Analysts Just Slashed Price Targets For These Two Dividend Stocks - Time To Consider An Alternative Option?

Dividend investors are always on the lookout for companies with strong and consistent payouts. However, recent analyst actions suggest that two popular dividend stocks, Huntington Bancshares Incorporated HBAN and Oxford Industries, Inc. OXM, may be facing 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 operates as the holding company for The Huntington National Bank. The company offers a wide range of financial products and services, including deposits, lending and wealth management. Huntington Bancshares has a forward dividend yield of 5.02% and a payout ratio of 49.21%. However, the company has only offered 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 its 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 Q1 2024 earnings release showed mixed results. While the company reported deposit and loan growth, net interest income decreased 9% year-over-year and noninterest income declined compared to the prior 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 various lifestyle brands, including Tommy Bahama, Lilly Pulitzer and Johnny Was. The company has a forward dividend yield of 2.63% and has increased its dividend for three consecutive years, 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’ Q1 2024 earnings release showed a 5.2% decrease in net sales compared to the prior-year quarter. The company also reported lower gross margins and operating income, as it continues to invest in the business amid a challenging macroeconomic environment.

Time For an Alternative Option?

Given the uncertain outlook for these two dividend stocks and the overall stock market as a whole, income investors may want to explore alternative options that offer higher yields and more stable returns. One such option is the Ascent Income Fund from EquityMultiple.

The Ascent Income Fund from EquityMultiple focuses on private credit investments, targeting stable income from senior commercial real estate debt positions. With a historical distribution yield of 12.1% and a focus on capital preservation, this fund offers investors a compelling alternative to traditional dividend stocks.

The Ascent Income Fund aims to enhance investors’ security by investing in loans with full payment priority. The fund also offers flexible liquidity, with redemption options available one year after the initial investment. Learn more about the Ascent Income Fund on EquityMultiple's website.

While Huntington Bancshares and Oxford Industries have been popular choices among dividend investors, recent analyst actions and mixed earnings results suggest that these stocks may face challenges in the near term. Income investors seeking higher yields and more stable returns might consider alternative options like 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 goals and risk tolerance before making any investment decisions.

Interested in exploring other high-yield investment opportunities? Check out Benzinga's favorite alternative income investments here. 

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