We recently published an article titled Why These 10 Dividend Stocks Are Declining? In this article, we are going to take a look at where Northern Oil and Gas, Inc. (NYSE:NOG) stands against the other dividend stocks.
In this article, we will examine 10 companies with high dividend yields and explore the reasons behind declining stock prices.
Companies that pay dividends have been a reliable choice for investors seeking a passive and somewhat stable income. All the stocks in our list today have offered attractive yields, thus satisfying the expectations of these investors. But we have noticed them struggling in recent months.
Broader market conditions, like a 25% tariff on steel and aluminum imported into the US, have led to market volatility. Though the broader market remained unchanged, the Nasdaq composite faced a decline during the past few weeks. These changes are reflected in the price of many high dividend-paying stocks. Some companies are additionally experiencing company-specific challenges. The strategic transition of British Petroleum from oil and gas assets to green energy and divestment, for instance, has led to its underperformance. Comparatively, competitors who were focused on fossil fuels gained preference, owing to the analysts questioning the future dividend sustainability of BP. The shifting investor sentiment also has contributed to the downturn of some of the stocks in our list.
We find it difficult to point out any single sector as a worst-performing sector. The recent macroeconomic trends, inclusive of the inflationary pressures as well as the interest rate adjustments, cause ripples across multiple sectors in the US economy. Some companies have maintained stable payouts proportionately to an increase in their share value. Others face declining share prices because of weaker earnings and reduced interests among the hedge fund holders.
Dividend Aristocrats have historically provided stability and consistent income. They have been a popular choice among long-term investors. In the past few months, however, the stock prices of these companies have declined despite maintaining high dividend yields. The upward interest rates and inflation rates recently pressured some high-yield companies, making it hard for them to sustain dividend increases without debts. Thus, high yields may seem appealing, but it falls in the hands of the investors to assess the ability of these companies to maintain their payouts without jeopardizing financial health.
Our Methodology:
The article includes 10 high-yield dividend stocks experiencing a decline in their prices in the last 1 month. Each company on the list was added after ensuring that they have a market capitalization of over $1 billion and a minimum dividend yield of 2.5%. The article assessed financial sustainability using historical stock performance, dividend payout ratios, and earnings reports. For this list, we scanned Insider Monkey’s database of 900+ hedge funds as of the third quarter of 2024. The final list is ranked according to their dividend yields, as of February 11.
At Insider Monkey, we are obsessed with hedge funds. 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).
An aerial view of an oil and gas platform in the middle of the ocean, representing the massive resources harvested by the company.
Northern Oil and Gas, Inc. (NYSE:NOG)
Annual dividend yield: 4.90%
Ex-Dividend Date: March 28, 2025
Number of Hedge Funds: 26 (2024 Q3)
Quarterly dividend amount: $0.45
The stock price of Northern Oil and Gas, Inc. (NYSE:NOG), a leader in the energy industry, saw a decline of 10% in the past month. The company has heavily focused on acquisitions and joint ventures in recent years, leading to expensive investments. The acquisition of XCL assets with SM energy cost Northern Oil and Gas $510 million. These investments were financed using debts, causing its leverage to shoot up. The increased leverage has strained the company’s financials as the interest expenses continue to grow.
With share buyback, Northern Oil and Gas, Inc. (NYSE:NOG) has declared a cash dividend of $0.45 per share for the first quarter of 2025, which marked a 12.5% increase year over year. The increase suggests a consistency in the shares of the company as a solid option for dividend investors despite the recent decline.
With the energy sector generating an average dividend yield of 4.24%, Northern Oil and Gas, Inc. (NYSE:NOG) surpasses it with an annual dividend yield of 4.90%. The analysts have a positive outlook for the company but, at the same time, recommend keeping an eye on the debt levels of the company.
Overall NOG ranks 4th on our list of the dividend stocks that are declining recently. While we acknowledge the potential for NOG 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 NOG 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.
