Can you lose money on dividend stocks?

Good Question!

Yes, dividend stocks can lose money. One great example is Enron. Enron used to pay dividends and went bankrupt. Investors that think they can count on analyst stars or all information in annual reports or that a dividend company can’t lose money need to realize it does not work that way all the time.

Company Bankruptcy filing Last paid dividend* Dividends paid** ($mil)
Comdisco July '01 Feb. '01 $15
Enron Dec. '01 Sept. '01 372
Federal-Mogul Oct. '01 Nov. '00 7
Polaroid Oct. '01 Nov. '00 153***
USG Corp. June '01 Feb. '01 20
Warnaco June '01 Sept. '00 19

You can also even be sued by a company that issued a dividend to you as a shareholder. Owens Corning , which went Chapter 11 in 2000 amid towering asbestos claims, filed a lawsuit against major shareholders, aiming to force them to relinquish dividends paid from 1996 to 2000. The last quarterly dividend it sent out before the Chapter 11 filing paid 7.5 cents a share for a nice 3.7% annual yield.

So, no, dividend stocks are not protected from losing money. Any investment can lose money.

I hope that helps and good luck with your investing!

Benjamin Z Miller
www.benjaminzmiller.com