We recently published a list of Why Are These 10 Dividend Stocks Declining? In this article, we are going to take a look at where Prudential Financial, Inc. (NYSE:PRU) stands against other declining dividend stocks.
The dividend season is here, and the big announcements are rolling in!
The overall market atmosphere has been moderately negative since the new tariffs from the US. Soon after he entered the Oval Office, President Donald Trump announced a 25 percent tariff on imported goods from Canada and Mexico. Chinese products, meanwhile, are left tackling an even higher tariff of 60 percent.
As a result, on Monday this week, the broader market noted a sharp decline of 0.76 percent, while the Nasdaq reported the same trajectory but at 1.20 percent.
Regardless of market conditions, investors have consistently shown interest in dividend stocks, particularly those from companies that have steadily increased their payouts, making them popular among income-focused investors. Analysts have long tracked the performance of Dividend Aristocrats, both historically and in recent times.
In a January 2019 blog post titled “Dividend Growth Strategies and Downside Protection,” Phillip Brzenk, Global Head of Multi-Asset Indexes, examined how dividend growth strategies perform, especially during market downturns. He noted that since the end of 1989, there have been six calendar years where the broader market delivered negative returns. Interestingly, during each of those years, the Dividend Aristocrats outperformed the broader equity benchmark by an average margin of 13.28%. In addition, in three of those challenging years, they still managed to generate positive total returns. Brzenk further pointed out that when analyzed on a monthly basis, the Dividend Aristocrats outperformed the market 53% of the time, with an average outperformance of 0.16%.
As noted earlier, dividend growth stocks have outperformed the broader market. From its launch in 2005 through September 2023, the Dividend Aristocrats Index delivered a total return of 10.35%, exceeding the broader market’s 9.54% return over the same period. Moreover, these stocks experienced lower volatility, measured at 15.35%, compared to the market’s 16.31%. This suggests that their prices tend to be more stable, making them less susceptible to sharp fluctuations and highlighting their overall resilience.
In the list of underwhelming performers we will be looking into today, the dividend companies with a minimum of $1 billion in market capitalization alone are considered. Then we checked the returns of these stocks and selected 10 stocks that fell on February 6, 2024. The stocks are ranked according to their dividend yields, as of February 6. We also hedge fund sentiment for each stock, as of Insider Monkey’s database of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A financial advisor sitting with a customer in a living room discussing their financial future.
Annual dividend yield: 4.79%
Ex-Dividend Date: February 14, 2025
Number of Hedge Funds: 40
Quarterly dividend amount: $1.35
Prudential Financial, Inc. (NYSE:PRU) is in a bearish run as the stock price declined by over 7.2% in a week, reflecting negative investor sentiments to its recent financial performance and outlook.
Prudential Financial, Inc. (NYSE:PRU) recently posted an EPS of $2.96, which missed the earnings estimates by a margin of 10% despite having positive net flows and growing AUM. The company also announced a share repurchase program for $1 billion. The firm also maintained substantial liquid assets, increasing its holding by $.5 billion compared to last year’s previous quarter. Charles Lowrey, Chairman & CEO, commented
“We balanced meaningful returns to our shareholders with continued investment in the growth of our businesses, all while maintaining our robust financial strength.”
Prudential Financial, Inc. (NYSE:PRU) is seen as a reliable stock for dividend investors due to its consistent concern about its investors having paid dividends for over 17 consecutive years. Dividend investors should be wary of the adverse trend in mortality and market downturns, which can very well affect the share’s payout policy and performance in the future.
Overall, PRU ranks 4th on our list of declining dividend stocks. While we acknowledge the potential for PRU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PRU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
