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With the S & P 500 index down by about 20% up to now this 12 months, some buyers are attempting to trip out the storm. Going through battle in Europe, cussed inflation, rising rates of interest and the specter of recession, they’re trying to find beaten-up shares providing fats current earnings. The hazard, although, is that the hunt for what looks like enticing quarterly dividend funds at the moment can set buyers up for disappointment tomorrow. Simply have a look at this display CNBC Professional ran, utilizing FactSet knowledge to seek for potential high-dividend traps. First, we checked out shares within the S & P 1500 index (combining the large-cap 500, mid-cap 400 and small-cap 600), then narrowed our search to solely these paying a dividend yield of 5% or extra, with a debt-to-equity ratio higher than 100%, a dividend protection ratio lower than three and the place analysts’ consensus estimates name at no cost money move to say no this 12 months. The ultimate filter we ran screened for shares which have already fallen 20% or extra up to now in 2022. The consequence? A handful of shares yielding between 5.9% and 9.4% in industries starting from client cyclicals to power to know-how. By Wednesday’s shut, the very best of them has tumbled about 29% this 12 months whereas the worst is down virtually 60%. Equitrans Midstream, a Pennsylvania-based pure fuel pipeline operator, pays a dividend equal to a 9.4% yield, the best within the group. Its debt-to-equity ratio was the second highest, at 308%. Equitrans inventory has fallen 38% in 2022. Glatfelter, a North Carolina supplies maker, pays a dividend equal to 7.8%, however its debt-to-equity ratio is 194% and the inventory is off 58% by way of Wednesday’s shut. Different shares whose sky-high dividends seem in danger are clothes retailer Hole, photocopier producer Xerox, restaurant chain Cracker Barrel and Hanesbrands, the maker of t-shirts and underwear.
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