Sell These 3 Overvalued Dividend Stocks Now

There are a lot of overvalued dividend stocks out there.

Time to wisely kick a few stocks out of your portfolio.

While the uninformed focus on equity markets potentially being a bubble, the most obvious bubble in the market is the risk of some higher-yielding dividend stocks.

The fixed income market is normally a place of stoic safety—the purview of those looking to avoid risk.

Is it really possible that allegedly safe Treasury securities could lose significant value?

You bet they can—and they will.

Correction: they are. As we’ve seen over the last two months, yields are falling further.

While it’s the market’s worst-kept secret, many investors will still lose big money watching their fixed-income investments evaporate. You don’t have to be one of them.

You do, however, need to see the writing on the wall and be willing to take action to protect your capital during what will likely be a long period of rising interest rates.

It’s not just bonds; other cash-flow-related securities like dividend stocks will suffer, as well.

Dividend stocks were the one safe haven during the crisis-level low-interest-rate phase now ending. The search for yield resulted in shares being bid up to unsustainable levels. Now with rates on their way up, dividend stocks are on their way down.

Get out while you can, with most dividend stocks trading at peak value.

Here are three dividend stocks to sell now:


McCormick & Company (NYSE: MKC)

The packaged food company is a great example of a bubble in dividend stocks. While there’s some justification for paying a high price for consistent cash flow, does it really make sense to pay 28 times 2021 estimated earnings?

Not really, especially when you consider that the company expects to grow profits in the single digits.

What happens to the valuation when yield seekers go elsewhere? Those that espouse dividend stocks fail to answer that question.

When an investment theme gets overdone, basic principles like valuation fall by the wayside; ultimately, the market proves that valuation does matter.

Sell McCormick before the market figures that out.


Kimberly Clark (NYSE: KMB)

From an investment perspective, there’s nothing sexy about Kimberly.

Typically, the market hands out premium valuations when there are fast-growing profits. That’s not the case with Kimberly Clark.

The company lowered 2021 sales growth to 0 to 1% with adjusted earnings down to $7.30 to $7.55.

Analysts expect the company to cut profit projections by 8% from the current year to the next. At current prices, shares trade for a very healthy 19 times 2021 estimated earnings.

The reason for the premium is the dividend. Kimberly Clark pays out more than 3% per annum. With interest rates so low, that’s an attractive return. If there is profit growth on top of that, you might have a meaningful combined return.

That argument fails when the valuation is so high. The stock continues to underperform, down 4% compared to the Consumer Staples Select Sector SPDR ETF (XLP) returned 22%.

This is the risk investors face, at current prices.

That 3% dividend might not look so attractive now. Add in the strong dollar risk it faces, and you have all the reason you need to break up with Kim.



Investors have a love-hate relationship with AT&T.

When the company tried to break out of the “boring” telecom space and move into the hot media/content arena buying Direct TV and Time Warner, many investors cheered.

Except when management went to execute the plan, the business model got really muddled between cell phone carrier and media content.

And Wall Street didn’t like that. The stock price went nowhere.

Yes, the company has paid out a rich dividend of 7% annually. But that’s coming to an end.

With the focus on the 5G and telecom build-out, management wants to conserve cash. So the dividend will be cut.

How much? Management hasn’t said, but speculation on the Street is it could be cutting the dividend in half.

And since the announced spin-off of the media properties, the stock price still hasn’t gone anywhere.

Move on from AT&T. There are better dividend players that can hold their yields and appreciate in price at the same time.

Can Clean Energy Renew Your Portfolio?

Can Clean Energy Renew Your Portfolio?

On August 8, 2022

As we look for trade ideas, the U.S. government just handed over a potential big win for one industry. Will we see a boost to the clean energy stocks after the Senate voted to unlock nearly $370 billion this past weekend?

Will Payrolls Push The Fed To Take Action?

Will Payrolls Push The Fed To Take Action?

On August 7, 2022

What does all of this mean for the future? Are the jobs reports good or bad?

Keep reading to find out the key levels for the S&P 500 and what reports are likely to move the markets this week.

Job Market Remains Tight As Jobless Claims Increase

Job Market Remains Tight As Jobless Claims Increase

On August 4, 2022

To close out the week I have a trade idea for you with a potential 44% return in the next 43 days.

Get Today’s Trade Idea (and more)

FOMO Hits Market After Strong Earnings

FOMO Hits Market After Strong Earnings

On August 3, 2022

We could see another strong month ahead for tech and there’s one symbol that you may want to add to your trading list.

Keep reading to learn more about the one symbol that could have a strong August.

Consistent Income Using One Ticker

Consistent Income Using One Ticker

On August 2, 2022

As the markets remain relatively flat, theta decay is your friend this week so I thought I’d write about a trade that has been showing remarkable accuracy lately.

This one trade has a 90% accuracy rate. Keep reading to find out more.

How Stable Is The Job Market?

How Stable Is The Job Market?

On August 1, 2022

It wasn’t too long ago that the market was reacting (or overreacting) to every piece of news that was published. Over the last month and a half, the markets have settled down some. That can be seen from the VIX (volatility index) which has been steadily decreasing since the mid-June market lows.

Don’t Call It A Recession

Don’t Call It A Recession

On July 31, 2022

That begs the question: if the market is forward-looking, why do we put so much attention to GDP numbers that are identified and then reported after the quarter is complete?

Is This Really A Recession?

Is This Really A Recession?

On July 28, 2022

The Mediots Are At It Again

As we’ve explained over the last few months, it was likely that the U.S. economy would meet the ‘technical’ definition of a recession (two or more consecutive quarters of negative GDP).

Three Dividend Stocks To Buy After Yesterday’s Fed Meeting

Three Dividend Stocks To Buy After Yesterday’s Fed Meeting

On July 27, 2022

It’s official, the Fed increased interest rates by 75 basis points for a second straight meeting. Inflation remains high, job growth is slowing, and consumer confidence is at historic lows.

Maybe that’s why investors are rushing toward dividend investing to protect their portfolios. With a recession likely on the horizon, if we’re not there already, and dividend payouts projected to increase throughout 2022, there are three quality companies you should consider for your portfolio.

Top CEOs Are Saying This About The Upcoming Quarter

Top CEOs Are Saying This About The Upcoming Quarter

On July 26, 2022

What can learn from the major companies that reported earnings?

Alphabet (GOOG/L) released earnings and missed overall, but their ad revenue beat expectations so their stock went up after hours. Microsoft (MSFT) missed on cloud revenue and ad revenue and their stock went down. Great.



267 Kentlands Blvd #225
Gaithersburg, MD 20878

P. (866) 257-3008
(Monday-Friday 9:00 AM-5:00 PM EST)

E. [email protected]



Publisher of actionable and proven strategies and tactics to help investors build wealth and reach seven-figure portfolios.

Receive the latest news

Subscribe To Our Daily Newsletter

Get notified about new articles, special events, training, and much more

Like What You See?

Leave your info below to get more options and trading ideas to your inbox

Yes, send me news to my inbox.