3 high-yield-dividend duds

Income investors might find that regular paydays don't make up for the price losses on these troubled shares.

By InvestorPlace Jun 28, 2010 1:43PM

dividend stocks dropHigh-yield dividend stocks are in favor on Wall Street right now as investors look to insulate themselves from recent market volatility. But what happens when these stocks actually end up losing you cash instead of protecting your portfolio?

If you’re losing a significant amount of money as the share prices of your income stocks dive, then it might be time to pull the trigger and sell these dividend duds. After all, there are a host of high-yield stocks out there, so why should you settle for one that offsets your quarterly dividends with regular losses in share price?

To help you identify which dividend losers you should cut loose, here are three high-dividend stocks that just aren’t worth holding on to right now:

Pfizer (PFE): This drugmaker is fairly popular among dividend stock investors, considering its nearly 5% yield and a market cap of about $118 billion. Sounds like a conservative stock that's sure to protect your portfolio, right? Well, think again. Pfizer shares are off about 21% this year as costs of last year’s Wyeth merger continue to weigh on its bottom line. On top of that, looming patent expirations on blockbusters like Viagra and Lipitor cast doubt on the long-term futures of PFE stock. Yes, the company just paid an 18 cent dividend in May, but that’s small recompense for the loss in share value -- and the threat of continued declines are enough to give investors pause.

PPL Corporation (PPL): This energy and utility holding company has a market cap of over $9.5 billion and has given up nearly 21% year to date. Through its subsidiaries, PPL generates electricity from power plants in the northeastern and western United States, markets wholesale or retail energy primarily in the northeastern and western portions of the United States and delivers electricity to approximately four million customers in Pennsylvania and the United Kingdom. PPL currently yields 5.6%.

Lorillard, Inc. (LO): The tobacco giant boasts a 5.6% yield and just paid shareholders a hefty quarterly dividend of $1 on May 27. Too bad the cigarette manufacturer is off more than $10 a share since January, or nearly 8%. What’s more, the stock has added a mere 8% in the past 12 months -- less than half the gains made by the broader market. Not only does Lorillard’s dividend yield not make up for its poor performance in 2010, its sluggish share price in the last year should be more than enough proof to scare you off this tobacco company. LO has a market cap of over $11 billion.

For four other dividends stocks to sell, follow this link.

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