5 Dividend Paying Stocks You Should Avoid According to Morgan Stanley’s Quant Screen

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In this article, we will discuss the 5 dividend paying stocks you should avoid according to Morgan Stanley’s quant screen. If you want to read about similar stocks, you can go to 10 Dividend Paying Stocks You Should Avoid According to Morgan Stanley’s Quant Screen.

5. Sonic Automotive Inc. (NYSE:SAH)

Dividend Yield as of September 27: 2.29%

Total Expected Return: -40%

Number of Hedge Fund Holders: 20

Sonic Automotive, Inc. (NYSE:SAH) is an American automotive retailer. The company operates through two segments: Franchised Dealerships and EchoPark. As of September 27, Sonic Automotive Inc. (NYSE:SAH) has declined 8.43% year to date, and Morgan Stanley expects the stock to shed an additional 40% over the next couple of quarters.

On September 9, BofA analyst John Murphy double downgraded Sonic Automotive Inc. (NYSE:SAH) to Underperform from Buy and slashed his price target to $71 from $82. The analyst noted that he sees a high probability of supply chain issues negatively impacting auto volumes into 2023. As of September 27, the stock is offering a forward dividend yield of 2.29% and has free cash flows of $353 million.

At the end of Q2 2022, 20 hedge funds held stakes in Sonic Automotive Inc. (NYSE:SAH). The total value of these stakes amounted to $92 million, down from $100 million in Q1 2022 with 23 positions. As of June 30, Teewinot Capital Advisers is the top shareholder in the company with stakes worth $21 million.

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