Last week was the worst week of the year for new dividend stock ratings from investment firms. Over 20 dividend stocks saw their ratings cut from buy to hold ratings. Today we are highlighting those downgraded dividend payers that have a dividend yield of 2% or more. We have provided the reason for the downgrade and the new price target when the analysts made their reasoning available.
Arlington Asset Investment (AI)
Arlington Asset Investment was downgraded by Wunderlich from a Buy rating to a Hold on February 27th and set a price target of $30 per share. Wunderlich cited increased risk after the company received a Wells Notice from the SEC. AI has a dividend yield of 14.7% and has increased its dividend for 1 year. It has a payout ratio over 100%.
CommonWealth REIT (CWH)
CommonWealth REIT was downgraded by JMP Securities from Market Outperform to Market Perform on February 27th. CWH was downgraded following the disappointing Q4 report. JMP Securities expects its suburban office portfolio to be a drag on core growth trends. CWH pays an annual dividend of $2.0 but only has earnings per share of $.18. The REITs current dividend yield is 10.6%.
Ventas was downgraded by UBS from a Buy to a Neutral rating on February 27th. UBS set a price target of $57 per share and said that Kindred Healthcare's decision to not renew the majority of lease bundles expiring in 2013 is a slight negative to VTR's earnings. UBS also said they believe there is uncertainty in the market around the future of master lease agreements which may keep VTR range bound. VTR is a REIT with a dividend yield of 4.1%. It has a 5 year dividend growth rate of 9.2% and has increased its dividend for 2 consecutive years.
Genuine Parts (GPC)
Genuine Parts was downgraded by Argus from a Buy to a Hold rating on February 28th. Argus cited disappointing 2012 guidance and slower growth concerns in its Office Products segment. GPC has a dividend yield of 2.9% and has increased its dividend for 55 years. It has a payout ratio of 50% and a 5 year dividend growth rate of 5.9%.
KB Home (KBH)
Compass Point downgraded KB Home from a Neutral to a Sell rating. Compass Point downgraded all 9 major home builders because there are shifting away from their previous valuation models and now expects most home builders to see 12-25% downside declines. KBH has a dividend yield of 2.2% and a payout ratio of 138%. The company cut its dividend in 2009 and has kept it at $.25 per share since that time.
Cablevision was downgraded by Collins Stewart from a Buy to Neutral rating on February 29th. Collins Steward cited disappointing revenue growth and increased investment costs as the reason for the downgrade. CVC has a dividend yield of 3.9% and a payout ratio of 51%. It has increased its dividend for 3 consecutive years.
Marathon Oil (MRO)
Marathon Oil was downgraded by Deutsche Bank on February 29th from a Buy to a Hold rating. Deutsche Bank set a price target of $37 and said they now have a more defensive stance on oil-levered stocks as a reason for the downgrade. MRO has a dividend yield of 2.1% and a payout ratio of 30%. The company cut its dividend in 2011 by almost 20%.
Magellan Midstream (MMP)
Magellan Midstream was downgraded by Wunderlich from a Buy to a Hold rating on March 2nd but raised its price target from $69 to $76. The downgrade was based on valuation. Wunderlich said there was limited upside potential at current levels. MMP is a limited partnership and has a dividend yield of 4.4%. It has increased its dividend for 10 consecutive years and has a 5 year dividend growth rate of 6.3%.
Other Dividend Stock Downgrades
Two other dividend stocks with yields over 2% were downgraded last week where the analyst's reason for the downgrade was not available. Each of these stocks has excellent dividend fundamentals and a long history of raising its dividend.
Target (TGT) was downgraded by Standpoint Research from a Buy to a Hold rating on February 29th. Target has a dividend yield of 2% and has increased its dividend for 40 consecutive years with a 5 year dividend growth rate of 20.5% and a payout ratio of 27%.
NW Natural Gas (NWN) was downgraded by Hilliard Lyons from a Buy rating to Neutral on March 1st. NWN has a dividend yield of 3.9% and has increased its dividend for 56 years. It has a 5 year dividend growth rate of 4.5% and a payout ratio of 73%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.