It happened again. Income-seeking investors piled into a 3% payer under the guise of dividend growth and safety… and they lost 10% in a single day. Wal-Mart (WMT) lured them in and lowered their net worth this time. Before the drop, the company’s yield was at an all-time high of 3.1% thanks to 42 years of consecutive payout increases. The aristocratic allure of this dividend-payer tempted forward-looking fans. They envisioned today’s payout compounding itself in their portfolio at previous growth rates.
Wal-Mart’s not the only hallowed name with an outdated business model and rising payout ratio. Here are three more 3% payers at risk for double-digit declines: Paper products maker Kimberly-Clark (KMB) has raised its dividend 43 straight years and counting, but this streak is in danger if KMB can’t peddle more paper soon. Food sales under McDonald’s (MCD) golden arches have been under pressure in recent years. The company is on the wrong side of every major food trend in America, and that’s finally starting to affect earnings. Finally, investors are paying 24 times earnings for food distributor Sysco (SYY), which sports declining earnings and operating margins.
Source: Forbes
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