Image Source: PixabayMany of the stocks crowned as Dividend Kings performed decently in 2024. They should mostly finish with a positive return in 2024, albeit only in the mid-single digits, barring a year-end meltdown. They are currently up about 6.7%, giving the group their fourth positive return in four years.The 3 worst-performing Dividend King stocks in 2024 were SJW Group (SJW), Stepan (SCL), and Nucor (NUE).

Market Overview
This year has been a good one from the market’s perspective. The U.S. Federal Reserve lowered rates three times in 2024 and is planning for two decreases in 2025. Inflation has declined substantially and has settled between 2% and 3% annually. It’s not yet at the 2% target, but the values are decent. The Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) Price Index are below 3%. The CPI is 2.7%, while the PCE is 2.8% for 2024.Although the housing and auto sales are still below their pre-pandemic highs, the stock market responded positively. The Nasdaq 100 is up 28% after a 49% gain in 2023, fueled by growth in Artificial Intelligence after the passage of President Biden’s CHIPS Act.The Dow Jones Industrials gained a respectable 14% while the broader S&P 500 Index increased 25%. Both the Nasdaq 100 and S&P 500 have been setting records in 2024. Besides the stock market, risk-based alternative assets soared.The past year contained further good news, including positive Gross Domestic Product (GDP) numbers, a still-low unemployment rate, and job growth. Despite the naysayers trying to convince people everything is terrible, the opposite is seemingly true.However, on the negative side, manufacturing continues to struggle. Moreover, a recession did not happen in 2024, despite general sentiment aligning with my prediction at the end of 2023. However, all bets are off in 2025.The 2024 Dividend Kings did not perform well in relative terms. This year, the Dividend Kings have climbed roughly 6.7% with dividends reinvested, as seen in the chart below, which is worse than the Nasdaq Composite (+31%), Dow Jones Industrial Average (+14%), S&P 500 Index (+25%), and the Russell 2000 (+27%).Overall, dividend stocks did not do as well as tech and growth stocks for the second year in a row.Image Source: Stock Rover

Past Years’ Worst Performers

3 Worst Performing Dividend King Stocks in 2024
As mentioned, the 3 worst-performing Dividend King Stocks in 2024 were: SJW Group, at -32%, Stepan, at -28%, and Nucor, at -21%, as of this writing, based on our watch list. This is the first time on our annual list for all three stocks. Image Source: Stock Rover

SJW Group
SJW Group, founded in 1865, is a water utility company providing water and wastewater services to approximately 1.5 million people across California, Connecticut, Texas, and Maine. The company operates through three main subsidiaries, including San Jose Water Company, Connecticut Water Company, and Texas Water Company. The utility acquired Connecticut Water Service in 2018 and followed that with smaller purchases in Texas. Total revenue was $670.4 million in 2023 and $722 million in the last twelve months.In 2024, SJW Group faced challenges primarily related to regulatory hurdles and rising interest rates. These factors impacted the company’s ability to secure necessary approvals for rate increases and increased its borrowing costs, negatively affecting its financial performance. Consequently, the company’s stock price declined significantly.However, SJW Group is expected to return to growth in 2025 due to several factors. Firstly, the company has a strong track record of consistent revenue and earnings growth because of its essential service nature, a growing number of connections, and a larger customer base, especially in Texas.Revenue has increased about 10% annually on average in the past decade. Secondly, SJW Group is investing in infrastructure upgrades and expanding its service areas, which should support future rate increases and growth. Additionally, the company benefits from long-term contracts with municipalities and a relatively stable long-term regulatory environment.SJW Group’s stock price has been punished despite beating revenue and earnings estimates. Consequently, the utility’s dividend yield is over 3% and at a decade high, making it attractive for first-time investors. The dividend safety is still excellent. The forward payout ratio is around 57%. Moreover, the company’s balance sheet, stable cash flows, and an A- upper-medium investment grade credit rating imply more dividend increases to come. SJW Group’s share price should recover, and even though it has been trading at an earnings multiple of 18.3X, it is probably undervalued. The usual range is between 18X and 38X. Hence, investors may still want to look at this Dividend King with a 57-year streak of increases. Image Source: Portfolio Insight

Stepan Company
Stepan Company, founded in 1932, is a global leader in specialty and intermediate chemicals. The company produces a diverse range of products, including surfactants, polymers, and other specialty chemicals, serving various industries such as personal care, home care, agriculture, and industrial. Stepan operates through a network of manufacturing facilities across North and South America, Europe, and Asia. The grandson of the founder is the company’s CEO.Total revenue was $2,326 million in the calendar year 2023 and $2,187 million in the last twelve months.In 2024, Stepan faced challenges from macroeconomic headwinds, including rising interest rates and inflationary pressures, which impacted global demand and reduced margins. These factors, as well as increased competition and supply chain disruptions, contributed to missing estimates or mixed results.Hence, the company’s share price declined. However, most chemical companies are facing similar pressures. For instance, Celanese cut its dividend because of market conditions and a high amount of leverage.However, Stepan is improving profitability by implementing cost-reduction measures and focusing on operational efficiency to improve margin. Also, the firm is expanding its product portfolio through research and development and new production sites. Additionally, a recovery in global easing inflationary pressures and better economic conditions in China and other locations could boost demand for chemicals.Stepan has a 56-year history of paying dividends, and the recent share price decline has significantly improved the dividend yield to 2.3%. This is nearly a decade high and one percentage point more than the five-year average.Furthermore, the company’s historically strong balance sheet and free cash flow generation helped drive dividend increases. Although the past few years have been challenging, the payout ratio is still only 67%, even after a steep decline in earnings per share. That said, the top and bottom lines are expected to increase in 2025.Despite membership as a Dividend King, Stepan may interest few investors because of the moderate dividend yield and high valuation. The stock usually trades at a price-to-earnings ratio (P/E ratio) ranging from 15X to 20X, and it is now at 26.7X. Image Source: Portfolio Insight

Nucor
Nucor, founded in 1905, is a leading manufacturer of steel products in North America. Its diverse product portfolio includes steel beams, bars, sheet steel, and steel plates, serving various industries like construction, automotive, and manufacturing. Nucor’s competitive advantage lies in its mini-mill strategy, utilizing electric arc furnaces for steel production, offering greater flexibility and lower operating costs than traditional integrated mills.Total revenue was $31,714 million in 2023 and $31,363 million in the last twelve months.In 2024, Nucor faced significant headwinds due to a sharp decline in steel prices amid weakening demand across key sectors. Rising interest rates and concerns about a potential recession further dampened market sentiment, impacting construction activity and automotive production. These factors combined significantly impacted Nucor’s profitability, leading to a substantial decline in its share price. Most steel companies are facing similar challenges.However, there are reasons to believe that Nucor can return to growth in 2025. The U.S. infrastructure bill is expected to boost demand for steel in the construction sector over time. Additionally, lower interest rates may boost demand for vehicles. Tariffs may potentially change market conditions, too. Furthermore, Nucor’s focus on cost efficiency should help it navigate challenging market conditions and lower demand, improving its profitability.However, despite the share price decline, the dividend yield is only 1.85%, below the five-year average. The equity has a 51-year dividend increase streak with an average growth rate of about 3.5% in the past 10 years.Nucor recently increased its quarterly dividend by a penny. That said, the dividend safety is solid, with a 12% payout ratio and an A-/Baa1 lower-to-upper medium investment grade rating. In addition, Nucor has an excellent dividend quality grade of a ‘B+,’ meaning it is in the 80th percentile of stocks.Despite the decline in share price, Nucor is not undervalued. It has been trading at a P/E ratio of ~14X, more than the five- and 10-year ranges. Also, the dividend yield is relatively low. Furthermore, the steel industry has been facing significant challenges. Image Source: Portfolio InsightMore By This Author:Celanese Cut Its Dividend To Focus On Deleveraging Amid Challenging Market Conditions3 Consumer Staples Stocks For Long-Term Dividend Growth And IncomeBaxter International: Dividend Cut Because Of Restructuring