Why PetSmart, Inc., Frontier Communications Corporation, and Windstream Holdings, Inc. Are Today's 3 Worst Stocks

Three companies paying dividends end as the worst performers in the stock market today.

May 21, 2014 at 7:42PM
Longview

Stocks finished broadly higher on Wednesday as fear that the Federal Reserve would begin raising interest rates anytime soon waned. All three major U.S. stock indexes ended with gains, but apparently PetSmart (NASDAQ:PETM), Frontier Communications (NASDAQ:FTR), and Windstream (NASDAQ:WIN) didn't get the memo, finishing as some of the worst performers in the S&P 500 Index (SNPINDEX:^GSPC). The S&P, for its part, added 15 points, or 0.8%, to end at 1,888.

PetSmart shed 8.3%, as the pet food retailer took a beating after first-quarter sales numbers failed to live up to expectations. Investors expected more robust same-store sales growth than the meager 0.6% seen last quarter, and the fact that same-store sales growth decelerated so quickly from the 3.5% seen in the same quarter a year ago is a cause for concern. On top of that, PetSmart is dragging its feet to get pet treats made in China off its shelves, even though the treats have been responsible for thousands of customer complaints over the years.

Although all 10 sectors advanced in the stock market today, the telecom sector barely made it off the ground, adding 0.1%. Frontier Communications would have gladly taken a mere 0.1% gain -- instead it slumped 4.3% Wednesday, even with a 6.8% dividend yield to lure investors to the stock. Although there was little news surrounding the stock today, a Barron's article on Monday, citing the stock's 30% year-to-date gains and "waning momentum" didn't help Frontier's popularity on Wall Street. Whatever Wall Street thinks about Frontier today, it's hard to argue that its $2 billion purchase of AT&T's Connecticut business at the end of last year was ill-advised.

Windstream Logo

Source: Windstream

Fellow telecom services provider Windstream joins Frontier at the bottom of the S&P Wednesday, having lost 1.5%. If you want to talk juicy dividends, few stocks boast the dividend juice of Windstream, which rewards investors to the tune of 10.7% annually. But my colleague Chad Henage poses the real $64,000 question investors should be asking themselves, along with two others: Is that dividend sustainable? Given that Windstream is losing customers, has large amounts of debt, and plans to increase capital expenditures moving forward, the answer isn't certain by any means.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends PetSmart. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers