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The Best Dogs Of The Dow Jones | Cheapest Stocks On The Index

Many people ask themselves how to make money with stocks and generate a second income that is high enough to retiree a few years earlier in order to enjoy the lifetime a bit more. Most investors try to search a safe investment strategy that works really well. A Strategy, simple enough to understand and easy to implement. Some investment strategies fail, others work well but every tactic is not forever. It comes the time when the market forces change.

One strategy I cover in my blog on a regular basis is the Dogs of the Dow Jones philosophy. The strategy 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.

The ten cheapest stocks of the Dow Jones have an average dividend yield of 21.72 percent as well as a forward P/E ratio of 12.02. The average P/B ratio amounts to 2.37 and P/S ratio is 1.97.

Here are the three best Dogs with strongest EPS growth:
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Verizon (NYSE:VZ) has a market capitalization of $123.57 billion. The company employs 184,500 people, generates revenue of $110.875 billion and has a net income of $10.198 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $29.376 billion. The EBITDA margin is 26.49 percent (the operating margin is 11.62 percent and the net profit margin 9.20 percent).

Financial Analysis: The total debt represents 23.93 percent of the company’s assets and the total debt in relation to the equity amounts to 153.33 percent. Due to the financial situation, a return on equity of 6.45 percent was realized. Twelve trailing months earnings per share reached a value of $1.07. Last fiscal year, the company paid $1.98 in the form of dividends to shareholders. The earnings are expected to grow by 16.26 percent for the next year.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 40.37, the P/S ratio is 1.13 and the P/B ratio is finally 3.45. The dividend yield amounts to 4.71 percent and the beta ratio has a value of 0.51.


”Long-Term
Long-Term Stock History Chart Of Verizon (Click to enlarge)
”Long-Term
Long-Term Dividends History of Verizon (VZ) (Click to enlarge)
”Long-Term
Long-Term Dividend Yield History of Verizon (NYSE: VZ) (Click to enlarge)

E I Du Pont De Nemours (NYSE:DD) has a market capitalization of $40.42 billion. The company employs 70,000 people, generates revenue of $38.719 billion and has a net income of $3.510 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $6.289 billion. The EBITDA margin is 16.24 percent (the operating margin is 11.06 percent and the net profit margin 9.07 percent).

Financial Analysis: The total debt represents 25.89 percent of the company’s assets and the total debt in relation to the equity amounts to 146.08 percent. Due to the financial situation, a return on equity of 39.82 percent was realized. Twelve trailing months earnings per share reached a value of $2.98. Last fiscal year, the company paid $1.64 in the form of dividends to shareholders. The earnings are expected to grow by 12.73 percent for the next year.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.54, the P/S ratio is 1.04 and the P/B ratio is finally 4.78. The dividend yield amounts to 3.99 percent and the beta ratio has a value of 1.47.


”Long-Term
Long-Term Stock History Chart Of E I Du Pont De Nemours (Click to enlarge)
”Long-Term
Long-Term Dividends History of E I Du Pont De Nemours (DD) (Click to enlarge)
”Long-Term
Long-Term Dividend Yield History of E I Du Pont De Nemours (NYSE: DD) (Click to enlarge)

General Electric (NYSE:GE) has a market capitalization of $220.84 billion. The company employs 301,000 people, generates revenue of $147.300 billion and has a net income of $14.366 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $31.015 billion. The EBITDA margin is 21.06 percent (the operating margin is 13.64 percent and the net profit margin 9.75 percent).

Financial Analysis: The total debt represents 63.22 percent of the company’s assets and the total debt in relation to the equity amounts to 389.43 percent. Due to the financial situation, a return on equity of 11.06 percent was realized. Twelve trailing months earnings per share reached a value of $1.35. Last fiscal year, the company paid $0.61 in the form of dividends to shareholders. The earnings are expected to grow by 12.58 percent for the next year.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.63, the P/S ratio is 1.50 and the P/B ratio is finally 1.91. The dividend yield amounts to 3.23 percent and the beta ratio has a value of 1.62.


”Long-Term
Long-Term Stock History Chart Of General Electric (Click to enlarge)
”Long-Term
Long-Term Dividends History of General Electric (GE) (Click to enlarge)
”Long-Term
Long-Term Dividend Yield History of General Electric (NYSE: GE) (Click to enlarge)

Here is the full table:


Dogs of the Dow (Click to enlarge)


Related Stock Ticker Symbols:
T, VZ, MRK, PFE, GE, JNJ, PG, DD, CVX, JPM

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1 comment:

  1. Anonymous11/27/2012

    In theory, the stocks with the highest dividends are the ones that have grown the least (thereby having a high dividend) and are consequently poised to outperform others in the group. In other words, a stock pays a high dividend oftentimes because the stock price is low - therefore resulting in a higher yield. For example, Intel INTC for several years was priced in a range of 27 to 29. At a price of say 28, the yield was 3.2%. However now that the price of the stock has decreased, the same payout produces a higher yield. Intel is now at 20.80/share and the new yield is 4.3%.

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