10 Dividend Trap Stocks to Avoid in 2025

2. Dow Inc. (NYSE:DOW)

Performance: -51.37%

Dividend Yield: 9.93%

Payout Ratio: 178.34%

Dow Inc. (NYSE:DOW), a Michigan-based company, is a global leader in materials science, producing plastics, industrial chemicals, and specialty products for end markets such as packaging, construction, and automotive. Innovation in polyethylene and polyurethane and circular economy initiatives amounts to the company’s competitive edge. Additionally, Dow Inc. (NYSE:DOW) uses integrated production and R&D investment to address climate challenges and demand shifts, thereby differing from its competitors in the market.

The company’s stocks saw a huge decline of 51.37% over the last 1 year, indicating a heavy fall in performance. The pricing pressures prevailing in the market caused a 2% year-over-year net sales decrease. As per the Q4 results, the EBITDA remained almost as flat as the previous year. The global macroeconomic conditions are weak and stand against the company, thus causing it to announce a strategic review of select European assets. Upon realizing that the market dynamics are not in its favor, Dow Inc. (NYSE:DOW) postponed the maintenance turnaround at one of its ethylene crackers in Europe. The decision could potentially idle the asset, resulting in lifespan exhaustion without generating any returns.

Even with a high dividend yield of 9.93%, Dow Inc. (NYSE:DOW) might be a risky dividend stock investment because of a dangerous 178.34% payout ratio, which signals unsound fundamentals.