Dividend Investing: 2 Names to Sell, 2 to Buy in August 2025

In a rising rate environment, dividend investors must prioritize sustainability over yield. While high payouts can be tempting, they often mask underlying vulnerabilities. August 2025 presents a critical juncture for rebalancing portfolios, favoring companies with robust financials, resilient sectors, and long-term growth potential. Below, we analyze two buy-and-hold champions and two high-yield duds to divest.

The 2 to Buy: Quality Over Yield in a Rising Rate World

1. AbbVie (ABBV): A Pharmaceutical Powerhouse with a Legacy of Growth

AbbVie's 3.39% yield may not be the highest, but its 53-year streak of dividend increases and blockbuster drug portfolio make it a standout. Rinvoq and Skyrizi, two of its top-selling drugs, are projected to generate over $25 billion in 2025—surpassing the legacy of Humira. The company's $30 billion+ in free cash flow ensures ample room to sustain and grow dividends, even as interest rates climb.

While its 82.55 P/E ratio and 236.67 P/BV ratio suggest sensitivity to rate hikes, AbbVie's $90+ programs in clinical testing provide a buffer. For long-term investors seeking a blend of income and growth, AbbVie's pharmaceutical dominance and R&D pipeline make it a buy-and-hold gem.

2. Verizon (VZ): A Telecom Titan with 6G-Driven Resilience

Verizon's 6.30% yield is among the market's highest, but its 63% payout ratio and $100+ billion in free cash flow prove it's not a desperate play. The telecom giant is preparing for 6G deployment by 2030, with a test network in Dallas already underway. This positions Verizon to capitalize on IoT expansion, smart glasses, and holographic communication—sectors poised for explosive growth.

With a 9.99 P/E ratio and 1.76 P/BV ratio, Verizon is undervalued relative to its peers. Its high broadband market share and industry-leading network reliability further insulate it from competition. In a rising rate environment, Verizon's low valuation and strong cash flow make it a defensive income play with upside.

The 2 to Sell: High-Yield Traps in a Volatile Market

1. Mesabi Trust (MSB): A Mining Play with a 98.6% Payout Ratio

Mesabi Trust's 23.28% yield is staggering, but its 98.6% payout ratio and volatile dividend history tell a different story. The company recently slashed its quarterly dividend by 79%, from $0.56 to $0.12, raising red flags about sustainability. While it operates in the Basic Materials sector, its high leverage and commodity price sensitivity make it a risky bet in a rising rate environment.

Investors should divest here. The yield is a mirage, driven by a shrinking stock price rather than earnings growth. With $7.02 in annual dividends but no room for reinvestment or growth, Mesabi Trust lacks the durability of true dividend champions.

2. Orchid Island Capital (ORC): A REIT Paying Out 141.87% of Earnings

Orchid Island Capital's 20.31% yield is even more unsustainable. As a REIT, it's legally required to distribute 90% of taxable income, but its 141.87% payout ratio means it's paying out more than it earns. This is a recipe for disaster, especially as interest rates rise and mortgage-backed securities (its core asset) face prepayment risks.

The company's monthly dividend of $0.12 may seem reliable, but its $121.2 million share count increase in 2025 dilutes per-share value. With no minimum distribution guarantee and a forward payout ratio exceeding 140%, Orchid Island is a ticking time bomb for income investors.

Strategic Rebalancing: Quality Wins in the Long Run

Dividend investing in 2025 demands a focus on sustainability, sector resilience, and financial strength. AbbVie and Verizon offer the stability of proven cash flows and growth-oriented sectors, while Mesabi Trust and Orchid Island Capital exemplify the dangers of chasing yield without fundamentals.

For income-focused investors, the lesson is clear: sell the high-yield duds and buy the durable champions. By prioritizing companies with strong balance sheets, low payout ratios, and sector-leading positions, you'll build a portfolio that thrives in both rising and falling rate environments.

In the end, dividend investing isn't about finding the highest yield—it's about finding the best bets for tomorrow.