While dividend stocks can be a good option for investors looking for an available revenue stream, not every dividend stock is worth your time. Plenty of deadly dividend stocks are ready to wreak havoc on your portfolio.
The worst thing about a deadly dividend stock is the inconsistency. You want to have a reliable payout schedule so you can plan your finances accordingly. You also want a dividend stock with a history of maintaining or growing its payout.
Unfortunately, one of the first things a struggling company will do is cut the dividend, especially if it needs the cash to pay off debt or if profits are taking a beating.
Investors who rely on dividends as a source of income may find it challenging to budget or plan for the future when dividend payments are suddenly cut.
We’re using the Portfolio Grader to help weed out the deadly dividend stocks you should avoid in April 2024.
Evaluate stocks based on earnings, growth, dividends, momentum, and analyst sentiment for success in Q2.
You can avoid the deadly dividend stocks that will sink your returns.
Apple (AAPL)
Apple (NASDAQ:AAPL) is actually more than a smartphone manufacturer. It makes and sells personal computers, wearable technology, tablets and more.
Its powerful Services segment includes the App Store where Apple allows developers to market their apps to the public. Apple gets a piece of that action, making it one of the company’s most profitable ventures.
Then there’s the downside. Apple’s seen iPhone sales slip, particularly in China where sales in the first six weeks of the year were down 24%. Sales of other products are also down, but not nearly as much as the iPhone in China.
That means Apple needs to find a way to compete with China’s homegrown smartphone maker, Huawei, or find a way to replace that revenue.
It does all that as both U.S. and U.K. regulators are looking into the App Store for possibly illegally blocking the competition.
Apple stock offers a dividend yield of just 0.5%, which isn’t nearly enough to cover its 13% loss in 2024. It gets a “D” rating in the Portfolio Grader.
Microchip Technology (MCHP)
Microchip Technology (NASDAQ:MCHP) is an Arizona company that makes microcontroller, mixed-signal, analog and Flash-IP products. Its customers are in the industrial, automotive, consumer, communications, computing and aerospace markets.
The company’s integrated circuits have been on the market for more than 20 years and are included in more than 100,000 products. Microchips are found in everyday products such as calculators, bank ATM, car infotainment systems and cell phones.
While the company makes important products, the stock has been maddingly inconsistent, with numerous price swings over the last 12 months.
The stock is down 6% since Jan. 1 on the heels of reporting weak earnings in the last quarter (Q3 of fiscal 2024, ending Dec. 31, 2023).
Revenue was $1.76 billion, a drop of 18.6% from a year ago and short of the company’s guidance. Microchip blamed the issue on weaker business conditions and lowered demand.
CEO Ganesh Moorthy says the company will cut discretionary spending and manage inventory in the near term.
MCHP provides a dividend yield of 2%. It gets a “D” rating in the Portfolio Grader.
Realty Income (O)
Realty Income (NYSE:O) is a sizable real estate investment trust with over 13,000 properties. Realty Income has interests in every U.S. state. That’s a huge footprint. Plus, it works with customers in 90 industries.
The biggest issue for Realty Income is debt. Borrowing money to purchase properties cost a lot more when interest rates are higher. That’s why even though Realty Income saw a significant increase in revenue in the fourth quarter, its income dropped.
One positive thing about Realty Income is the generous dividend yield of 6% that’s paid monthly. But I’m going to be skeptical of O stock until interest rates come back down to a more manageable level.
O stock is down 9% this year and gets an “F” rating in the Portfolio Grader.
U.S. Bancorp (USB)
U.S. Bancorp (NYSE:USB) isn’t the biggest bank in the country, but it’s pretty close.
It ranks as the No. 5 banking company in size in the United States, primarily serving the 26 states in the Midwest and Western U.S.
Many banks, including U.S. Bancorp, have been troubled by the interest rate issue. The company has been forced to offer higher interest rates on deposit accounts to customers to prevent them from shifting their money into high-yielding bonds.
That strategy weighs directly on the company’s bottom line, with first-quarter earnings showing that profits at U.S. Bancorp dropped 22% from a year ago.
It also lowered its guidance on net interest income, the money banks pay customers and what they earn on interest on loans.
USB previously guided for income net interest income of $16.6 billion for the full year, but now says it will be somewhere from a range between $16.1 billion and $16.4 billion.
USB stock pays a dividend yield of nearly 5%, but the stock is down more than 8% this year and gets a “D” rating in the Portfolio Grader.
Ford Motor Co. (F)
Ford Motor Co. (NYSE:F) is a well-known member of the Big Three Detroit automakers. The stock pays a solid dividend yield of nearly 5%.
So what’s not to love? Plenty, as it turns out.
Ford has to compete with other automakers, particularly Tesla (NASDAQ:TSLA) which is singlehandedly driving down the price of electric vehicles. Tesla cut prices in 2023 and 2024 as it seeks to boost its sales numbers.
I don’t think it’s a great strategy because it eats into the profit margin – and investors hate it when a company’s profitability suffers. Now Ford is going through the same issue.
Ford cut the price of its Mustang Mach-E electric SUV by up to $8,100, and its cutting prices on its 2024 Ford F-150 Lighting, and all-electric pickup.
Next week the company is reporting first-quarter earnings and I want to see how the profit numbers hold up.
F stock is down 1% in 2024 and gets an “F” rating in the Portfolio Grader.
Lowe’s Companies (LOW)
Lowe’s Companies (NYSE:LOW) is primarily known for its giant brick-and-mortar home improvement stores.
It peddles everything that you need to build a house, complete a major construction project, plant a tree or simply decorate your patio.
The company has more than 1,700 home improvement or outlet stores in the U.S., covering every state and the District of Columbia. And while shares were soaring earlier this year, there’s trouble on the horizon and LOW stock is already feeling the heat.
In reporting its fourth-quarter and full year 2023 earnings in February, Lowe’s disclosed that it expects sales to drop by 2% to 3% in 2024. And profits will also take a hit, with earnings per share expected to fall by more than 7%.
That’s enough to send investors scurrying, and LOW stock is down 10% in the last six weeks alone.
LOW stock pays a dividend yield of 2% and gets a “D” rating in the Portfolio Grader.
General Mills (GIS)
General Mills (NYSE:GIS) is best known for its iconic breakfast foods from Cheerios ro Progresso soups and Green Giant vegetables.
All that sounds great. But sales are down as of late.
In the fiscal third quarter of 2024, General Mills reported sales down 1% to $5.1 billion.
That was a better outlook than the previous quarter, when the company was forced to lower its organic sales guidance from a previous range of 3% to 4% to just 1%.
That’s why you should treat General Mills with caution, even though the stock is up 6% on the year and its pays a decent dividend yield of 3.4%.
All in all, there are worse stocks than General Mills. But there are much better dividend stocks you can buy as well, so avoid this “D” rated stock.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article held AAPL, but did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.