Many investors accumulate dividend stocks to generate steady cash flow. Investors who pick reliable assets can collect payouts for many years. They can then decide whether they want the cash upfront or to reinvest the dividend each time.
Unfortunately, not all dividend stocks provide a high level of consistency in their returns and overall performance though. Some dividend stocks continue to lose value for investors. While cash flow may still exist, a large drop in the stock’s price will inevitably result in a net loss.
Dividend investing has many perks, but avoiding the duds is important. Here are three top dividend stocks to sell right now.
Macy’s (M)
Macy’s (NYSE:M) is no longer the corporate giant that it once was. The company only has a $5.3 billion market cap after shedding 23% of its value over the past five years. Macy’s is closing more stores, and recently brought on yet another CEO in hopes of righting the ship.
Macy’s has reported multiple quarters of declining revenue and net income. That isn’t just a concern for dividend investors. It’s a notable weakness that should rattle any investor. Net sales dropped by 7% year-over-year (YOY) in the third quarter of 2023, continuing a common trend for the retailer.
The company’s quarterly dividend per share currently sits at 17 cents. Macy’s is due for a dividend hike in the next quarter. Diluted earnings per share only came in at 15 cents per share in Q3 2023. That’s not enough to support the current dividend and is a considerable drop from the 39 cents diluted earnings per share in Q3 2022. When considering dividend stocks to sell, investors should put Macy’s at the top of their list.
Campbell Soup (CPB)
Campbell Soup (NYSE:CPB) is another underperforming dividend stock and has dropped by nearly 20% over the past year. While a 3.62% annual dividend yield is higher than average, it doesn’t compensate for the stock’s drop.
Campbell Soup got into a bad pattern of reporting low single-digit or negative YOY revenue growth rates. The consumer goods company opened up fiscal 2024 with a 2% decline in net sales and an 11% YOY decline in earnings per share (EPS) from $1.02 to 91 cents.
While Campbell’s EPS for the quarter is enough to cover its dividend, the company has made little effort to raise its dividend over the years. Campbell raised its quarterly dividend per share from 31 cents to 35 cents in 2016. Then, the company inched up its dividend to 37 cents per share in 2021. The dividend has remained at that level ever since.
Campbell has barely raised its dividends over the past decade and investors should put their money into dividend stocks that actually reward them for holding them long-term. Given this lackluster dividend history, investors should consider CPB one of their dividend stocks to sell.
AT&T (T)
Investors often debate if AT&T (NYSE:T) is a value stock or a value trap. The company’s 6.6% dividend yield and 8.6 price-to-earnings (P/E) ratio look attractive on the surface. However, there are growth concerns, and it’s easy to see that in the firm’s historical stock price.
The stock is down by 12% over the past year and has lost 27% of its value over the past five years. The company cut its dividend in half two years ago, and has yet to raise it again. Revenue only inched up by 2.2% YOY in Q4 2023. AT&T also disappointed investors with a 54 cents EPS. Analysts were expecting an EPS of at least 56 cents.
Investors can choose from many dividend stocks that offer high yields and respectable growth. AT&T has the yield, but it has nothing else going for it. Investors should consider if they would even invest in AT&T at all if it weren’t for the yield. Looking at the one-year and five-year charts, along with recent financial performance, investors may benefit from selling AT&T and pursuing other options.
On the date of publication, Marc Guberti did not hold. (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.