1 Dividend Stock I'd Avoid Today? Dow
"If it looks too good to be true, it probably is."
That adage has haunted shareholders (and watchers) of Dow Inc. (NYSE: DOW) for months and months now. This, as the company's previous $2.80 annual dividend saw the yield hovering around 10% since early April, an eye-grabbing number that looked enticing but was more than offset by a steep, yearlong slide in the stock. Shares had already lost more than half their value before management finally moved on July 24, announcing a 50% dividend reduction during their second-quarter earnings call.
According to Dow Chairman and CEO Jim Fitterling on the company's second quarter earnings call, the cut was necessary to preserve cash and give the 128-year-old chemical giant much-needed flexibility to navigate a tough environment. Which is all well and good, but it should also serve as a cautionary flag -- especially for income-oriented investors. In short, Dow might not be a buy yet. The fundamentals are still too weak, and the path to recovery is far from certain.
Source Fool.com
