We recently published an article titled These 10 Dividend Stocks are Underperforming in 2025. In this article, we are going to take a look at where Northern Oil and Gas, Inc. (NYSE:NOG) stands against the other underperforming dividend stocks.
Two months into 2025, the stock market has already taken a massive hit from macroeconomic factors. The new power in the White House has brought about so many changes, influencing the broader market. For instance, the new tariffs proposed earlier by the U.S. President – a 25% increase on imports from Canada and Mexico and an additional 10% on imports from China – have been perceived by analysts to have a substantial impact on the stock market. Also, the advent of new AI models from China is affecting the trading volume and value in the U.S. Some dividend stocks are also getting caught in these giant waves while others are thriving.
The shifting economic conditions, changing investor preferences, and company-specific challenges have strongly impacted the performances of a few dividend-paying companies, making the year 2025 more challenging.
READ ALSO: These 10 Dividend Stocks are Outperforming the Market in 2025
In the market, the cautious stance of the Federal Reserve regarding the rate cuts has kept borrowing costs elevated. It has negatively reflected companies relying heavily on debt to maintain their dividend payouts. Furthermore, with the investors’ focus shifting toward technology and AI, some sectors, like consumer staples and utilities, which were traditionally considered safe investments, are declining in their performance.
At the same time, investors increasingly prioritize companies with strong earnings growth over yield-focused companies. With limited capital flowing into the market and shifting priorities, dividend stocks struggle to justify their payouts.
However, it is essential to remember that despite the broader headwinds, not all dividend stocks have suffered. Some have maintained strong financials, thereby continuing to reward investors. Others face significant challenges, including weak earnings reports, declining free cash flow, or strategic inefficiency. For instance, CNN has reported a slump in the energy sector caused by rising inflation rates and price hikes, which are affecting the earnings of some companies in the industry. Because of such challenges, many dividend companies are reevaluating their dividend policies, causing either a decline in payouts or a reallocation of capital toward growth opportunities to remain competitive.
The biggest question, however, is, “What does this mean for the investors?” The new developments raise concerns and signify the need to evaluate more than just a stock’s yield. Future guidance, sector outlook, and the company’s financial health should be prioritized before making an investment decision. In this regard, this article presents investors with an opportunity to look into the underperforming stocks in 2025. The companies on our list may recover, so their current undervalued price could be seen as an opportunity for income-focused investors.
Our Methodology
To compile our list of 10 underperforming dividend stocks in 2025, we considered companies with a market cap of $1 billion or more since we wanted to include those companies that are financially strong. Next, we looked for stocks with a negative year-to-date (YTD) return as of February 28, 2025, indicating underperformance. We did not include stocks with a dividend yield of less than 4% since income-focused investors are interested in a dividend yield of 4% or more. Also, to drive the value of our article upwards in terms of information and usefulness, we looked into dividend yield, payout ratio, and the number of hedge funds to create the list.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An aerial view of an oil and gas platform in the middle of the ocean, representing the massive resources harvested by the company.
Northern Oil and Gas, Inc. (NYSE:NOG)
Dividend yield: 5.71%
Ex-Dividend Date: March 28, 2025
Number of Hedge Funds: 42
Northern Oil and Gas, Inc. (NYSE:NOG), an independent energy company based in Minnesota, U.S., is engaged in the business of acquiring, exploring, developing, and producing oil and natural gas properties. The regions covered by the company include Williston, Uinta, Permian, and Appalachian basins within the contiguous United States.
As of February 28, 2025, the stock declined by 17.68% YTD. The decline is primarily attributed to the shift in the company’s focus on expensive acquisitions. For instance, the acquisition of XCL assets cost the company $510 million. The investment was funded through debt, and the resulting interest expense affected the company’s value. The Q4 earnings call indicated an EPS of $1.11, which missed both the estimates and the previous year’s value of $1.13 and $1.61. However, the overall financial performance is high, with an adjusted EBITDA of $1.6 billion and free cash flow of $461 million, reaching the peak in 2024. Northern Oil and Gas, Inc. (NYSE:NOG) expects strong growth in the future, which will be contributed to by their previous acquisitions, including XCL.
The company offers a substantial income stream covered by earnings with a 5.71% dividend yield and a healthy 31.91% payout ratio. With 42 hedge funds from the Insider Monkey database holding the shares of Northern Oil and Gas, Inc. (NYSE:NOG) at the end of Q4 2024, the institutional interest in the stock remains strong.
Analysts maintain a Buy rating based on the projection of a 55.33% upside to $47.50. Investors interested in stock can purchase before March 28, 2025, to benefit from dividends.
Overall NOG ranks 6th on our list of the dividend stocks that are underperforming in 2025. While we acknowledge the potential of NOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NOG but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.