Passive Income Powerhouses: 3 Dividend Growth Stocks to Buy NOW

Look for stocks offering the dynamic duo of increasing dividend payments and a rising stock price

Dividend investing has proved itself to be one of the best, most reliable strategies to amassing wealth. Because stocks beat out every other asset class over the long haul, and dividend-paying stocks outperform those that don’t make a payout, you will position yourself for generating riches by buying dividend growth stocks.

However, you shouldn’t just buy any dividend growth stocks. That are lots of income stocks that will cut or suspend their payout at the slightest sign of turmoil. On the other end are companies willing to go to the mat to defend their dividend. During the pandemic, Exxon Mobil (NYSE:XOM) was one of only a handful of oil and gas companies that maintained its payout and even grew the dividend.

Yet that’s not enough either. What investors want are dividend growth stocks. Those are companies that reward shareholders with both dividend increases and capital appreciation. Below are three dividend growth stocks you should buy today to create a portfolio of wealth to retire on.

Dividend Growth Stocks to Buy: Agree Realty (ADC)

The first dividend growth stock to buy now is real estate investment trust (REIT) Agree Realty (NYSE:ADC). It is arguably one of the best REITs on the market to reward you today and tomorrow.

Publicly traded since 1994, Agree Realty ia a consistent, well-balanced REIT that has generated 11.8% compound annual total returns for investors. It also enjoyed 6.1% compound annualized dividend growth during that time.

Agree has such a strong track record because its adjusted funds from operations (AFFO) per share has grown at an annual rate of 7%. That’s better than many of its peers, including Realty Income (NYSE:O), which has grown AFFO per share by 5% annually. AFFO is a key metric for REITs, much like free cash flow is for other companies. 

Agree Realty is also well diversified with its top three sectors accounting for only 27% of the total portfolio. It focuses on tire and auto centers, home improvement and grocery. Its top tenants are Walmart (NYSE:WMT), Tractor Supply (NYSE:TSCO) and Dollar General (NYSE:DG). Yet no one sector accounts for more than 10% of the total. Again, Agree Realty stock is well diversified protecting its downside.

High interest rate environments such as we’re in weigh heavily on REITs. That explains why ADC stock is down 10% year to date but that just makes it a great price to buy this tremendous dividend growth stock.

Lowe’s (LOW)

Home improvement center Lowe’s (NYSE:LOW) is the second dividend growth stock to consider for your portfolio. It has far outperformed the S&P 500 over the past decade, offering investors total returns of 514%, or double the broad market index’s 235% returns.

Lowe’s has steadily increased the amount of its dividend every year. Back in 2014, it was paying a quarterly dividend of just 18 cents per share but today the payout is worth $1.10 per share, a six-fold increase. At the same time, the share price quintupled. That’s a powerful combination for your portfolio.

The retailer is, in fact, a Dividend King, or a company that has raised its dividend for 50 years or more. Yet as noted earlier, it’s not enough to increase it. You also want the payout well supported, which Lowe’s offers too. While the dividend has grown at an 18% compound annual growth rate (CAGR) over the last 10 years, Lowe’s free cash flow (FCF) has expanded by more than 6% annually. That’s actually quite good for a mature business like the home improvement center. FCF per share grew smartly over that time as well, a strong indication Lowe’s stock and dividend will continue rising in the future.

Domino’s (DPZ)

The last dividend growth stock to buy may seem surprising but pizza shop Domino’s (NYSE:DPZ) has been a monster stock to own. Over the past decade, it has served up total returns of over 630% in large part because it has been growing its dividend at a CAGR of 20% a year. Its quarterly dividend has grown from 25 cents per share to $1.51 per share today. It yields 1.2% annually.

Investors might initially be put off by that but if you consider its yield on cost, or the amount the dividend yields based on when you purchased it, Domino’s is a fantastic wealth generator. A $1,000 investment 10 years ago nabbing that 1.2% would be seeing 8.1% yields today. Furthermore you wouldn’t have even had to reinvest dividends to achieve that. That’s the power dividend growth stocks deliver.

Domino’s trades at a premium today because it nailed down just how to grow its business. It floods an area with stores in a strategy called “fortressing” that builds brand awareness with consumers while reducing costs such as marketing. Although an individual store may do less business, the company itself prospers.

With free cash flow growing 12% annually, the payout is well-supported. And because the FCF payout ratio is just 35%, there are many more years of dividend growth and capital appreciation to come.

On the date of publication, Rich Duprey held a LONG position in XOM, O and LOW stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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3 EV Stocks to Avoid Like a Dead Battery After Xiaomi’s SU7 Triumph

Xiaomi (OTCMKTS:XIACY), known for its smartphones, is making a bold entry into the electric vehicle (EV) market. The company announced it will launch its first EV at competitive prices, which put several names in the EV stocks to avoid category following the highly successful SU7 launch.

Xiaomi co-founder Lei Jun unveiled the SU7 range, with the base model priced at approximately $30.000. The company set ambitious sales targets, with pre-orders for the SU7 surpassing 50,000 within minutes of the announcement, reflecting strong consumer interest.

Xiaomi’s EV venture, backed by a $10 billion investment, seeks to challenge industry leaders by offering high-spec vehicles at attractive prices. The SU7 models, designed to rival Tesla’s (NASDAQ:TSLA) Model 3 and the electric Porsche Taycan, is the latest strategic move in the global EV market. Tesla and BYD (OTCMKTS:BYDDY) currently dominate that space.

Goldman Sachs (NYSE:GS) analysts said in its report that they see the fully electric sedan as a “highly competitive” product, which “demonstrates Xiaomi’s capabilities of becoming a potential price leader in the market rather than a price follower.”

Fitch Ratings has projected a slowdown in the growth of EV sales in China, forecasting a 20% increase for 2024 compared to the 37% growth experienced in 2023. The deceleration is attributed to economic uncertainties and the rising levels of competition within the sector.

As such, here are three EV stocks to avoid.

Tesla (TSLA)

An image of a Tesla EV charger

Tesla is arguably the world’s most prominent EV manufacturer. Headed up by billionaire Elon Musk, Tesla has led the EV revolution for more than a decade. However, the company’s stock has struggled in recent months, with analysts highlighting Tesla’s struggle to come out with a cheap EV product.

There is a demand issue stemming from Tesla’s limited and high-cost product lineup, primarily the Model 3 and Model Y, suggesting market saturation and intensifying competition within the EV sector. That competition necessitates price cuts, adversely affecting profit margins. Amid these challenges for the last six months, Tesla has been the only S&P 500 stock with a double-digit loss, underscoring the unique pressures it faces compared to the broader market.

Without new high-volume offerings until 2026, and with the Cybertruck targeting a limited market, Tesla has been facing gross margin pressures, impacting stock performance.

Along these lines, Tesla is one of the EV stocks to avoid in 2024, especially after Reuters reported the company is scrapping low-cost car plans. The news sent shares tumbling, with investors unable to identify a catalyst to help shares re-rate in the near term.

Nio (NIO)

Nio (NYSE:NIO) is one of the companies likely to be greatly impacted by Xiaomi’s EV market entry. That is evident in the lackluster share price performance in recent months.

Barclays analysts recently downgraded the stock’s rating to Underweight from Equal Weight, while also decreasing its price target from $5 to $4 per share. The downgrade reflects concerns over Nio’s sales performance, particularly with its 2024 model lineup, which debuted in March. It did not meet sales expectations.

Barclays pointed out that March’s weaker sales underscore challenges in meeting the company’s forecast for the year, citing the first quarter deliveries aligned with the revised guidance of 30,000 units but fell short of the initial projection of 31,000 to 33,000 units.

Analysts also said that Xiaomi’s first car is a “highly competitive EV sedan.” With a limited number of new product launches anticipated for the remainder of 2024, Barclays anticipates significant risks to Nio’s capacity to fulfill consensus estimates for the year.

Xpeng (XPEV)

Similar to Nio, Xpeng (NYSE:XPEV), one of the three EV stocks to avoid, is an up-and-coming China EV company that aims to disturb Tesla and BYD’s leadership positions. However, the company’s plans have been negatively impacted by the successful launch of Xiaomi’s SU7.

Compared to July 2023, Xpeng stock trades 65% lower due to several factors, including the SU7 launch, weak global demand for EVs and aggressive price cuts initiated by Tesla.

Xpeng stock sentiment was further dampened after Citi (NYSE:C) analysts said they believe the EV maker will be mostly impacted by the arrival of SU7. The vehicle’s significant space relative to its price distinguishes it from rivals such as the Luxeed S7, Zeekr 001, Xpeng P7i and Han EV.

The competitive edge, they suggested, will likely drive a consistent rise in the SU7’s production and sales in the first three to four months following its market introduction. Analysts highlighted that Xiaomi and Xpeng have “strong ASP overlapping.”

Xiaomi has produced inventory in advance, and analysts believe the company could ship 5,000 to 6,000 vehicles in April, with full-year sales/production at around 55k to 70k units. As such, Citi kept its Sell rating on Xpeng’s stock.

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.

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f You Can Only Buy One Dow Stock, It Better Be One of These 3

Conservative investors looking for large stocks can use the Dow Jones as a starting point

Dow stocks to buy - If You Can Only Buy One Dow Stock in April, It Better Be One of These 3 Names

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The Dow Jones Industrial Average consists of 30 large stocks that have been chosen in an effort to represent the major components of the U.S. economy. As a result, for conservative investors looking for major names from multiple sectors of the American economy, the index is a reasonable place from which to start.

And at a time when the stock market’s rally has been broadening beyond tech stocks, investing in other sectors is wise. Of course, as always, it’s important to select the shares of companies that are in well-positioned sectors, have been performing positively and have attractive or at least reasonable valuations, along with strong, upcoming, positive catalysts.

So let’s examine three such Dow stocks, even if you can only buy just one..

American Express (AXP)

American Express (NYSE:AXP) delivered commendable fourth-quarter results, along with excellent full-year guidance. Moreover, the credit card network should continue to benefit significantly from future U.S. consumer spending trends.

In Q4, AXP’s net income climbed 23% versus the same period a year earlier to $1.93 billion. Additionally, its “revenues net of interest expense” advanced 11% year-over-year (YOY) to $15.8 billion. For all of 2024, the firm predicts that its earnings per share will come in at $12.65-$13.15. That’s well above its 2023 EPS of $11.21.

Further, the job market remains strong and unemployment stays low. So, AXP should continue to benefit from upbeat consumer spending trends going forward. Also importantly, the shares have an attractive forward price-earnings ratio of 16.8 times. And the dividend yield of 1.3% is significant.

Finally, Warren Buffett has owned a significant amount of AXP stock for many years, giving the name his stamp of approval.

Goldman Sachs (GS)

In a note to investors on March 26, Morgan Stanley (NYSE:MS) wrote that “money center banks” should get a big boost from the stock market’s recent gains, increases in mergers and acquisitions and debt-raising deals. MS named Goldman Sachs (NYSE:GS) as one of these five money center banks. Morgan Stanley maintained an overweight rating on GS stock.

Additionally, Goldman Sachs delivered good Q4 results as its sales rose 7% versus the same period a year earlier to $11.3 billion. And, its net income increased to $2 billion from $1.3 billion in Q4 of 2022.

Also importantly, Goldman succeeded in raising a huge $251 billion from investors last year. The proceeds funded the bank’s initiatives in many diverse areas, including credit, equity, real estate and hedge funds. With the economy humming along, its investments in those areas should generate very strong returns.

GS stock has a low forward price-earnings ratio of 11.6 times and a significant dividend yield of 2.65%.

Caterpillar (CAT)

As of March 22, Caterpillar (NYSE:CAT), in accordance with my previous, upbeat view of CAT stock, had climbed 22.4% in 2024. This makes it the Dow’s second-best performer since the beginning of the year.

The firm continues to have multiple positive catalysts. Those include high U.S. infrastructure spending and strong mining activity as the demand for many metals from the electric vehicle and renewable energy sectors remains high. Additionally, CAT should keep benefiting from the construction of many data centers. And, the rebound of oil prices and the better-than-expected performance of the Chinese economy should also boost its financial results.

In 2023, CAT’s sales rose 13% YOY to $67 billion, while its earnings per share, excluding certain items, soared 53% to $21.21. CAT stock has an attractive forward price-earnings ratio of 17.5 times and a significant dividend yield of 1.4%.

On the date of publication, Larry Ramer held Goldman Sachs bonds and his wife held a long position in AXP stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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3 EV Stocks on the Brink of a Major Crash: Sell Before It’s Too Late

These EV stocks to sell are unlikely to survive intense competition and sustained cash burn will continue to weaken fundamentals

EV stocks to sell - 3 EV Stocks on the Brink of a Major Crash: Sell Before It’s Too Late

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A March 2024 article on CNBC suggested the EV euphoria is dead. This view was backed by the fact that automakers have been scaling back on their EV expansion plans. Undoubtedly, the industry is suffering from factors that include competition, macroeconomic headwinds, and slower adoption by consumers. However, it’s too early to believe it’s the end of the road for EVs.

In the coming years, the industry will see consolidation and the potential failure of multiple EV companies. The ones that survive will emerge stronger and continue to grow through the decade. A balanced view would, therefore, be to buy quality EV stocks at a discount. At the same time, look at EV stocks to sell that represent companies that might not survive.

This column focuses on EV stocks to sell before they crash and burn. These EV companies will continue to suffer from cash burns, and with continued funding requirements, the stock will trend lower.

Lucid Group (LCID)

Lucid Group (NASDAQ:LCID) was once touted as a Tesla (NASDAQ:TSLA) competitor. However, Lucid has disappointed on multiple fronts, and the stock has been punished. The stock has corrected 67% in the last 12 months, and I expect further downside.

In March, Lucid announced a $1 billion investment from Ayar Third Investment Company. This boosted sentiments. However, it’s still a few years before Lucid can turn cash flow positive. Sustained cash burn implies further equity dilution. This will translate into a downside for LCID stock.

It’s worth noting that for Q1 2024, Lucid produced 1,728 vehicles and delivered 1,967 vehicles. These numbers are significantly low when scaling up and turning adjusted EBITDA positive.

Of course, Lucid ended Q4 2023 with a liquidity buffer of $4.78 billion. The recent infusion adds to the cash position. However, it’s unlikely that continued cash infusion will save the company amidst intense competition and a broad-based slowdown in EV sales.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY) stock was listed in June 2022 at $13. The decline has been sustained from those levels, and PSNY stock currently trades at $1.6. I remain pessimistic about the stock, and the downtrend will likely sustain.

It’s worth noting that the company received external funding of $950 million in February. This financing comes from 12 international banks. Further, Polestar reported a cash buffer of $770 million as of December 2023. Therefore, liquidity will not be an issue in the coming quarters.

The real challenge for Polestar is to achieve a cash flow break-even that’s targeted for 2025. The bank financing would imply debt servicing cost, and if sales are sluggish, credit metrics will worsen. The company still expects additional external funding of $350 million to achieve the cash flow break-even target.

On the positive side, new models are likely to support deliveries growth. However, it remains to be seen if costs can be curbed when the company is looking for aggressive deliveries growth.

ChargePoint Holdings (CHPT)

Among EV charging stocks, ChargePoint (NYSE:CHPT) is a sell even after a correction of 82% in the last 12 months. Business metrics have been discouraging, and ChargePoint is unlikely to survive the competition.

The first point to note is that the EV charging industry is still at an early growth stage. Most EV charging companies have been reporting steady or stellar revenue growth. For Q4 2023, Chargepoint reported revenue of $115.8 million, which was lower by 24% on a year-on-year basis. At the same time, the company’s gross margin contracted by 300 basis points to 19%. The decline in revenue coupled with margin compression is a big negative.

It’s worth mentioning that ChargePoint has reaffirmed its guidance for positive non-GAAP Adjusted EBITDA by January 2025. While that’s a few quarters away, the markets remain unimpressed. With a strong presence in North America and 16 European countries, growth has disappointed. Expect CHPT stock to remain weak and avoid it even from a trading perspective.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

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3 AI Stocks to Turn $10,000 Into $1 Million: April 2024

ai stocks - 3 AI Stocks to Turn $10,000 Into $1 Million: April 2024

Source: shutterstock.com/Tex vector

Artificial intelligence isn’t going anywhere. Bloomberg Intelligence forecasts that the generative AI market will grow to $1.3 trillion over the next 10 years from $40 billion in 2022. The technology promises to change all our lives in both small and big ways. The future is both exciting and a little intimidating when it comes to the brave new world of AI. 

While most technology companies are racing ahead with AI technologies, some have set themselves apart from the pack. These are companies that are racing ahead with the technology and finding ways to quickly monetize it and boost their bottom lines. While analysts agree that we are in the early innings of the AI revolution, they clearly see winners emerging in the space. Here are three AI stocks to turn $10,000 into $1 million: April 2024. 

Palantir Technologies (PLTR)

Palantir Technologies (NYSE:PLTR) is leveraging AI to bolster its data analytics service, and the results have been impressive. Largely because of its use of AI, PLTR stock has risen 167% over the last 12 months, including a 35% gain so far this year. The company’s stock jumped nearly 20% higher after the data analytics company’s most recent financial results were made public. Specifically, Palantir reported that its revenue increased 20% from a year earlier.

The growth at Palantir has been attributed to demand for AI, which the company’s CEO Alex Karp has repeatedly called “unrelenting.” To capitalize on the opportunity, Palantir is rolling out a new AI platform and making it available to both its government and commercial clients. Palantir has now reported four consecutive quarters of profitability, and rumors are growing that PLTR stock will be added to the benchmark S&P 500 index by year’s end.

Apple (AAPL)

Don’t sleep on Apple (NASDAQ:AAPL). The leading technology company has lagged behind in AI so far, but that could change quickly. The company is hosting its annual Worldwide Developers Conference from June 10 to 14 , and there is speculation the company will announce new AI products at the event. In February of this year, Apple CEO Tim Cook said Apple is “investing significantly” in AI and that there would be an AI announcement by the company this year.

More recently, there have been media reports that Apple is in talks with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) about licensing Gemini AI technology for future editions of the iPhone. It has also been reported that Apple is developing robots for use in the home after canceling its electric vehicle project. Multiple media reports say that engineers at Apple are in the early stages of developing a robot that can follow users around their homes and perform basic tasks. This is all to say that Apple could emerge as a major AI player. 

AAPL stock is down 8% this year. Buy the dip!

Meta Platforms (META)

Meta Platforms has pivoted aggressively from the metaverse to focus on AI. The company is working overtime to cascade AI across its social media platforms, virtual reality headsets, and other applications. As a result, Meta Platforms has become a huge buyer of AI microchips and semiconductors. CEO Mark Zuckerberg has said that the company could spend billions of dollars this year buying microchips from Nvidia (NASDAQ:NVDA) and others. 

In a post on Instagram, Zuckerberg said the company will have 350,000 Nvidia H100 graphics processing units (GPUs) and about 600,000 H100 compute equivalent GPUs by the end of 2024. “Our long-term vision is to build general intelligence, open source it responsibly, and make it widely available so everyone can benefit,” wrote Zuckerberg on social media. Owing to its growing push into AI, META stock has been a huge gainer, rising 142% in the past 12 months, including a 50% increase so far in 2024. 

On the date of publication, Joel Baglole held long positions in AAPL, NVDA and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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Don’t Be Left Holding the Bag: 3 Stocks Stocks to Sell ASAP

When building a stock portfolio, the most prudent strategy is typically to buy and hold shares of quality companies for the long haul. Avoiding businesses with flawed fundamentals or deteriorating financials can save you from getting stuck holding the bag on failing investments. However, I believe keeping a small portion of your portfolio for contrarian bets or speculative moonshot stocks can also prove rewarding, if done judiciously.

Of course , it’s worth noting that these companies’ battered valuations could prompt massive short squeezes at any time. Savvy traders can still generate short-term gains by playing on their volatility. But make no mistake – the long-term investment merits of these companies seem dubious at best.

Ultimately, I advocate holding primarily mainstream, institutional-quality investments. Allocating a smaller amount to moon shot bets is great, but investors will want to focus the majority of their portfolio on companies with solid leadership and finances.

So, for those looking to differentiate between the moonshot bets worth making, and the stocks I’d put in the “sell” bucket, here are three of the latter.

Ideanomics (IDEX)

There’s no sugarcoating it – the electric vehicle industry has endured a brutal year. High interest rates and recessionary fears decimated growth stock valuations, particularly those companies in the EV sector. Even innovative electric vehicle makers with promising futures have seen shares plunge dangerously close to penny stock territory. Ideanomics (NASDAQ:IDEX), a global EV solutions provider focused on fleet electrification, is one such beaten-down name facing extreme risks.

With losses mounting and cash reserves dwindling each quarter, it’s tough to justify Ideanomics as a viable long-term investment any longer. In Q3 2023 alone, the company lost a staggering $63 million on just $5.4 million of quarterly revenue. And its balance sheet now shows only around $2 million in cash remaining to fund near-term operations.

Make no mistake about it, the concept behind Ideanomics has merit. The company does have some strong tailwinds driving its valuation that could propel a move higher, if macro conditions improve. But in the current environment, raising capital is extremely difficult (and costly), making shareholder dilution seem inevitable just to keep the lights on.

AppTech Payments (APCX)

Unlike unprofitable and speculative EV stocks, leading fintech disruptors tend to operate with attractive margin profiles, even in their early stages of growth. But as a relatively unknown fintech company targeting merchants and consumers, AppTech Payments (NASDAQ:APCX) is a clear outlier. Four consecutive quarters of mounting losses and less than $1.3 million in remaining cash paint the picture of a company racing towards dilution or insolvency, absent a drastic change in fortunes.

Bulls will rightfully point out that revenues grew double digits again in Q4 and annual losses narrowed slightly on an adjusted EBITDA basis. However, with AppTech still losing substantially more money each quarter than it generates in sales, its current run rate is untenable. And for a microcap fintech company to succeed, fast growth at high margins is paramount.

Perhaps AppTech can stage an unlikely turnaround in a few years and finally achieve cash flow breakeven. But its history and Q4 results argue otherwise. I’m willing to bet AppTech won’t have sufficient time to scale further before requiring another emergency cash infusion. Cutting losses seems to be a prudent strategy, as opposed to risking a total wipeout.

Stryve Foods (SNAX)

In an environment where cash is king for small-cap companies, very few situations appear more dire right now than what we’re seeing at Stryve Foods (NASDAQ:SNAX). The emerging packaged snacks player has seen its revenues rapidly shrink from $30 million in 2022 to just $17.7 million this past year. There is little evidence Stryve can stop its cash bleed without an immediate strategic shift.

Making matters worse, Stryve’s balance sheet is saddled with nearly $24 million of highly-restrictive debt converting over the coming year which will effectively wipe out today’s shareholders altogether. The company recently reported holding only $377,000 in cash.

In short, extreme dilution seems inevitable in the near-term, for Stryve to just to keep the lights on. That is, if debt holders don’t seize control of the company entirely. I think SNAX stock will likely be rendered worthless or near-worthless sooner rather than later.

Penny Stocks

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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Dividend Danger Zone: 3 Aristocrats on the Brink of a Payout Cut

Being royalty has its perks but the risk of losing one’s crown remains with these Dividend Aristocrats to avoid

Dividend Aristocrats are stocks that are members of the S&P 500 index and have raised their dividend payouts yearly for 25 years or more. It’s an exclusive list of companies. Of the thousands of stocks on the market, only 68 were cut. 

That shows just how difficult it is. Yet, becoming a Dividend Aristocrat doesn’t mean a stock will always be one. Earlier this year, Walgreens Boots Alliance (NASDAQ:WBA) was forced to cut its dividend to conserve cash. Before that, VF Corp (NYSE:VFC) slashed its payout by 70%. Both stocks were booted from the list.

Below are three Dividend Aristocrats to avoid. They pose the greatest risk of cutting their dividend. Although they might not, as companies go to great lengths to maintain their status, a close inspection shows why these stocks are in danger of doing so.

Albemarle (ALB)

Albemarle (ALB) logo on a mobile phone screen

Source: IgorGolovniov/Shutterstock.com

Some investors might be surprised to learn that lithium producer Albemarle (NYSE:ALB) is a dividend aristocrat, let alone that it is one to avoid because it might cut its payout. The company owns one of the largest lithium mines at Greenbushes in Perth, Australia.

Albemarle was added to the Dividend Aristocrat list in 2019 and continues raising its payout to this day. Yet, being royalty doesn’t necessarily tell you the quality of the dividend. Although ALB stock is approaching its 30th year of increases, the growth rate has slowed dramatically. Over the past decade, Albemarle’s dividend has grown at a compounded annual rate of 3.8%, but over the last five years, it has grown to just 1.7% annually. That means investors are earning less on their dividends due to inflation.

Worse for ALB stock investors, the company typically generates negative free cash flow (FCF). Because companies pay their dividends out of the money they have left over after paying their bills, Albemarle’s negative 23% FCF payout ratio is a yellow flag. 

Again, the lithium producer may not cut its payout tomorrow, but that’s not a good sign. There are much better places for your money than Albermarle stock.

3M (MMM)

3M logo on top of a corporate building. MMM stock

Source: JPstock / Shutterstock.com

If there’s one Dividend Aristocrat most seen as likely to cut its payout, it’s industrial conglomerate 3M (NYSE:MMM). Because of the legal liabilities piled up against the owner of Post-It Notes and Scotch brand tape, it makes more sense to cut the dividend than use its cash reserves to finance it.

3M has paid a dividend for 66 years. So, not only is it an aristocrat, but it’s also a dividend king, meaning the payout has been raised for 50 years or more. Still, the company faces billions in legal liabilities for its military earplugs and more than $10 billion for environmental pollution from so-called “forever chemicals” to be paid out over the next decade or so.

3M also just spun off its one growth business, the healthcare business Solventum (NYSE:SOLV). Many companies cut their dividends after such spinoffs. AT&T (NYSE:T) cut its dividend in half when it spun off its entertainment division into Warner Bros Discovery (NASDAQ:WBD).

Although 3M’s FCF payout ratio is only 65%, much of those cash flows will go to Solventum. The conglomerate still owns almost 20% of the company, which means it will have much less FCF coming in. Management has committed to paying a dividend but hasn’t given a full-throated defense of increasing it.

Leggett & Platt (LEG)

A magnifying glass is focused on the logo for Leggett & Platt on the company's website.

Source: Casimiro PT / Shutterstock.com

Inner coil spring maker Leggett & Platt (NYSE:LEG) is the third Dividend Aristocrat to avoid. The mattress spring maker has been in business for 140 years and has raised its dividend for over 50 years. However, it’s business has been ailing. Inflation and high interest rates have hurt its primary business, which relies on the housing market. They also impact secondary ones like automotive and flooring. Those three industries account for 80% of Leggett & Platt’s revenue.

The stock is down 26% this year and off 37% over the past 12 months. The Federal Reserve is growing increasingly reticent about cutting interest rates, which could weigh further on Leggett’s fortunes. 

LEG stock is currently the highest-yielding Dividend Aristocrat, and though its FCF payout ratio is 65%, it is near to maxing out the leverage ratio set by its debt covenants. It may need to divert more resources to preserve its investment-grade debt rating, which hints at a possible dividend cut coming.

On the date of publication, Rich Duprey held a LONG position in WBA, MMM, SOLV, WBD, T and LEG stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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3 Stocks Wall Street Is Ignoring (But You Shouldn’t): April Edition

If you think about it, many of today’s high-flying stocks were once ignored by the Street. Nvidia (NASDAQ:NVDA) was a struggling video-game chip maker, Amazon (NASDAQ:AMZN) was a fledgling online book seller and Apple (NASDAQ:AAPL) was a formerly successful PC maker, fighting to stay in business. Indeed, the Street tends to shun stocks with great potential that are not yet delivering huge revenue gains or impressive partnerships. Therefore, it’s certainly worthwhile for long-term investors to consider buying stocks that are largely being shunned by the most popular business-news pundits and the largest investors. Here are three such overlooked stocks to buy.

Eisai (ESAIY)

The Street is still not enthusiastic about Japanese drug maker Eisai (OTCMKTS:ESAIY), co-owner of the first-ever Alzheimer’s treatment, Leqembi, that has shown a significant amount of effectiveness.

According to data reported late last year, 60% of a small group of early-stage Alzheimer’s patients who received the drug meaningfully improved. Among a larger group of patients with varied stages of the disease, cognitive decline was slowed by 27%.

For a variety of logistics-related reasons, the uptake of the drug has been slower than expected. Neurologists have been unenthusiastic about the treatment. Insurers’ reluctance and IV-only delivery likely explains physicians’ reticence.

Thankfully, Eisai has begun seeking FDA approval for a subcutaneous version of Leqembi which should ease the drug’s administration. Additionally, Eisai’s U.S. partner, Biogen (NASDAQ:BIIB), is reportedly working to increase insurance coverage of the treatment.

In spite of the problems, Eisai predicts that the drug will generate almost $2 billion in sales by fiscal year 2027 and $8 billion in revenue in fiscal year 2031.

Entain (GMVHY)

Entain (OTCMKTS:GMVHY), a UK-based online betting giant, delivered strong financial results in 2023. It also may greatly benefit from selling a stake in a joint venture to MGM (NYSE:MGM) and could itself become a takeover target.

Last year, Entain’s revenue climbed 11% to 4.77 billion British pounds, while its operating profit, excluding certain items, jumped 18% to 641.8 million British pounds.

Meanwhile, Entain and MGM’s joint venture, BetMGM, rose 36% last year, and the joint venture generated positive EBITDA in the second half of the year. BetMGM’s revenue and EBITDA are likely to climb tremendously as the platform expands to more states and as the popularity of online betting spreads in the U.S.

There have been rumors that MGM would look to buy Entain’s stake in BetMGM. If that does occur, Entain would likely have several billion dollars of cash that it could return to shareholders or use to acquire a profitable firm.

Further, the London Times recently reported that private equity firms are interested in buying Entain. If that occurs, of course, the company’s shares would soar.

All of Entain’s positive catalysts make it one of the best overlooked stocks to buy.

Stem (STEM)

Stem’s (NYSE:STEM) AI-powered software maximizes the efficiency of electricity use. The electrification of transportation and the rapid proliferation of AI should cause Stem’s software demand to surge going forward.

Stem recently launched PowerBidder Pro to help energy traders and asset owners optimize their asset bids and manage risk. It also enables them, using AI, to predict their energy usage. The product appears to be geared to the owners of energy storage batteries, a sector that’s rapidly growing in America.

Encouragingly, Stem already obtained a major customer and leading independent energy and commodity group, Mercuria, for PowerBidder Pro. Mercuria’s decision to purchase the product so soon after its launch bodes well for its outlook.

Stem expects to generate $50 million of cash this year, making it a prime choice among overlooked stocks to buy.

On the date of publication, Larry Ramer held long positions in STEM, ESAIY and MGM. His wife held a long position in BIIB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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