A dividend is a distribution of profits to the shareholders. So when you see dividends that are consistently higher than profits, that’s a problem. It may be a sign that the company is recklessly borrowing to maintain its dividend. That’s a major no-no. In evaluating dividend stocks, you want to see consistent and growing profits that can safely support the dividends being promised. You don’t want to bet your retirement on an income stream that could evaporate tomorrow. Today, we’re going to take a look at 10 dangerous dividend stocks. Some of these are OK to wait out if you already hold, but you should avoid if you don’t. Others should be dumped with haste...
I’ll start with a household name, International Business Machines Corp. (NYSE:IBM). Cloud computing would take a wrecking ball to IBM’s business. Up next is Mattel, Inc. (NASDAQ:MAT). Like IBM, Mattel is getting trounced by its competitors these days. Heavy-duty equipment maker Caterpillar Inc. (NYSE:CAT) is up big in the past year. Its revenues peaked in 2012 and have been in decline ever since. I’d also recommend steering clear of that most venerable of dividend stocks, Marlboro maker Altria Group Inc (NYSE:MO). The crown for the highest-yielding stock on this list of dangerous dividend stocks goes to Frontier Communications Corp (NASDAQ:FTR). At current prices, the stock yields nearly 15% … at least for now. CenturyLink Inc (NYSE:CTL) is in the same boat. As a mid-sized phone and internet provider, CenturyLink operates in slow-growth, low-margin businesses. Staples, Inc. (NASDAQ:SPLS) annual revenues peaked in 2012 and have been drifting lower ever since. Kohl’s Corporation (NYSE:KSS) is another brick-and-mortar retailer with a very uncertain future. Pitney Bowes Inc. (NYSE:PBI) is a survivor, given the decline of “snail mail.” And finally, I’d recommend you be very cautious with British telecom giant Vodafone Group Plc (ADR) (NASDAQ:VOD).
Source: InvestorPlace
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I'm not crazy about TGT and think it trades lower. After the whole bathroom deal, they've alienated a massive number of customers. I don't trust any management that creates unnecessary drama.