Top 4 Popular Dividend Stocks To Not Hold

Warning: be ready to be shocked by reading this article.

And I’m ready to take your tomatoes… even though I’m right.

Instead of making another list of great stock picks, I decided to do the opposite today. I actually wrote about these companies over the past 12 months telling investors to sell them now before it’s too late. What makes them special is that they have tons of fans as they are very popular dividend paying companies. They often ace the first filtering processes due to their competitive advantage and good fundamentals. Their “brand” as a dividend paying stock is strong among investors but I feel that they offer more smoke than anything else. Many investors are blinded by the story told by these companies and tend to ignore the story that will happen in the years to come.

Those companies are on my black list and I don’t see them returning to my watch list anytime soon. In fact, I think each of them is a BIG SELL at the moment.

General Electric (GE)

General Electric is a 100-year-old company offering various digital industrial products. The company counts 8 divisions within its “GE Store”:

  • Power: combustion science and services, installed base.
  • Energy connections: electrification, controls, and power conversion technology.
  • Renewable energy: sustainable power systems and storage.
  • Oil & Gas: services & technology.
  • Transportation: engine technology and localization in growth regions.
  • Lighting: LED bulbs.
  • Healthcare: diagnostics technology.
  • Aviation: advanced materials, manufacturing, and engineering products.

All right, what could possibly go wrong with this all-star player? I mean, even Warren Buffett holds shares of GE in his portfolio. Now that the company is getting rid of its financial division (GE Financial), management is claiming to focus on what they do best; manufacturing a wide variety of products. Fine.

But what this great story doesn’t tell you is that it’s not looking well for future dividend payments. First, the company cut its dividend severely back in 2008 and shareholders haven’t gotten back to their previous distribution level yet:

Source: Ycharts

But you are going to tell me the dividend payment is climbing slowly but surely again. However, tell me how they will continue to do this with such payout ratios:

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Disclosure: Each month, we do a review of a specific industry at our membership website; Dividend Stocks Rock. In addition to have full access ...

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