The ultimate goal of the dividend growth investing, is to realize rising income over time. For this reason, we recommend dividend growth investors focus on stocks with long histories of increasing dividends each year.

However, there are times when income investors should consider selling a stock. Namely, if a company cuts its dividend, or goes a long period of time without raising its dividend. Reduced or stagnated dividends can be a red flag that a company’s underlying earnings are not rising.

The following 3 dividend stocks have displayed no dividend growth and/or have cut their dividends, making them potential sells for income investors.

Oxford Square Capital (OXSQ)

Oxford Square Capital Corp. is a BDC (Business Development Company) specializing in financing early- and middle-stage businesses through loans and investments in collateralized loan obligations.

At the end of last quarter, the total fair value of Oxford Square’s investment portfolio stood at about $243.2 million across 61 positions, allocated approximately 61% in secured debt (48% first-lien, 13% second-lien), 38% in CLO equity, and about 1% in equity or other investments. Last year, the BDC generated roughly $42.7 million in total investment income.

On April 25th, 2025, Oxford Square Capital reported its first-quarter 2025 results for the period ending March 31st, 2025. The company generated about $10.2 million in total investment income, down slightly from $10.7 million in Q1 2024, mainly due to lower interest income from debt investments.

The company’s investment income per share has been declining at a 10-year CAGR of 4.9%, as Oxford Square has been failing when it comes to refinancing its investment at attractive yields, resulting in declining investment spreads. Further, the company has been historically over-distributing dividends to shareholders, decaying its NAV, and hence its future income generation due to fewer assets. 

Rising interest rates should help boost the company’s results in the medium-term. Still, with the company’s investments declining in value and a generally falling NAV creating a downward spiral on reinvested capital, income generation could further decline. OXSQ’s payout ratio has often been above 100% over the years, as management has historically paid investors more than what the company earned.

The ongoing shareholder value deterioration trend does not seem to be nearing an end-, at least not anytime soon. Overall, we believe that the company’s future investment income generation carries substantial risks, while a potential recession and an adverse economic environment could severely damage its interest income.

PennyMac Mortgage Investment Trust (PMT)

PennyMac Mortgage Investment Trust invests in residential mortgage loans and mortgage-related assets. The trust focuses on creating mortgage-related assets through its correspondent production activities, which includes mortgage servicing rights. PennyMac operates as a mortgage real estate investment trust (REIT). PMT has three segments: credit sensitive strategies, interest rate sensitive strategies and correspondent production. PennyMac Mortgage began its operations in 2009 with $324 million of assets, which has grown to $14.9 billion as of March 31st, 2025. 

PMT is externally managed by PNMAC Capital Management, which itself is a wholly owned subsidiary of PennyMac Financial Services (PFSI). As a result of being externally managed, PMT has only one employee on record. The growth of PMT is dependent upon PFSI’s 4,000 employees. It is headquartered in Westlake Village, California. 

PennyMac Mortgage Investment Trust reported first quarter 2025 results on April 22nd, 2025, for the period ending March 31st, 2025. PMT reported net investment income of $44.5 million, which was a 40% decrease from NII of $74.2 million in the prior year quarter. The trust generated a ($0.01) loss per share in the quarter, which compares unfavorably to the $0.39 earned in the year-ago quarter. The book value per share decreased from $15.87 on December 31st, 2024 to $15.43 on March 31st, 2025.

PMT has not produced much in terms of per-share growth over the past decade, in both diluted earnings per share and net investment income per share. Net investment income generated by the whole company has risen, however as the trust raises capital through equity issuance, existing shareholders are heavily diluted. The number of outstanding shares has tripled since 2011. Continued dilution makes the ongoing dividend payout much more burdensome for the company.

The dividend has been a struggle to pay for certain years over the last decade, and the company has cut its dividend multiple times. The payout ratio has historically been volatile for PMT, and this increases the risk of the dividend being in danger once again in the future. Expectations for 2025 put the dividend again in dangerous territory.

USA Compression Partners LP (USAC)

USA Compression Partners, LP (USAC) is one of the largest independent providers of gas compression services to the oil and gas industry, with annual revenues of $950 million (in 2024). USAC was founded in 1998, completed its initial public offering in January 2013, and has paid a quarterly dividend continuously since the second quarter of 2013. 

The partnership is active in several shale plays throughout the U.S., including the Utica, Marcellus, and Permian Basin. It focuses primarily on infrastructure applications, including centralized high- volume natural gas gathering systems and processing facilities, requiring large horsepower compression units. It designs, operates, and maintains the compression units. USAC operate under fixed-fee, take-or-pay contracts, and does not have direct exposure to commodity prices. 

USAC reported first quarter 2025 results on May 6th, 2025. Revenues for the quarter rose to $245 million compared to $229 million in Q1 2024. Distributable cash flow increased from $87 million to $89 million in Q1. The distribution was held steady at $0.525 per unit, in line with last year. And distributable cash flow coverage was 1.44X for the quarter.

For several years, the partnership’s growth on a per common unit basis had been rather stagnant. During 2020 to 2021, DCFU decreased as the pandemic impacted results. In 2022, the company returned to modest growth. Due to a history of effectively shrinking distributable cash flow per unit over the long term, and the cyclicality of the oil and gas industry, we estimate a -2% decline of distributable cash flow per unit from this high comparison base in the intermediate term.

USAC has not increased its dividend in nearly a decade. USAC earns a sell rating due to its lack of dividend growth.