While most companies are reporting better than expected earnings, there are 6 dividend paying companies that have analysts worried. We did not find any obvious trends in the downgrades. Each lowered rating was based on the respective company's position and business. Each of these stocks has a dividend yield of 2% or more. We have listed the reason for the downgrade and the price target where the analyst made it available.
S & T Bancorp (STBA)
S & T Bancorp was downgraded by Boenning & Scattergood from Outperform to Neutral on April 23rd. Analyst Matthew Schulthesis is concerned over valuation after the great run bank stocks have had in the last 6-8 months. The analyst believes the company's fundamentals are strong, but the stock price has reached fair value. STBA has a dividend yield of 3.1% and a payout ratio of 43%. The company has not raised its dividend since it was cut in 2009 and has a negative 5 year dividend growth rate of 11%.
McDonald's Corp (MCD)
McDonald's was downgraded by Argus from a Buy to a Hold on April 25th. Argus said it cut its rating due to decelerating earnings growth and the new mad cow disease scare that looms over the U.S. beef industry. Despite these concerns, McDonalds does have solid dividend fundamentals. MCD has a dividend yield of 2.7% and a payout ratio of 50%. The company has increased its dividend for 35 years and has a 5 year dividend growth rate of 25%.
Wal-Mart Stores Inc (WMT)
Wal-Mart was downgraded by Argus from a Buy to a Hold on April 25th. Argus said it lowered its rating because Wal-Mart is facing increased scrutiny following a federal probe into Mexican bribery allegations. Despite the downgrade, WMT also has very solid dividend fundamentals with a 2.5% yield and a 33% payout ratio. Wal-Mart has increased its dividend for 36 years and has a 5 year dividend growth rate of 15.7%.
MeadWestvaco Corp (MWV)
MeadWestvaco was downgraded by RBC Capital Markets from Outperform to Sector Perform on April 26th with a price target of $30 per share. RBC Capital lowered MeadWestvaco estimates to reflect lower Brazilian packaging margins, unfavorable European mix, and FX headwinds. MWV has a dividend yield of 3.1% and a payout ratio of 67%. The company has increased its dividend for 2 years and has a 5 year dividend growth rate of 1.7%.
Nustar Energy LP (NS)
Stifel Nicolaus downgraded Nustar from a Buy to a Hold on April 26th. Stifel Nicolaus said the downgrade was based on headwinds from its San Antonio refinery operations. Nustar has a dividend yield of 8%, and because it is a limited partnership we are not focusing on the payout ratio. The company has increased its dividend for 10 years and has a 5 year dividend growth rate of 4%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.