8 Dividend Stocks No Longer Expected To Outperform

by: Dividend Stocks Online

Despite lower consumer confidence numbers in February, improving unemployment numbers and an ease of international debt fears have helped to drive stocks higher. Stocks that were once undervalued have been on the rise forcing analysts to change their ratings from buy to hold. We found 8 dividend stocks that have recently been downgraded by investment firms. None of these stock have been cut to sell ratings but it is worth noting that the covering analysts is expecting lower returns at their current levels.

Spectra Energy LP (NYSE:SEP)

Barclays Capital downgraded Sepectra Energy from Overweight to Equal Weight on February 6th and set a price target of $34 per share. Barclys cited reduced expansion opportunities and its exposure to storage markets. The difficult backdrop for pipeline and storage markets in the last year has eroded SEP's ability to grow distributions. SEP has a dividend yield of 6% and has increased their dividend for 4 consecutive years. Their 3 year dividend growth rate is 10.6%.


Standpoint Research downgraded Gap from a Buy to a Hold on February 6th. Standpoint buys this stock on bad news in the teens and sells on good news in the twenties. They are downgrading for the 4th time. If you believe like I do that the market will continue to trend higher Standpoint may have had their last successful trade on this stock for a while. Gap has a dividend yield of 2.1% and has increased their dividend for 8 consecutive years. Their 5 year dividend growth rate is 7.2%.

Steris (NYSE:STE)

JMP Securities downgraded Steris from Market Outperform to Market Perform on February 8th. JMP said their downgrade was based on reduced visibility following the Q3 report and weak guidance. STE has a dividend yield of 2%. If you remove the one time dividend they paid in 2009 STE has increased its dividend for each of the last 5 years.


Oppenheimer downgraded Amgen from Outperform to Perform on February 9th. They cited a poor near term outlook after an FDA panel voted against recommending approval of Xgeva in bone metastasis prevention. AMGN has a dividend yield of 2.2% and just started paying dividends in 2011.

United Micro (NYSE:UMC)

HSBC Securities downgraded United Micro from Overweight to Neutral on February 9th. HSBC said the stock was now overvalued after its recent run up. UMC has a dividend yield of 5.5% and pays dividends annually. They more than doubled their dividend in 2011.

Lorillard (NYSE:LO)

Stifel Nicolaus downgraded Lorillard from a Buy to a Hold on February 10th. Stifel Nicolaus belives that Lorillad is overvalued at its current level. LO has a dividend yield of 4.2% and has increased their dividend for 3 consecutive years. Their payout ratio is 70% and their 5 year dividend growth rate is 23.3%. Despite these positive dividend number Stifel Nicolaus believes the stock is no longer a good value.


Stifel Nicolaus downgraded MCG Capital from a Buy to a Hold on February 6th. Their downgrade was also based on valuation. MCGC has a dividend yield of 14.3%. Over the last few years that have paid 2, 3 and 4 dividend payouts per year. They have been paying dividends since 2002.

Bank of Montreal (NYSE:BMO)

BMO Capital Markets downgraded Bank of Montreal from Outperform to Market Perform on February 10th. They cited relative valuation as the reason for the downgrade. Bank of Montreal has a dividend yield of 4.8% and has not increased their dividend since 2007. They have been paying dividend since 1829.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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