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The Dividend Stocks That Are 'The Most Dangerous Stocks On The Planet'

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The Dividend Stocks That Are 'The Most Dangerous Stocks On The Planet'

Mark Yusko, CEO and chief investment officer of Morgan Creek Capital Management was a guest on Benzinga's PreMarket Prep to discuss a list of stocks he considers to be "the most dangerous stocks on the planet."

When asked for his thoughts on high yielding dividend stocks, like utilities, energy and telecommunication stocks that have seen their stocks battered as of late, Yusko responded that investors shouldn't fall for this trap.

"Not to be too much of a skunk at a garden party but I think those are the most dangerous stocks on the planet," he said. "I actually have a term for this — the American dinosaurs. I think these big U.S. companies that people now are buying stocks as bonds might be the dumbest strategy ever created."

Related Link: A Look Into Warren Buffett's Worst Investment Ever Provides A Great Lesson

Yusko added that investors could lose "ten years of dividends overnight" if the stock undergoes even a "normal correction." He expanded that the only reason why telecom companies such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) pay such large dividends is because they are borrowing "huge" amounts of money essentially for free and are paying out more than their earnings in dividends.

Yusko further suggested AT&T and Verizon are "wildly overvalued" and are set to "drop a lot."

Yusko continued with his "favorite" stock to short which is also considered by some investors to be a dividend play: Exxon Mobil Corporation (NYSE: XOM). The oil giant is similarly borrowing money to pay dividends at a time when its earnings are dropping yet its P/E multiple stands at 35.

"Paying 35 times earnings for that is just crazy," Yusko said.

Bottom line, there is a whole group of "American dinosaurs" that are so big that investors assume implies safety but they will "die a slow painful death I think."

Listen to the full discussion in the clip below.
PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8–9 ET here, or catch the podcast here.

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Posted-In: dividend stocks Mark YuskoNews Dividends Dividends Exclusives Trading Ideas Interview Best of Benzinga

 

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