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Dividend investors are always looking for companies with strong and consistent payouts. However, recent analyst moves suggest that two popular dividend stocks, Huntington Bancshares Incorporated (NASDAQ:HBAN) and Oxford Industries, Inc. (NYSE:OXM), may face some headwinds. Let’s take a closer look at these companies and explore why income investors might want to consider alternative options.
Huntington Bancshares
Huntington Bancshares Incorporated serves as the holding company for The Huntington National Bank. The company offers a wide range of financial products and services, including deposits, loans and asset management. Huntington Bancshares has a forward dividend yield of 5.02% and a payout ratio of 49.21%. However, the company has offered only modest dividend increases in recent years, with a five-year dividend growth rate (CAGR) of just 3.19%.
On June 14, 2024, Piper Sandler downgraded Huntington Bancshares from ‘Neutral’ to ‘Underweight’ and lowered the price target from $13.50 to $11.50. This implies a potential downside of 5.66% from the current price of $12.19.
Huntington Bancshares’ recent first-quarter 2024 earnings release showed mixed results. Although the company reported growth in deposits and loans, net interest income declined 9% year-over-year and non-interest income declined compared to the previous quarter, excluding the impact of mark-to-market on pay-fixed swaptions.
Oxford Industries
Oxford Industries, Inc. is an apparel company that designs, sources, markets and distributes products under several lifestyle brands, including Tommy Bahama, Lilly Pulitzer and Johnny Was. The company has a dividend yield of 2.63% and has increased its dividend three years in a row, with a five-year dividend growth rate (CAGR) of 13.52%.
On June 13, 2024, Citigroup maintained its “Sell” rating on Oxford Industries, but lowered its price target from $94 to $92. This suggests a potential downside of 8.09% from the current price of $100.10.
Oxford Industries’ first quarter 2024 earnings release showed a 5.2% decline in net sales compared to the previous year’s quarter. The company also reported lower gross margins and lower operating results as it continues to invest in the sector in a challenging macroeconomic environment.
Time for an alternative option?
Given the uncertain outlook for these two dividend stocks and the stock market as a whole, income investors may want to explore alternative options that offer higher yields and more stable returns. One of those options is EquityMultiple’s Ascent Income Fund.
The Ascent income fund from EquityMultiple focuses on private credit investments, aiming for stable income from senior commercial real estate debt positions. With a historic distribution yield of 12.1% and a focus on capital preservation, this fund offers investors an attractive alternative to traditional dividend stocks.
The Ascent Income Fund aims to increase investor safety by investing in full payment priority loans. The fund also offers flexible liquidity, with redemption options available one year after initial investment. Read more about the Ascent Income Fund on the EquityMultiple website.
While Huntington Bancshares and Oxford Industries are popular picks among dividend investors, recent analyst moves and mixed earnings results suggest these stocks could face challenges in the near term. Income investors looking for higher yields and more stable returns could consider alternative options such as the Ascent Income Fund, which offers the potential for attractive income backed by real assets. As always, investors should conduct their own due diligence and consider their individual financial objectives and risk tolerance before making any investment decisions.
Interested in exploring other high-yield investment opportunities? See Benzinga’s favorite alternative income investments here.
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This article Analysts Just Cut Price Targets on These Two Dividend Stocks – Time to Consider an Alternative Option? originally appeared on Benzinga.com
