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3 Reasons to Sell This Big Dividend

Editor's note: This video was shot before the announcement that SUPERVALU would be cutting its dividend. The Fool regrets the error.

For investors to make educated decisions about their portfolio's holdings they need to understand both the bear and bull perspectives on each position. That's why analyst Austin Smith, a SUPERVALU (NYSE: SVU  ) shareholder, is looking at three reasons to sell SUPERVALU.

At the top of his list is the enormous debt burden here, a whopping $4.8 billion. Throw on top another $3.5 billion in lease commitments, long-term liabilities, and pension worries, and you've got a company that's backed up against a wall in many ways. Competition from nontraditional retailers creates an extremely competitive environment as well, and for all the turnaround potential here same-store sales continue to trend lower. SUPERVALU can only do so much without improving this absolutely key metric.

With such a shaky foundation, even SUPERVALU'S stellar dividend may be called into question. That's why we'd suggest going with one of the winners in our new analyst report "9 Rock-Solid Dividend Stocks" instead. You can access your complimentary copy today at no cost! Just click here to discover the winners our best stock pickers selected.

Austin Smith owns shares of SUPERVALU. The Motley Fool owns shares of Costco Wholesale and SUPERVALU. Motley Fool newsletter services recommend Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 11, 2012, at 7:11 PM, drcor wrote:

    Little late.

  • Report this Comment On July 11, 2012, at 7:33 PM, DNAstock wrote:

    Well that's an abrupt about face on this stock. What happened to the long-term perspective here?

    Is this suddenly no longer a "special situation" play?

  • Report this Comment On July 11, 2012, at 7:46 PM, TMFBWItime wrote:


    Apologies for the timing here, this was shot yesterday, prior to the announcement about the dividend being cut.

    I will get an editor's note in place as soon as possible.

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