10 Dividend Trap Stocks to Avoid in 2025

6. UWM Holdings Corporation (NYSE:UWMC)

Performance: -31.50%

Dividend Yield: 7.23%

Payout Ratio: 307.69%

Operating as United Wholesale Mortgage, UWM Holdings Corporation (NYSE:UWMC) is among the largest wholesale mortgage lenders in the U.S. The focus of the company is on residential mortgage origination through independent brokers. By offering competitive loan products with an emphasis on technology-based underwriting and processing, the Michigan-based company contends with top competitors like loanDepot. The broker-focused partnerships and low-cost operational models further help the company to stand out among its peers.

The drop in share price by 31.50% in the 1-year period suggests that UWM Holdings Corporation (NYSE:UWMC)’s scalability and digital platform position are not highly effective in navigating interest rate fluctuations and housing market shifts. In addition to this, the earlier investments made on growth opportunities have caused the operating expenses for 2024 to surpass expectations. The company also faces the impact of the mortgage market decline, with home sales reaching their record low since 1995. With new tariff rates, the existing demand is expected to prevail throughout 2025, leading to some impact on the company’s revenue growth.

UWM Holdings Corporation (NYSE:UWMC)’s 7.23% dividend might attract income chasers, but the 307.69% payout ratio is likely to divert investors from this risky dividend stock because they are paying almost 3 times more than what they are earning.