3 Reasons to Sell This Big Dividend


Editor's note: This video was shot before the announcement that SUPERVALU would be cutting its dividend. The Fool regrets the error.

For investors to make educated decisions about their portfolio's holdings they need to understand both the bear and bull perspectives on each position. That's why analyst Austin Smith, a SUPERVALU (NYS: SVU) shareholder, is looking at three reasons to sell SUPERVALU.

At the top of his list is the enormous debt burden here, a whopping $4.8 billion. Throw on top another $3.5 billion in lease commitments, long-term liabilities, and pension worries, and you've got a company that's backed up against a wall in many ways. Competition from nontraditional retailers creates an extremely competitive environment as well, and for all the turnaround potential here same-store sales continue to trend lower. SUPERVALU can only do so much without improving this absolutely key metric.

With such a shaky foundation, even SUPERVALU'S stellar dividend may be called into question. That's why we'd suggest going with one of the winners in our new analyst report "9 Rock-Solid Dividend Stocks" instead. You can access your complimentary copy today at no cost! Just click here to discover the winners our best stock pickers selected.

At the time thisarticle was published Austin Smith owns shares of SUPERVALU. The Motley Fool owns shares of Costco Wholesale and SUPERVALU. Motley Fool newsletter services recommend Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.