AEF) is another CEF with a smaller forward yield of 6.6%. This does not mean its payout is safe. AEF’s portfolio is full of emerging market stocks, which carry higher risk. With the global economy still reeling from the pandemic, AEF’s holdings may be in for a rough ride. Additionally, if the Federal Reserve continues to raise interest rates, AEF’s holdings may decline in value, potentially leading to a dividend cut. AEF earns an F rating in Portfolio Grader.\n\nIn a dividend stocks can be a great addition to a portfolio, but it is important to do thorough research and avoid high-risk options.”
“Dividend Stocks to Avoid: High Risk, Low Reward\n\nDividend stocks are often seen as a safe bet for long-term returns, but not all dividend stocks are created equal. Some are known as dividend traps or yield traps, with high risk of reducing or suspending their payouts. These stocks may have enticing double-digit yields, but they come with a caveat. Alongside these, there are other dividend stocks that may not be at risk of a dividend cut, but still carry significant downside risk. Here are three dividend stocks to avoid, each earning an F rating in Portfolio Grader.\n\nAbrdn Income Credit Strategies Fund (ACP)\n\nClosed-end funds (CEFs) like Abrdn Income Credit Strategies Fund (NYSE:ACP) are popular among dividend-focused investors due to their high yields. The market has not made a mistake in de-rating ACP to a yield of 14.35%. Over the past year, shares in this CEF have fallen by more than 20%, and further declines may be ahead. The prospect of the Fed raising interest rates to combat inflation could negatively impact ACP’s portfolio of low-rated debt securities. Additionally, the current economic downturn may increase the default risk of ACP’s holdings, potentially resulting in another dividend cut. ACP earns an F rating in Portfolio Grader.\n\nAdeia (ADEA)\n\nAdeia (NASDAQ:ADEA) may have a low forward dividend yield of 1.89%, but taking into account downside risk, it is still one of the dividend stocks to avoid. Sell-side analysts anticipate a 30% decline in ADEA’s earnings this year, raising concerns about the sustainability of its payout. While the company has presented a plan to grow and maximize the value of its patent portfolio, execution may prove to be challenging. If Adeia fails to get back into growth mode, its payout may be cut, resulting in a decline for ADEA stock. Currently earning an F rating in Portfolio Grader, it is best to stay away from ADEA.\n\nAbrdn Emerging Markets Equity Income Fund (AEF)\n\nAbrdn Emerging Markets Equity Income Fund (NYSEAMERICAN:AEF) is another CEF with a smaller forward yield of 6.6%. This does not mean its payout is safe. AEF’s portfolio is full of emerging market stocks, which carry higher risk. With the global economy still reeling from the pandemic, AEF’s holdings may be in for a rough ride. Additionally, if the Federal Reserve continues to raise interest rates, AEF’s holdings may decline in value, potentially leading to a dividend cut. AEF earns an F rating in Portfolio Grader.\n\nIn a dividend stocks can be a great addition to a portfolio, but it is important to do thorough research and avoid high-risk options.”$DEX2023-12-14T13:27:59.723Z
