In this article, we will take a look at some of the worst-performing stocks that pay dividends.
Dividend stocks, though popular among long-term investors, often trail the broader market. Even this year, the Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, surged by nearly 4% since the start of 2025, compared with a 16.6% return of the broader market. That said, dividend stocks have previously shown less volatility in comparison to other asset classes.
A study by Ned Davis Research suggested that non-dividend-paying companies and dividend cutters have historically underperformed other asset classes. In addition, companies with no active dividend policies were not only more volatile but also lagged their peers.
According to a report by Hartford Funds, during market declines of over 10%, dividend stocks outperformed those that don’t pay dividends. The report revealed that from 1975 through March 2025, dividend stocks showed a 14.4% decline during major market drawdowns, compared with a nearly 20% drop in the broader market.
However, a different pattern has been emerging over the past few years. AI stocks are gaining traction, which is having an effect on the performance of long-term dividend stocks. Given this, we will take a look at some of the worst-performing dividend stocks in 2025.
Our Methodology:
For this list, we screened for companies with a market cap of at least $2 billion with stable dividend policies. From the resultant list, we picked dividend stocks that have produced negative returns in 2025 and finally, shortlisted 11 companies showing the worst year-to-date returns. The stocks are ranked according to the decline in their share prices in 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11. Diageo plc (NYSE:DEO)
YTD Decline in Share Price as of December 8: 29.8%
Diageo plc (NYSE:DEO) is one of the worst-performing stocks in 2025.
On December 3, UBS downgraded Diageo plc (NYSE:DEO) to Neutral from Buy and also trimmed the stock’s price target to 1,850 GBp from 2,250 GBp. The analyst noted the stock’s share price decline this year and sees continued downside risks in the US spirits market. UBS also questions the likelihood of outperformance in the first half, highlighting weakness in Tequila and Diageo’s ongoing market share losses.
Diageo plc (NYSE:DEO) reported declines this year because of sluggish sales in Latin America, under-pressure consumers in the UK and US, declining alcohol consumption among Gen Z, and the growing market of GLP-1 weight-loss drugs. However, the company’s premium brands, including Johnnie Walker, Crown Royal, Smirnoff, Baileys, and Captain Morgan, are giving a glimmer of hope as things are not completely bleak.
In fiscal Q1 2026, Diageo plc (NYSE:DEO) organic net sales were flat, and its organic volume grew by 2.9%. The company also experienced growth in Europe, Latin America and Caribbean (LAC), and Africa; however, weakness was seen in Chinese white spirits and a softer US consumer environment.
Despite these setbacks, Diageo plc (NYSE:DEO) remains upbeat on its performance in the coming year and has raised its guidance for organic sales and operating profit. The company also expects to deliver approximately $3 billion in free cash flow in 2026.
Diageo plc (NYSE:DEO) is a British multinational alcoholic beverage company that has operations in nearly 180 countries.
10. Owens Corning (NYSE:OC)
YTD Decline in Share Price as of December 8: 32.8%
Owens Corning (NYSE:OC) is one of the worst-performing dividend stocks.
On December 8, Barclays reduced its price target for Owens Corning (NYSE:OC) to $130 from $131 and kept an Overweight rating on the stock. The update came as part of the firm’s 2026 outlook, and it updated its ratings and targets across the homebuilding and building products sector. Barclays expects another year of declines in single-family housing starts, and noted that the housing market “remains far from balanced.” The analyst added that this leaves homebuilder stocks “volatile, with no cycle call to be made.”
In its earnings for the third quarter of 2025, Owens Corning (NYSE:OC) highlighted challenging market conditions, which resulted in weakening residential trends in the US, impacting the company’s volumes in repair and remodel and new construction product lines. However, the company plans to overcome these near-market dynamics by maintaining a high level of safety.
Owens Corning (NYSE:OC) Prattville, Alabama, as the location for its new shingle plant in the Southeastern US. The plant is set to serve an underserved market and improve service throughout the company’s shingle network. In addition, from a cash point of view, the company also remained committed to delivering value to shareholders. During the quarter, it returned $278 million to investors through dividends and share repurchases.
On December 4, Owens Corning (NYSE:OC) also announced a 15% hike in its quarterly dividend to $0.79 per share.
Owens Corning (NYSE:OC) is an Ohio-based company that develops and manufactures insulation, roofing, and fiberglass composites and related products.
