In this article, we will take a look at 10 dividend stocks that are declining.
The dividend season is here, and the big announcements are rolling in!
The overall market atmosphere has been moderately negative since the new tariffs from the US. Soon after he entered the Oval Office, President Donald Trump announced a 25 percent tariff on imported goods from Canada and Mexico. Chinese products, meanwhile, are left tackling an even higher tariff of 60 percent.
As a result, on Monday this week, the broader market noted a sharp decline of 0.76 percent, while the Nasdaq reported the same trajectory but at 1.20 percent.
Regardless of market conditions, investors have consistently shown interest in dividend stocks, particularly those from companies that have steadily increased their payouts, making them popular among income-focused investors. Analysts have long tracked the performance of Dividend Aristocrats, both historically and in recent times.
In a January 2019 blog post titled “Dividend Growth Strategies and Downside Protection,” Phillip Brzenk, Global Head of Multi-Asset Indexes, examined how dividend growth strategies perform, especially during market downturns. He noted that since the end of 1989, there have been six calendar years where the broader market delivered negative returns. Interestingly, during each of those years, the Dividend Aristocrats outperformed the broader equity benchmark by an average margin of 13.28%. In addition, in three of those challenging years, they still managed to generate positive total returns. Brzenk further pointed out that when analyzed on a monthly basis, the Dividend Aristocrats outperformed the market 53% of the time, with an average outperformance of 0.16%.
As noted earlier, dividend growth stocks have outperformed the broader market. From its launch in 2005 through September 2023, the Dividend Aristocrats Index delivered a total return of 10.35%, exceeding the broader market’s 9.54% return over the same period. Moreover, these stocks experienced lower volatility, measured at 15.35%, compared to the market’s 16.31%. This suggests that their prices tend to be more stable, making them less susceptible to sharp fluctuations and highlighting their overall resilience.
However, in this article, we will take a look at dividend stocks that have declined in the recent past.
Image by Gerd Altmann from Pixabay
Our Methodology:
In the list of underwhelming performers we will be looking into today, the dividend companies with a minimum of $1 billion in market capitalization alone are considered. Then we checked the returns of these stocks and selected 10 stocks that fell on February 6, 2024. The stocks are ranked according to their dividend yields, as of February 6. We also hedge fund sentiment for each stock, as of Insider Monkey’s database of Q3 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Honeywell International Inc. (NASDAQ:HON)
Annual dividend yield: 2.15%
Ex-Dividend Date: February 28, 2025
Number of Hedge Funds: 55
Quarterly dividend amount: $1.13
On 6th Feb, the stock of Honeywell International Inc. (NASDAQ:HON) opened at $215 at NYSE, a 13% decline from its all-time high after they announced a strategic split into three independent entities. Vimal Kapur, Chairman and CEO of Honeywell, said the following regarding the company’s performance:
“The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies and unlock significant value for shareholders and customers.”
Honeywell International Inc. (NASDAQ:HON) joins other industrial giants like 3M, General Electric, and United Technologies in breaking up large conglomerates as it announced it would break up into three independently listed entities—Aerospace, Automation, and Advanced Material following activist investor Elliott Management’s $5 billion stake in the company. Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn said:
“With today’s action, Honeywell will be separating its Automation and Aerospace businesses into two market-leading enterprises poised for sustained growth and value creation.”
Honeywell International Inc. (NASDAQ:HON)’s shares have been on a steep decline since the news broke out. As per our database, 55 hedge fund portfolios held Honeywell International Inc. (NYSE: HON) at the end of the third quarter. Honeywell is one of the stocks on the radar of dividend investors as it pays a 2.16% dividend yield, and it could change as the company opts for different capital structures, cash flows, and pay-out policies.
9. International Business Machines Corporation (NYSE:IBM)
Annual dividend yield: 2.61%
Ex-Dividend Date: February 10, 2025
Number of Hedge Fund Holders: 57
Quarterly dividend amount: $1.67
International Business Machines Corporation (NYSE:IBM) has declined since the start of the market after reaching its 52-week high of $265.72 just a few trading sessions ago. The stock recently received new investment from Mirae Asset Global Investments Co. Ltd., increasing their holding to 10.6% per the SEC disclosure. IBM’s stock has been of particular interest to multiple hedge funds such as FMR LLC (6.6%) and State Street Corp (2.2%). According to our database, 57 hedge funds held a strong position in the share by the end of Q3 2024.
The stock price declined despite Stiefel maintaining a buy rating with a $290 target as the stock is adjusting after a soaring high in the recent sessions, and it presents an ideal opportunity for investors to accumulate the stocks.
One of the trusted stocks among dividend investors, International Business Machines Corporation (NYSE:IBM) maintains a high dividend payout ratio of 102.6% and a progressive dividend policy with an average annual dividend growth rate of 0.7% over the last 5 years.
8. Toyota Motor Corporation (NYSE:TM)
Annual dividend yield: 2.86%
Ex-Dividend Date: March 31, 2025
Number of Hedge Fund Holders: 14
Quarterly dividend amount: $1.36
The share price of automobile giant Toyota Motor Corporation (NYSE:TM) saw its share price decline recently due to market adjustments following a strong six-month rally, during which the stock surged over 13%. The favorable currency exchange rates also played a small part in the stock’s recovery amid a significant decline in the past year.
Toyota Motor Corporation (NYSE:TM) offers an annual dividend yield of approximately 2.87%, with a trailing twelve-month dividend payout of $5.46 per share. The semi-annual distribution of dividends is the company’s long-standing practice, as they have followed this tradition for over 30 years. The value investors hold a special place for Toyota in their portfolio due to their consistent performance. The investor sentiment is also boosted by analysts’ expectations, who raised its full-year operating profit forecast by 9% to $30.7 billion.
7. Bunge Global SA (NYSE:BG)
Annual dividend yield: 4.02%
Ex-Dividend Date: February 18, 2025
Number of Hedge Fund Holders: 33
Quarterly dividend amount: $0.68
The stock price of Bunge Global SA (NYSE:BG) declined by over 11% in the last five trading sessions due to their underperformance in quarterly results. The company suffered from poor earnings in its 4th quarter report, where it reported an EPS of $2.13 against the expected $2.30 per share. The adjusted EPS of the company for the fiscal year 2024 declined by over 40% when compared to 2023, highlighting the poor output of the firm. As a result of poor earnings, Citi cut the target price of Bunge Global SA (NYSE:BG) from $86 to $76.
Bunge Global SA (NYSE:BG) remains a strong pick stock among dividend and value investors, as it maintains solid fundamentals and a healthy 34% payout ratio, which is in line with the sector average. With Bunge’s expected acquisition of Viterra in the first quarter of 2025, analysts expect some minor downsides for the stock in the future.
6. Kenvue Inc. (NYSE:KVUE)
Annual dividend yield: 4.10%
Ex-Dividend Date: February 12, 2025
Number of Hedge Fund Holders: 46
Quarterly dividend amount: $0.21
Kenvue Inc. (NYSE:KVUE) share price faced a substantial decline of 7.6% in the last five trading sessions despite the EPS meeting the analysts’ expectations of $0.19. The company’s sales amount to approximately $3.66 billion, missing the projections for $3.76 billion. Seasonal infections like the flu have brought down sales in the pediatric pain franchise, and disruptions from Asia have caused a decline in sales in the essential health group. The gap between the actual and projected sales may widen in 2025 because organic sales are offset by a possible 3% headwind from unfavorable foreign exchange rates.
Even so, the shares of Kenvue Inc. (NYSE:KVUE) continue to be part of 46 hedge fund portfolios, making it an attractive investment for investors. The company has declared a quarterly dividend of $0.21 per share. Shareholders who own the stock before the ex-dividend date of February 12, 2025, will be paid this dividend on a scheduled date of February 26, 2025.
5. The J. M. Smucker Company (NYSE:SJM)
Annual dividend yield: 4.18%
Ex-Dividend Date: February 14, 2025
Number of Hedge Fund Holders: 31
Quarterly dividend amount: $1.08
The J. M. Smucker Company (NYSE:SJM), a bonafide presence in the portfolio of dividend investors as they maintain a consistent dividend payout policy, has seen a significant decline of over 4% in the last five trading days as it announced its plan to sell its packaged pastries brand Cloverhill and cinnamon rolls as a part of their cost-cutting measures. Dan O’Leary, senior vice president made the following comment about this:
“This decision continues the ongoing work to ensure our manufacturing network is optimized to mitigate costs and reduce complexity.”
The following transaction will likely be completed by the end of the fourth quarter. The food and beverage manufacturer declared a dividend of $1.08 per share, scheduled for March 3, 2025. The J. M. Smucker Company (NYSE:SJM) also maintains a very high dividend payout ratio of 87.5%. According to the Insider Monkey database, 31 hedge fund portfolios held the company at the end of the third quarter, and there was a steep decline from 37 in the first quarter.
4. Prudential Financial, Inc. (NYSE:PRU)
Annual dividend yield: 4.79%
Ex-Dividend Date: February 14, 2025
Number of Hedge Funds: 40
Quarterly dividend amount: $1.35
Prudential Financial, Inc. (NYSE:PRU) is in a bearish run as the stock price declined by over 7.2% in a week, reflecting negative investor sentiments to its recent financial performance and outlook.
Prudential Financial, Inc. (NYSE:PRU) recently posted an EPS of $2.96, which missed the earnings estimates by a margin of 10% despite having positive net flows and growing AUM. The company also announced a share repurchase program for $1 billion. The firm also maintained substantial liquid assets, increasing its holding by $.5 billion compared to last year’s previous quarter. Charles Lowrey, Chairman & CEO, commented
“We balanced meaningful returns to our shareholders with continued investment in the growth of our businesses, all while maintaining our robust financial strength.”
Prudential Financial, Inc. (NYSE:PRU) is seen as a reliable stock for dividend investors due to its consistent concern about its investors having paid dividends for over 17 consecutive years. Dividend investors should be wary of the adverse trend in mortality and market downturns, which can very well affect the share’s payout policy and performance in the future.
3. The Kraft Heinz Company (NASDAQ:KHC)
Annual dividend yield: 5.55%
Ex-Dividend Date: March 7, 2024
Number of Hedge Fund Holders: 38
Quarterly dividend amount: $0.40
The stock price of The Kraft Heinz Company (NASDAQ:KHC) declined by over 4% in the last five trading days due to the expected fiscal year results announcement in the coming days. The company is expected to report its 2024 full-year results on Wednesday, February 12, 2025, and the analysts expect the company to announce adjusted earnings per share of $0.78. It is a $0.04 increase from the previous quarter. Additionally, The Kraft Heinz Company (NASDAQ:KHC) is in the midst of controversy as the firm faces legal issues regarding marketing “ultra-processed” foods to children.
A darling among dividend and value investors, the company consecutively paid dividends for over 11 years. Moreover, The Kraft Heinz Company (NASDAQ:KHC) maintains solid ground as it managed to beat the EPS estimates consecutively for over 4 quarters. However, the overall analyst ratings had turned to less bullish from strongly bullish over the past 3 months.
2. Polaris Inc. (NYSE:PII)
Annual dividend yield: 5.88%
Ex-Dividend Date: March 3, 2025
Number of Hedge Fund Holders: 50
Quarterly dividend amount: $0.67
One of the leading automotive manufacturers in the US, Polaris Inc. (NYSE:PII), experienced a 7.2% fall in its share value in the past five days. This was right after gaining a downgraded outlook from S&P Global. The investment research giant initially gave the company a “stable” credit rating outlook. However, on Monday, the rating was changed to “negative” based on the expectation that S&P Global Ratings-adjusted debt to EBITDA will slightly exceed the 3x downgrade threshold. Polaris Inc. (NYSE:PII) is expected to use the free cash flow to repay debt. However, according to S&P Global, reducing this debt would hugely be based on the growth of the power sports industry and the macroeconomic conditions.
Polaris Inc. (NYSE:PII) may enter the fourth quarter with its presence in 50 hedge fund portfolios, indicating interest from institutional investors. The 5.88% dividend yield of the company continues to attract investments. However, this yield could change since the downturn from the previous year, caused by macroeconomic conditions like higher interest rates, is expected till the 2nd quarter of 2025. It resulted in a downfall of revenue for the industry and Polaris by 20% last year.
1. Pfizer Inc. (NYSE:PFE)
Annual dividend yield: 6.62%
Ex-Dividend Date: January 24, 2025
Number of Hedge Funds: 82
Quarterly dividend amount: $0.43
The pharmaceutical giant and blue-chip favorite for dividend-focused investors, Pfizer Inc. (NYSE:PFE) fell by 3.5% in a week despite a growth in the sales including Comirnaty, owing to the threat to vaccines from the new political environment in 2025.
Robert F. Kennedy Jr. has been a vocal opponent of the COVID vaccines, particularly from Pfizer Inc. (NYSE:PFE). The Covid vaccines and pills earned Pfizer its peak sales during the pandemic and were termed the “deadliest vaccine ever made” by Kennedy. Pfizer Inc. (NYSE:PFE)’s CEO, Albert Bourla, claims that the entry of Kennedy as the secretary of state might bring down his hostile view against vaccines—meanwhile, the company reaffirmed their investors with projected revenues between $61 billion and $64 billion for FY25.
Regardless, with 82 hedge funds as of 2024 Q3, Pfizer Inc. (NYSE:PFE) is expected to make a turnaround with one of its most expensive acquisitions, Seagen. Jim Cramer, the host of Mad Money, made the following comment about the company:
“We still haven’t seen the breakout anti-cancer drugs that would justify the deal’s $43 billion price tag. Now, maybe we’ll hear something good this quarter. If so, the stock could soar, minimal downside at these low levels…”
Pfizer Inc. (NYSE:PFE) continues to stand as a leader in the pharmaceutical industry. It may change depending on its use of R&D and acquisitions in managing a comparatively unfavorable political environment. It has declared a quarterly cash dividend of $0.43 per share, payable to shareholders on March 7, 2025.
Overall Pfizer Inc. (NYSE:PFE) ranks first on our list of the dividend stocks that are falling today. While we acknowledge the potential for PFE 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 PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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