American Assets Trust: A Hidden Gem Among Underperforming Dividend Stocks in 2025

As we navigate the volatile markets of 2025, it's essential to keep an eye on underperforming dividend stocks that may present attractive investment opportunities. One such company that has caught our attention is American Assets Trust, Inc. (AAT), a real estate investment trust (REIT) with a strong track record and a compelling dividend yield.



American Assets Trust, Inc. (AAT) is a full-service, vertically integrated and self-administered REIT headquartered in San Diego, California. The company has over 55 years of experience in acquiring, improving, developing, and managing premier office, retail, and residential properties throughout the United States in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon, Texas, and Hawaii. AAT's office portfolio comprises approximately 22.6 million square feet of office space, while its retail portfolio consists of 11.5 million square feet of retail space, and its residential portfolio includes 1,700 apartment units.



Despite its strong fundamentals and attractive dividend yield, AAT has struggled in 2025, with its stock price down approximately 9.19% year-to-date as of February 28, 2025. Several factors have contributed to AAT's underperformance, including:

1. Macroeconomic Factors: The new power in the White House has brought about changes, such as proposed tariffs on imports from Canada, Mexico, and China, which have significantly impacted the stock market. Additionally, the advent of new AI models from China is affecting trading volume and value in the U.S. These macroeconomic factors have contributed to the overall market decline, including American Assets Trust's stock performance.
2. Cautious Stance of the Federal Reserve: The Federal Reserve's cautious stance regarding rate cuts has kept borrowing costs elevated, negatively impacting companies that rely heavily on debt to maintain their dividend payouts. This factor is also affecting other dividend stocks in the market, as higher borrowing costs can lead to reduced earnings and dividend payouts.
3. Investor Preferences Shifting: Investors are increasingly prioritizing companies with strong earnings growth over yield-focused companies. This shift in investor preferences has led to a decline in capital flowing into the market and a reevaluation of dividend policies by some companies. American Assets Trust, along with other dividend stocks, may be struggling to justify their payouts in this environment.



Despite these challenges, American Assets Trust has maintained strong financials, thereby continuing to reward investors. The company's annual dividend payout has increased by 1.5% for the last year, and its dividend yield stands at an attractive 6.17%. Additionally, AAT's payout ratio of 142.6% indicates that the company is committed to returning capital to shareholders.

In conclusion, American Assets Trust, Inc. (AAT) is a compelling investment opportunity for income-focused investors, despite its recent underperformance. The company's strong fundamentals, attractive dividend yield, and commitment to returning capital to shareholders make it an attractive choice for investors seeking stable income and potential long-term growth. As the market continues to evolve in 2025, it is essential to keep an eye on underperforming dividend stocks like AAT, which may present attractive investment opportunities. By doing so, investors can build a diversified portfolio that generates stable income and has the potential for long-term growth.