Wednesday, November 5, 2008

Worst Performing dividend stocks so far in 2008

In a previous post I outlined the 5 best performing year to date dividend aristocrats. The 5 worst performing dividend aristocrats so far in 2008 include:








Gannett Co. (GCI) has been hit hard this year as its profits have slipped due to the weakness in the advertising market. Furthermore there is evidence pointing that newspapers are losing readership to the free online news sites. GCI recently confirmed that they are maintaining their quarterly dividend unchanged, even though the stock currently yields 15%. I do believe that at current prices the dividend is adequately covered. That might not stop the company from cutting the payment in future quarters in an effort to conserve cash in this tough economy.

SVU, which is a grocery retailer, is another weak dividend this year. The stock is yielding 5% right now. The problem for SVU is that it has been growing EPS and dividends at rates equal to the rate of inflation for several years now. Recessions are typically not good for stocks which don't have a solid differentiating factor relative to competition.

Archer Daniels Midland (ADM), has been hit hard by the drop in commodity prices. I think that ADM is attractively valued at this levels given strong historical growth rates. I also believe that the dividend is adequately covered.

FITB is a financial stock which has cut its dividend several months ago. I expect this stock to be removed from the dividend aristocrats’ index in December.

JCI which operates in three businesses: building efficiency, automotive experience and power solutions has also been hit hard this year. The main reason for that could be the slowing automobile market in the US as the automotive segment accounted for 63% of sales and 55% of JCI’s income in 2007. I would research this stock further as the current valuations seem attractive.

Full Disclosure: Long GCI and ADM

Relevant Articles:

- Which Bank will be next? Follow the dividend cuts
- Gannett (GCI) leaves dividend unchanged at $0.40
- Archer Daniels Midland (ADM) Dividend Stock Analysis
- Dividend Aristocrats are outperforming the markets in 2008

2 comments:

  1. Just as some dividend humour...

    How about including those dividend stocks that failed? :)

    ReplyDelete
  2. Nurse911,

    These are the 5 worst stocks in the dividend aristocrats index in 2008.

    The stocks that failed were never part of the "elite" list of dividend aristocrats.

    ReplyDelete

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