Xerox (NYSE: XRX) seems like a cheap dividend stock on the surface. It's a Fortune 500 company that provides print and digital document products and services across 160 countries, its stock trades at just 11 times forward earnings, and it pays a high forward dividend yield of 4.3%.
Xerox hasn't raised its payout since 2017, but it continued paying dividends throughout the pandemic, and spent just 53% of its free cash flow on those payments over the past 12 months. Its low valuation could also make it more appealing as the market rotates from growth to value stocks . Those points are all valid -- but I believe Xerox is still a high-yield trap, for five reasons.
Image source: Xerox.
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This High-Yield Dividend Stock Might Be in Trouble