7 Dividend Trap Stocks To Avoid

Description:

Beware of dividend traps. These are stocks that entice investors to take an investment position based on cheap valuation and above average dividend payouts. Unfortunately what the investor learns is that the value received from the dividend is more than offset by the depreciation in value of the stock price. In other words, total returns to investors are negative.
With that in mind, I scoured the S&P 1500 Composite Index (SPR) for dividend traps that have hurt investors. These are stocks that one should continue to avoid. The period of time under review was the three year period ending on June 1, 2012. Thus I was able to compare these dividend trap returns to an excellent period for the market in which the SPX returned on a total return basis about 44.3%.

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