This article will look into 2025’s 10 underperforming dividend stocks.
Consistent returns from dividend stocks have long attracted many investors, becoming the cornerstone of many investment portfolios. However, significant changes have been recorded a month and a half into 2025 among these dividend stocks. Some of the most historically reliable dividend-paying companies have struggled to maintain attractiveness. As the market concentrates heavily on innovation and growth, the performances of many of the dividend stocks have begun to decline. The list in this article contains significant stocks, some of which may also be in your portfolio.
Are you curious to find out which? Stick around as we count from 10 to 1 and uncover the names falling behind this year.
Reasons matter as much as knowing the performance level of stocks. The reallocation of capital is a significant reason for the underperformance. Heavy investments have always favored sectors with high-growth potentials, such as artificial intelligence (AI) and technology space, as of 2025. Funds are being pulled from traditional dividend-paying industries like utilities, consumer staples, and real estate investment trusts (REITs) to invest in these sectors. Though major tech companies have been struggling recently, with the advent of DeepSeek–a Chinese AI model–their anticipated growth trajectories continue to be more than that of many dividend stocks. These changes in the market have consequentially depressed the performance of dividend-heavy sectors.
Even with these yield-wise underperformances, dividend stocks have become more attractive. When funds are pulled to invest in high-growth AI stocks, dividend stocks become undervalued, resulting in higher dividend yields. Investors who prefer consistent income are taking this opportunity to acquire quality dividend stocks at favorable valuations. This trend has provided a balancing effect for some sectors.
AI can be a significant reason for the underperformance of the stocks on our list, but it cannot be the sole reason. In our article, we will also look at other factors that led to the underperformance of these 10 dividend stocks. Interest rates, for instance, are among the vulnerabilities of many dividend-heavy sectors like utilities and REITs. With the Federal Reserve continuing to maintain higher interest rates, the attractiveness of dividend stocks may decline further compared to their income-generating counterparts. On the other hand, many tech giants make dividend payments, closing the gap between high growth and income investing. The entry of more AI-driven companies into the dividend-paying territory might cause some of the existing dividend stocks to lose their footing in the competition.
As of now, dividend-paying assets hold value for investors seeking stability and income, particularly regarding market volatility. A deflated AI bubble could potentially uplift the performances of dividend stocks in the future. Hence, understanding the factors contributing to their underperformance becomes necessary to make informed decisions about portfolios in 2025. Our list of 10 underperforming dividend stocks and the reasons behind their declining performance would assist in acquiring such understanding.
Photo by Sharon McCutcheon on Unsplash
Our Methodology:
Our list was put together by considering the negative year-to-date (YTD) returns generated by the companies as of February 15, 2025. We have included the stocks with a minimum dividend yield of 3%, which the income-focused investors would find attractive. Part of our selection also involved taking into account only those stocks with an average daily trading volume of more than 1 million units per day and a market capitalization of more than 500 million USD. These criteria helped select the prominent dividend-paying stocks, identified through their financial performance, trading activity, and market size. They put together the following list of 10 underperforming dividend stocks in 2025. The stocks are ranked according to their dividend yields.
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10. Veritex Holdings, Inc. (NASDAQ:VBTX)
Dividend yield: 3.01%
Dividend payout ratio: 41.03%
Ex-Dividend Date: February 14, 2025
Number of Hedge Funds: 27
Veritex Holdings, Inc. (NASDAQ:VBTX) saw a year-to-date decline of 2.14% on February 15, 2025, underperforming the broader market. In the fourth quarter of 2024, Veritex reported earnings per share of $0.45, missing the consensus estimate of $0.55. The company’s revenue stood at $96.1 million, falling short of the projection of $112.22 million.
The decline raises concerns regarding the ability of the company to sustain long-term profitability in the banking environment, which holds an intense level of competition. With limited product differentiation, the competitors have begun using AI to gain a competitive edge. Competitors like Wells Fargo have integrated AI into their business operations, such as customer service, making their stocks look more appealing. The current strategic initiatives of Veritex Holdings, Inc. (NASDAQ:VBTX) do not include any AI-based solutions, preventing them from tapping into the investors’ segment for AI.
The company provides a dividend yield of 3.01%. The modest payout ratio of 41.03% balances create returns for shareholders and retain capital for future investments. The ex-dividend date for the next payout was February 14, 2025.
Veritex Holdings, Inc. (NASDAQ:VBTX) faces headwinds since they are yet to leverage AI-driven solutions. Still, their dividend stability and 27 hedge funds reflecting moderate institutional confidence suggest the possibility of recovery in the long run.
9. Lockheed Martin Corporation (NYSE:LMT)
Dividend yield: 3.12%
Dividend payout ratio: 57.33%
Ex-Dividend Date: March 3, 2025
Number of Hedge Funds: 58
Lockheed Martin Corporation (NYSE:LMT) – an American defense and aerospace manufacturer, experienced a 12.91% decline in its share price year-to-date on February 15, 2025, after an insider selling of $13 Million.
The company has been underperforming in the past year. Sales of Lockheed Martin Corporation (NYSE:LMT) took a massive hit after the delays in the funding and authorization of F-35 fighter jets. These jets were among the most expensive defense programs in the U.S. They were also the biggest revenue generator for Lockheed. The program contributes to 30% of the company’s total revenue. As a result, the delay in the program affects the company’s revenue stream, causing the insiders to sell $13 Million worth of shares. The delays were caused by a software issue that is expected to continue into 2026. These lags have inevitably led to a decline in hedge fund holdings.
Despite the declining share value, Lockheed Martin Corporation (NYSE:LMT) offers close to 58% of its earnings as dividends, with a dividend yield ratio of 3.12%. The company’s R&D, particularly its F35 jets, has attracted the market’s attention. Investors concentrating on long-term stable income may find the stock appealing.
8. Universal Insurance Holdings, Inc. (NYSE:UVE)
Dividend yield: 3.13%
Dividend payout ratio: 31%
Ex-Dividend Date: March 7, 2025
Number of Hedge Funds: 18
As of February 15, 2025, Universal Insurance Holdings, Inc. (NYSE:UVE) saw a year-to-date decline of 3.04%, with its shares trading at $20.42 per share.
The second quarter of 2024 saw an increase in the performance of the company stocks because of strong underwriting performance and positive claims and litigation trends. It contributed to increased implementation policies for the first time after 2021. During this period, Universal Insurance Holdings, Inc. (NYSE:UVE) managed to renew its 2024-2025 reinsurance program at a modestly higher cost despite rising demand. On the other hand, the company’s director sold the company stocks valued at over $720,000. The market response follows in the third quarter, where the stock price is underperforming the broader market.
Universal Insurance Holdings, Inc. (NYSE:UVE)’s dividend yield stands at 3.13%, with a payout ratio of 31%. The latter indicates that the company retains most of its earnings for reinvestment purposes. The upcoming ex-dividend date is March 7, 2025. With the number of hedge funds moving down from 18, a modest level of institutional interest can be identified concerning Universal Insurance’s stocks.
Though the stock price is underperforming, the consistency in dividend payments by the company makes it attractive among investors seeking stable income.
7. Scorpio Tankers Inc. (NYSE:STNG)
Dividend yield: 3.63%
Dividend payout ratio: 12.17%
Ex-Dividend Date: March 7, 2025
Number of Hedge Funds: 33
As of February 15, 2025, Scorpio Tankers Inc. (NYSE:STNG) has experienced a year-to-date decline of 11.19%, with shares currently trading at $44.13. The downturn can be attributed to the challenges prevailing in the shipping sector. Though AI shipping applications could benefit the industry, tanker rates are still declining. Their oversupply in Europe, as well as the ongoing refinery maintenance, is seen as the major contributor to this downfall.
Further following the recent earnings announcement, Scorpio Tankers Inc. (NYSE:STNG) reached a new 52-week low of $44.88 on February 14, 2025. Bank of America has adjusted its price target to $52, maintaining a “Neutral” rating after a significant year-over-year decline in earnings and revenue
Scorpio Tankers Inc. (NYSE:STNG) offers a dividend yield of 3.63% with a payout ratio of 12.17%. The upcoming ex-dividend date is March 7, 2025. As of now, 33 hedge funds hold positions in Scorpio Tankers. It reflects sustained institutional interest in the company despite the decline in the share price.
Scorpio Tankers Inc. (NYSE:STNG) faced headwinds that were familiar to the industry. The recent stock underperformance reduces its charm among investors. However, its attractive dividend yield and positive analyst outlook indicate recovery potential in the long term.
6.WaFd, Inc. (NASDAQ:WAFD)
Dividend yield: 3.63%
Dividend payout ratio: 47.49%
Ex-Dividend Date: February 21, 2025
Number of Hedge Funds: 11
The local bank, WaFd, Inc. (NASDAQ:WAFD), saw a sharp decline in value by 7.66% year-to-date on February 15, 2025. The decline may have been primarily contributed by the fall in the net income from $257 million to $200 million in FY 2024. The decline was followed by the bank announcing its exit from the single-family mortgage lending business, which the CEO Brent Beardall believed would cause the credit risk to rise. Ultimately, DA Davidson downgraded the stock from ‘Buy’ to ‘Neutral’ after it missed its first-quarter earnings for fiscal year 2025.
WaFd, Inc. (NASDAQ:WAFD) has offered dividend payments for 43 consecutive years, signaling a strong commitment to its shareholders. Among them, the bank has raised its dividend for six straight years. Their dividend payout ratio stands at 47.49%, with an annual dividend of $1.04 per share and a yield of 3.50%.
Comparatively, it stands tall against the regional banks within the Russell index, which has an average dividend payout ratio of 25% over the past year and an average yield of 2.3%, suggesting that despite the underperformance of the stock, WaFd, Inc. (NASDAQ:WAFD) continues to focus on its dividend payouts.
5. Comcast Corporation (NASDAQ:CMCSA)
Dividend yield: 3.73%
Dividend payout ratio: 22.46%
Ex-Dividend Date: April 2, 2025
Number of Hedge Funds: 75
Comcast Corporation (NASDAQ:CMCSA), a multinational mass media corporation in the U.S., saw a decline of 5.70% in its stock price year-to-date on February 15, 2025, after a slowdown in the cable industry. In the fourth quarter of 2024, the company reported a loss of 311,000 customers for its cable business. Last Thursday, it further reported losing 139,000 residential broadband customers.
Though growth was recorded in the revenue, it stood low at 1.78% in 2024 due to the increasing subscription prices. Competition from OTT platforms like Disney and Netflix has further weakened Comcast Corporation (NASDAQ:CMCSA)’s market share. The dividend payout ratio stands low at 22.46%. It’s one of the lowest on our list. The number of hedge fund portfolios for the company has also been declining since the third quarter.
However, Comcast Corporation (NASDAQ:CMCSA) showed better performance in its studio business, which showed a revenue growth of 46% in the fourth quarter of 2024. It also grew its connectivity revenue by 5% despite the decline in customer base. An analyst from TD Cowen gave the stock a ‘Buy’ rating and lowered the price target to $46.
Despite the fall in its stock price and a low dividend payout ratio, Comcast Corporation (NASDAQ:CMCSA) may attract investors seeking an investment with growth potential.
4. Reynolds Consumer Products Inc. (NYSE:REYN)
Dividend yield: 3.84%
Dividend payout ratio: 54.55%
Ex-Dividend Date: February 14, 2025
Number of Hedge Funds: 21
A leading manufacturer and seller in the consumer products sector, Reynolds Consumer Products Inc. (NYSE:REYN), saw an 11.3% fall in its stock value year-to-date (YTD), closing on February 14, 2025. The company’s earnings per share also slightly falls behind the market estimates.
With the rising cost of aluminum—a significant raw material in Reynolds Consumer Products Inc. (NYSE:REYN) books—the company finds it challenging to safeguard its profit margin. The company’s net income during the third quarter of 2024 declined 11.68% year over year.
The consistency in the dividend policy, however, enables Reynolds Consumer Products Inc. (NYSE:REYN) to maintain the trust of its shareholders. Despite the falling stock value, the payout ratio of approximately 55% of its earnings per share stands above the average dividend payout ratio of 43.2%.
Though the declining share value alerts the investors, the consistent dividend policy and attractive payout ratio may make the stock seem like an opportunity for those focused on consistent income.
3.Shutterstock, Inc. (NYSE:SSTK)
Dividend yield: 4.60%
Dividend payout ratio: 114.71%
Ex-Dividend Date: March 6, 2025
Number of Hedge Funds: 21
Shutterstock, Inc. (NYSE:SSTK), a U.S.-based provider of stock photography, stock footage, stock music, and editing tools, experienced a slight decline in its year-to-date return of 5.44% as of February 15, 2025. The broader market’s upward trend of 4.19% over the same period indicates the stock’s underperformance. The overall industry faces heightened competition alongside evolving customer demands, causing the decline in Shutterstock.
Through a six-year agreement, Shutterstock, Inc. (NYSE:SSTK) strengthened its partnership with OpenAI. As of July 2023, the company became the major provider of high-quality training data for OpenAI’s models, demonstrating its commitment to leveraging AI technologies in developing its platform. Aiming at sustainability, the company has announced a merger with Getty Images in January 2025. It claims that the resulting expansion in the stock photo libraries will provide better competition against AI-driven image creation tools.
The dividend yield of the company stands at 4.60%, with the highest payout ratio on our list, 114.71%. The payout ratio exceeds the technology sector average of 39.6%. The upcoming ex-dividend date is March 6, 2025. Twenty-one hedge funds held positions in Shutterstock, Inc. (NYSE:SSTK) in the third quarter of 2024, indicating a moderate interest in the stock.
Though the stock price suggested an underperformance, the strategic AI partnerships and the recent merger announcement might attract investors looking for stocks with future growth potential.
2. Portland General Electric Company (NYSE:POR)
Dividend yield: 4.80%
Dividend payout ratio: 58.21%
Ex-Dividend Date: March 24, 2025
Number of Hedge Funds: 26
A publicly owned energy company, Portland General Electric Company (NYSE:POR), is an underperforming dividend-payer, with a share price that has declined by 4.54% year-to-date, closing on February 14, 2025.
After the closure of the Boardman Coal Plant in 2020, Portland General Electric Company (NYSE:POR) faced changes in its business operations. Boardman Coal Plant was a significant source of power generation for the company. Alternatively, the company started leaning heavily on fossil fuel generation and wholesale spot-market purchases to compensate for the intervals in renewable energy sources. The transition resulted in earnings fluctuations influenced by the changes in fuel costs and market prices.
Portland General Electric Company (NYSE:POR) may benefit from the AI wave because of the rising electricity demand induced by AI-driven data centers. The demand has the potential to boost the company’s revenues. However, it risks facing environmental regulation issues and congestion costs.
Portland General Electric Company (NYSE:POR) has a dividend payout ratio of 58.21%. However, its position in the number of hedge fund portfolios has begun to decrease after the third quarter of 2024. Even so, AI-driven data centers may favor the company’s growth. Thus, despite declining share prices, the company maintains a positive outlook among the analysts.
1. The Interpublic Group of Companies, Inc. (NYSE:IPG)
Dividend yield: 4.88%
Dividend payout ratio: 72.13%
Ex-Dividend Date: March 3, 2025
Number of Hedge Funds: 26
The stocks of Interpublic Group of Companies, Inc. (NYSE:IPG) faced a decline of 3.46% YTD closing on February 14, 2025. It is underperforming the market, which grew by 4.19%. The decline in share price imitates a decrease in operating income, which went down by 6.4% from the year-ago quarter. The operating income in the last quarter came in at $567.9 million, less than the estimated $586.4 million.
Interpublic Group of Companies, Inc. (NYSE:IPG) experienced this fall despite the industry surpassing expectations. According to EMARKETER.COM, the global advertising industry reached a revenue of over $1 trillion for the first time, signaling that industrial growth is at its peak. Industrial development, in turn, attracts heavy competition from the Interpublic Group.
With many competitors using AI technologies to survive the market, Omnicom Group aims to buy the rival company Interpublic Group at 13.25 Billion to overthrow other big competitors with AI advantages. The merger will make the resulting company one of the leaders in the advertising industry and thus has garnered the attention of all the investors in the market. However, some speculate on the resulting company’s ability to match the Interpublic Group’s commitment to dividends.
Overall, Interpublic Group of Companies, Inc. (NYSE:IPG) ranks first on our list of the dividend stocks that are declining. While we acknowledge the potential for IPG 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 IPG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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