2019 was a banner year for the U.S. economy. But the economy is not the stock market, and corporations with a large portfolio of brick-and-mortar retailers did not fair so well this year.
“…the worst performers tend to share a common theme of trouble thanks to the decline of physical retail sales in the age of online shopping alternatives,” U.S. News said. “On the plus side, some of these stocks offer double-digit dividends. But as you’ll see, massive share price declines more than offset any income potential from these troubled stocks.”
Here are the 10 worst S&P 500 Dividends stocks of 2019 according to U.S. News and World Report.
Kohl’s Corp. (KSS)
Current yield: 5.4%.
2019 returns: -26%
In May, the clothing-and-home retailer admitted to concealing its bleak earnings prospects and that is only likely to erode the trust of Wall Street investors in 2020.
“After a big miss on earnings across the board, the company restated its full-year guidance and that included a deep cut to profit forecasts,” U.S. News said. “The result was to be expected – a big move downwards for stocks as investors readjusted their expectation for this company.”
Kraft Heinz Co. (KHC)
Current yield: 5.1%
2019 returns: -27%
Following the 2015 merger of its two iconic brands, Kraft Heinz became the world’s fifth-largest food and beverage company and the third-largest in the United States. But Wall Street’s excitement in the company has faded thanks to a debt-heavy deal struck in the merger, deep cost-cutting moves and a lineup of products that can’t seem to keep up with consumers’ changing tastes.
“Throw in a recent SEC investigation, deep write-offs and quarterly losses, and it’s no wonder that investors lost faith in this consumer mashup in 2019,” U.S. News said.
Alliance Data Systems Corp. (ADS)
Current yield: 2.3%
2019 returns: -29%
Alliance Data Systems serves merchants, travel firms and leisure companies worldwide with marketing and customer-loyalty solutions. including private label credit cards and direct-mailed, reward-program coupons. Unfortunately for ADS, e-commerce competition has been fierce especially fierce and lucrative this year, making it hard for merchants to justify such programs use the corporation’s services.
“Printing and mailing a coupon to your local home goods store just isn’t an effective way to connect with customers in 2019,” U.S. News said. “And that shows in the performance of ADS.”
L Brands (LB)
Current yield: 6.7%
2019 returns: -32%
The “L” in L Brands might as well have stood for lackluster this year. The retailer has struggled as more and more as consumers do their shopping with e-commerce giants like Amazon and lose interest in the group’s big-name brands.
“Sure, Victoria’s Secret underwear and Bath & Body Works lotions were all the rage in the 1990s, but the marketplace has moved on,” U.S. News says. “When you have trouble connecting with customers it’s never a good thing. But when you have to find a way to reinvent your brand even as you have to rethink the whole logistics of your retail business in a digital age, the pressures are serious indeed.”
Mosaic Co. (MOS)
Current yield: 1%
2019 returns: -33%
This relatively-unknown, Minnesota-based company sells fertilizer and agricultural chemicals. Despite a sizable customer base and few competitors, the company saw little growth and disappointing dividends in 2019
Current yield: 5.8%
2019 returns: -33%
With Gap’s portfolio touting brands like Old Navy and Banana Republic, the company appeals to a number of different consumer demographics. Old Navy is Gap’s biggest brand and its only segment to see growth over the last three years, but has become a down-market choice for shoppers and it’s low prices are leading to low margins.
“While top line performance isn’t terrible, pressure on margins has investors worried about the stock’s long-term performance – and its dividend,” U.S. News says.
Current yield: 1.9%
2019 returns: -35%
Owens-Illinois manufactures glass containers and packaging for a number of industries but mainly serves beer and wine makers.
“With a small but growing segment of the alcoholic beverage marketplace moving toward environmentally-friendly solutions, it’s hard to see a future where OI is bigger or better than where it is today,” says U.S. News. “Though profits look decent and this company isn’t going anywhere, the top line is certainly not getting larger for Owens-Illinois.”
Occidental Petroleum Corp. (OXY)
Current yield: 8.3%
2019 returns: -38%
As the global community grapples with the use and environmental impacts of fossil fuels, oil producer like Occidental are struggling to in a low-growth industry. Falling natural gas prices have dealt another blow and are leading end-users away from crude-oil use.
“The sad reality is that there is a lot of risk ahead for the energy sector generally, and explorers like OXY are directly in the crosshairs for this long-term energy transition,” U.S. News says.
Macerich Co. (MAC)
Current yield: 11.5%
2019 returns: -49%
Despite a large yield in 2019, Macerich is facing long-term pressure as a real-estate investment trust that develops and manages a dying American institution: shopping malls.
“With 51 million square feet of real estate in 47 centers, in many ways MAC stock is ground zero for the problems facing the retail sector as merchants across the board cut back on physical locations – and leave empty storefronts in their wake,” says U.S. News.
Current yield: 9.7%
2019 returns: -49%
U.S. News describes Macy’s as the “poster child for struggling retail stocks in 2019,” and its stocks fell slowly and steadily throughout the year.
“Macy’s has been characterized by higher prices than its competitors, a mediocre online shopping experience, long checkout lines and messy physical stores that frustrate customers and a general lack of efficiency that is so important in the age of lower margins for brick-and-mortar operators,” U.S. News says.