We recently published a list of Why Are These 10 Dividend Stocks Declining? In this article, we are going to take a look at where Honeywell International Inc. (NASDAQ:HON) stands against other declining dividend stocks.
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.
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).
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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.
Overall, HON ranks 10th on our list of declining dividend stocks. While we acknowledge the potential for HON 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 HON but that 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
Disclosure: None. This article is originally published at Insider Monkey.
