE:EIX), is engaged in generating, distributing, and investing in electric power and energy services. The company primarily focuses on clean energy and grid modernization. Through its subsidiary, Southern California Edison (SCE), the company serves over 15 million people living in central, coastal, and Southern California regions.
Year-to-date, the stock faced a decline of -29.82% as of February 28, 2025. The core EPS of $4.93 surpasses the midpoint of guidance. However, the decline comes as it has been ruled out that Southern California Edison customers will cover $1.6 billion of a $2.4 billion wildfire settlement, impacting ratepayers. Edison International (NYSE:EIX)’s shareholders will fund $1 billion, with additional investments in wildfire prevention. On the other hand, the company’s revised EPS guidance for 2025 stands at $5.50 to $5.90, plus $0.44 from TKM settlement. The 21st consecutive annual increase in dividend stands at 6.1%, marking a positive outlook for the company.
Edison International (NYSE:EIX) offers a dividend yield of 6.08%. The dividend payout ratio of 95.69% indicates the company’s capability to cover its dividend payments using the generated earnings. Our Insider Monkey database shows 38 hedge funds held stakes in the company in Q4 2024, suggesting a high institutional interest.
Analysts maintain a Buy rating, with a 1-year median price target of $69.23, projecting a 23.13% upside from the current price. Investors can purchase shares before April 7, 2025, and benefit from the upcoming dividend payout.
2. Noble Corporation plc (NYSE:NE)
Dividend yield: 7.72%
Ex-Dividend Date: March 5, 2025
Number of Hedge Funds: 32
Noble Corporation plc (NYSE:NE) is an offshore drilling contractor, headquartered in London, England. The company focuses on the oil and gas industry and provides contract drilling services. The company specializes in ultra-deepwater and harsh environment drilling, with its mobile offshore drilling units like floaters and jack-ups. The company serves established and emerging regions, including the North Sea, West Africa, and the Gulf of Mexico.
Noble Corporation plc (NYSE:NE) has faced a YTD decline of 20.62% as of February 28, 2025. A softer utilization environment impacted the company’s performance for lower specification floaters and a lagging rebound in the jack-up market. Furthermore, the company is explicitly experiencing a decline in the West African Market as the demand for rigs fell from 17-20 to 13 rigs. It impacted the regional performance of the company, and the EPS of the company fell to $0.60 compared to the previous year’s $1.06. However, the acquisition of Diamond Offshore has enabled the company to enhance its position in the deepwater market, leading to a positive reception among investors.
Noble Corporation plc (NYSE:NE) offers a dividend yield of 7.72% with a reasonable 60.81% payout ratio, indicating the importance placed by the company on retaining a portion of its earnings. However, institutional confidence in the stocks is strong, with 32 hedge funds from the Insider Monkey database holding stakes in Noble at the end of Q4 2024.
Analysts forecast a 56.38% upside to $39 and hence offered a consensus Buy rating. Investors should act before March 5, 2025, to qualify for the upcoming dividend payouts.
1. Carter’s, Inc. (NYSE:CRI)
Dividend yield: 7.75%
Ex-Dividend Date: March 10, 2025
Number of Hedge Funds: 29
The American-based apparel company, Carter’s, Inc. (NYSE:CRI) is focused on designing and marketing clothes for Children. The company runs its operations from Atlanta, Georgia. The company operates under brands like Carter’s and OshKosh B’gosh to serve families with children. These brands are sold in leading department stores, national chains, and specialty retailers inside and outside the U.S.
The challenges in the retail environment and significant headwinds brought the company’s year-to-date performance, as of February 28, 2025, down to 21%. The inflation and high interest rates have caused a decline of 4.4%. Additionally, suspending pandemic-related stimulus payments to child-care centers affected the market demand for the company’s children’s apparel. The company’s EPS for the year 2024 declined by 13%, as reported in the last quarter earnings call. However, Carter’s, Inc. (NYSE:CRI) new personalization capabilities and the rebranding of its loyalty program are anticipated to bring in more customer engagement, resulting in a positive outlook.
Carter’s, Inc. (NYSE:CRI) offers an attractive 7.75% dividend yield. Its sustainability is represented in the 62.50% payout ratio. Despite a considerable decline in YTD, institutional interest remains high, with 29 hedge funds in the Insider Monkey database holding stakes as of Q4 2024.
Analysts maintain a Hold rating, with a 9.09% upside based on a 1-year price target of $46.50. Investors interested in the next dividend payout should act before March 10, 2025.
Overall, Carter’s, Inc. (NYSE:CRI) ranks first on our list of the dividend stocks underperforming in 2025. While we acknowledge the potential for CRI 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 CRI but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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