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4/26/2013

Dogs of The Dow: The Cheapest Growth Picks From The Index As Of April 2013

Dogs of the Dow Jones originally published on “long-term-investments.blogspot.com”. Each month, I screen the market by the current Dogs of the Dow Jones. The strategy “Dogs of the Dow”  is an often mentioned and well known tool for investors who don’t know what kind of assets are cheap on the market.

The philosophy is to buy 10 stocks of the Dow Jones with the highest dividend yield and lowest price to earnings ratio at the beginning of the year and to hold these stocks for a year. After this period, the investor should sell stocks that are no more Dogs of the Dow and buy therefore new Dogs of the Dow. 

Below is an updated sheet of the 10 best Dogs of the Dow. Such stocks have the lowest expected price to earnings ratio and highest dividend yield within the Dow Jones Index.

I’ve no idea if those stocks are really good investments. If I look at the current results, I would only buy a few of them but not all. For sure, every investor needs a clear strategy to follow and it's very easy to stop thinking and making research when you put each year the best dogs into your portfolio.

I truly believe that this strategy is also no guarantee for better returns but you can get new ideas for your asset allocation. The more often your target investment appears on your daily screens, the more attractive is the company.

The 10 cheapest stocks of the Dow Jones have an average dividend yield of 3.53 percent as well as a forward P/E ratio of 11.98. The average P/B ratio amounts to 2.76 and P/S ratio is 2.40.

Here are the results with highest expected earnings growth:
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General Electric (NYSE:GE) has a market capitalization of $230.95 billion. The company employs 305,000 people, generates revenue of $147.359 billion and has a net income of $14.902 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $28.367 billion. The EBITDA margin is 19.25 percent (the operating margin is 11.81 percent and the net profit margin 10.11 percent).


Financial Analysis: The total debt represents 60.42 percent of the company’s assets and the total debt in relation to the equity amounts to 336.56 percent. Due to the financial situation, a return on equity of 12.24 percent was realized. Twelve trailing months earnings per share reached a value of $1.43. Last fiscal year, the company paid $0.70 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.52, the P/S ratio is 1.54 and the P/B ratio is finally 1.86. The dividend yield amounts to 3.46 percent and the beta ratio has a value of 1.67.

Long-Term Stock Price Chart Of General Electric (GE)
Long-Term Dividend Payment History of General Electric (GE)
Long-Term Dividend Yield History of General Electric (GE)

Intel Corporation (NASDAQ:INTC) has a market capitalization of $115.74 billion. The company employs 105,400 people, generates revenue of $53.341 billion and has a net income of $11.005 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $22.160 billion. The EBITDA margin is 41.54 percent (the operating margin is 27.44 percent and the net profit margin 20.63 percent).

Financial Analysis: The total debt represents 15.94 percent of the company’s assets and the total debt in relation to the equity amounts to 26.26 percent. Due to the financial situation, a return on equity of 22.66 percent was realized. Twelve trailing months earnings per share reached a value of $2.00. Last fiscal year, the company paid $0.87 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 11.67, the P/S ratio is 2.17 and the P/B ratio is finally 2.26. The dividend yield amounts to 3.85 percent and the beta ratio has a value of 1.02.

Long-Term Stock Price Chart Of Intel Corporation (INTC)
Long-Term Dividend Payment History of Intel Corporation (INTC)
Long-Term Dividend Yield History of Intel Corporation (INTC)

Microsoft (NASDAQ:MSFT) has a market capitalization of $265.48 billion. The company employs 94,000 people, generates revenue of $73.723 billion and has a net income of $16.978 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $24.819 billion. The EBITDA margin is 33.67 percent (the operating margin is 29.92 percent and the net profit margin 23.03 percent).

Financial Analysis: The total debt represents 9.85 percent of the company’s assets and the total debt in relation to the equity amounts to 18.00 percent. Due to the financial situation, a return on equity of 27.51 percent was realized. Twelve trailing months earnings per share reached a value of $1.94. Last fiscal year, the company paid $0.80 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.38, the P/S ratio is 3.62 and the P/B ratio is finally 4.03. The dividend yield amounts to 2.88 percent and the beta ratio has a value of 0.96.

Long-Term Stock Price Chart Of Microsoft (MSFT)
Long-Term Dividend Payment History of Microsoft (MSFT)
Long-Term Dividend Yield History of Microsoft (MSFT)


Take a closer look at the Dogs of the Dow. The 10 cheapest stocks of the Dow Jones have an average dividend yield of 3.53 percent as well as a forward P/E ratio of 11.98. The average P/B ratio amounts to 2.76 and P/S ratio is 2.40.

Here is the full list:

Cheapest Dogs Of The Dow (Click to enlarge)



Related Stock Ticker Symbols:
T, INTC, VZ, MRK, GE, CSCO, DD, PFE, JPM, MSFT

Selected Articles:

*I am long INTC, GE, CSCO. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.



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