2 Risky Dividend Stocks to Avoid

It can be tempting to invest in a dividend stock for its ultra-high yield. But often, an excessive dividend yield is a sign that all is not well.

Elevated inflation and rising interest rates are changing consumer behavior. Retailers are either overloaded with inventory or have been forced to slash prices to clear out excess merchandise. A global recession is a real possibility, and retailers first and foremost need to make sure they're able to weather the storm.

In the case of The Gap (NYSE: GPS) and Kohl's (NYSE: KSS), getting through this downturn will almost certainly mean reducing or eliminating dividend payments. Both retailers are struggling as demand evaporates, and neither is in a financial situation to justify generous dividend payments to investors.

Continue reading

Source Fool.com