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10/22/2013

Dogs Of The Dow Jones: A Compilation Of The Cheapest Stocks From The Index

Dogs of the Dow Jones originally published on “long-term-investments.blogspot.com”. Investing is hard work, especially when you don’t have a system or strategy to follow. An investing strategy helps you to avoid big failures and keeps you on track. One popular investing scheme is the dogs of the Dow Jones Strategy.

The Dogs of the Dow Jones Strategy is a popular investment rule or strategy which is used by many investors. The success is controversial. Some studies say that you can create an outperformance by following this rule; others say you don’t have a benefit from it.

The philosophy behind is to buy ten 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 ten best Dogs of the Dow. They have the lowest expected price to earnings ratio and highest dividend yield within the Dow Jones index.

I’ve attached a full list of the current dogs of the Dow Jones in this article.

Here is the table with some fundamentals:
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Verizon Communications (NYSE:VZ) has a market capitalization of $144.76 billion. The company employs 180,900 people, generates revenue of $115.846 billion and has a net income of $10.557 billion. Verizon Communications’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $37.466 billion. The EBITDA margin is 32.34 percent (the operating margin is 11.36 percent and the net profit margin 9.11 percent).


Financial Analysis: The total debt represents 23.08 percent of Verizon Communications’s assets and the total debt in relation to the equity amounts to 156.79 percent. Due to the financial situation, a return on equity of 2.53 percent was realized by Verizon Communications. Twelve trailing months earnings per share reached a value of $0.76. Last fiscal year, Verizon Communications paid $2.02 in the form of dividends to shareholders. The forward P/E is at 15.73 while 5-Year earnings growth of 11.26 percent is predicted.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 66.40, the P/S ratio is 1.24 and the P/B ratio is finally 4.31. The dividend yield amounts to 4.24 percent and the beta ratio has a value of 0.37.


Long-Term Stock Price Chart Of Verizon Communications (VZ)
Long-Term Dividend Payment History of Verizon Communications (VZ)
Long-Term Dividend Yield History of Verizon Communications (VZ)

Intel Corporation (NASDAQ:INTC) has a market capitalization of $120.22 billion. The company employs 106,000 people, generates revenue of $53.341 billion and has a net income of $11.005 billion. Intel Corporation’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 Intel Corporation’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 by Intel Corporation. Twelve trailing months earnings per share reached a value of $1.85. Last fiscal year, Intel Corporation paid $0.64 in the form of dividends to shareholders. The forward P/E is at 12.59 while 5-Year earnings growth of 10.67 percent is predicted.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.03, the P/S ratio is 2.23 and the P/B ratio is finally 2.31. The dividend yield amounts to 3.77 percent and the beta ratio has a value of 1.00.


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)

General Electric (NYSE:GE) has a market capitalization of $266.20 billion. The company employs 305,000 people, generates revenue of $147.359 billion and has a net income of $14.902 billion. General Electric’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $29.339 billion. The EBITDA margin is 19.91 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 General Electric’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 by General Electric. Twelve trailing months earnings per share reached a value of $1.40. Last fiscal year, General Electric paid $0.70 in the form of dividends to shareholders. The forward P/E is at 14.53 while 5-Year earnings growth of 9.78 percent is predicted.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.62, the P/S ratio is 1.77 and the P/B ratio is finally 2.16. The dividend yield amounts to 2.97 percent and the beta ratio has a value of 1.81.


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)

Take a close look at the full sheet of the cheapest stocks from the Dow Jones Index. In total, The 10 cheapest stocks of the Dow Jones have an average dividend yield of 3.48 percent as well as a forward P/E ratio of 12.71. The average P/B ratio amounts to 2.74 and P/S ratio is 2.56.

Dogs of the Dow (Click to enlarge)

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

Selected Articles:

*I am long INTC, MSFT, CSCO, GE. 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.

2 comments:

  1. "The philosophy behind is to buy ten 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."

    If there are two criteria, how are they BOTH used? Verizon has a very high dividend yield, but also has a very high P/E ratio. Why is Verizon listed 1st when it's P/E ratio is 5 times that of Intel, which has just a slightly lower dividend yield?

    PS--the link to the full table did not work for me.

    ReplyDelete
  2. The metric also includes the expeced growth. So it's the forward P/E...

    Thanks for the info. I've fixed the error..

    ReplyDelete

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