Deluxe Corp (NYSE: DLX) has been a massive disappointment for its investors since early 2025, having lost more than 30% since the final week of January.
And while an unusually high dividend yield of 7.57% on the modern payments firm looks attractive – market veteran Jim Cramer recommends against getting tempted.
In the 1980s, DLX was a celebrated growth stock – but it seems to have lost its mojo and no longer looks appealing to own for the back half of this year, Cramer argued on “Mad Money”.
Deluxe stock’s dividend yield is a red flag
Cramer’s concern is based on an exceptionally high dividend yield of more than 7.50% on Deluxe stock.
According to him, the unusually high dividend yield is not a sign of strength, but a potential red flag.
“When you get a yield that’s well above all the others, it’s not good. That means something’s very wrong,” the famed investor told his audience.
Jim Cramer blasted the company for talking about diversification for years but failing to actually deliver on it.
On “Mad Money”, he dismissed DLX shares with a blunt “X-nay Deluxe” lamenting what he described as a missed opportunity for a company that once held promise.
DLX shares may be all sizzle, no steak
DLX has been working to reposition itself as modern fintech name, emphasizing its transformation from a check-printing legacy business to a provider of B2B payments, data solutions, and merchant services.
The company’s “North Star” strategy, unveiled at its “2023 Investor Day”, aims to drive organic growth and generate $100 million in incremental free cash flow by 2026.
However, the market remains skeptical.
The dividend payout ratio – currently over 96% of earnings – suggests Deluxe is distributing nearly all of its profits to shareholders.
While this may be appealing for income-focused investors, it leaves little room for reinvestment or weathering downturns.
Compounding concerns, Deluxe’s stock has struggled to gain traction, and its legacy print segment continues to face secular decline.
Deluxe topped Street estimates its fiscal Q1
Jim Cramer took a cautious tone on Deluxe stock even though the NYSE listed firm surpassed Street estimates in its latest reported quarter.
In late April, DLX said 75 cents per share on about $536 million in revenue in its fiscal Q1, beating 72 cents a share and $535 million in revenue that experts had forecast.
But the former hedge fund manager’s comments underscore a broader cautionary tale: high yields can sometimes mask deeper operational or strategic issues.
For DLX shares, the challenge lies in convincing investors that its transformation is more than just talk – and that its dividend is sustainable in the long run.
That said, out of three analysts that cover the dividend stock, two currently rate it at “overweight”.
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