Highest Yielding Dow Stocks – 22 of 30 Beat Treasury Yields

November 4, 2011 · 3 comments

The highest yielding Dow stocks list is out and as of November 2011, 22 out of the 30 Dow Jones Industrials stocks have yields that are exceeding the current yield on the 10 year treasury.  With the yield on the 10-Year right at 2.0%, here’s the list of the Top 10 highest yielding Dow stocks, often termed the “Dogs of the Dow”:

T AT&T  6%
VZ Verizon 5.5%
MRK Merck 4.5%
PFE Pfizer  4.1%
GE General Electric 3.8%
JNJ Johnson and Johnson 3.6%
INTC Intel 3.5%
DD Dupont 3.5%
KFT Kraft 3.4%
PG Proctor and Gamble 3.4%

Do the Highest Yielding Dow Stocks Outperform?

There’s been a years-long following of the Dogs of the Dow, whereby investors rotate into the highest yielding stocks in the index each year.  The theory is that they enjoy both high current yields, plus potential bounceback in share prices since normally, a higher yield equates to a depressed stock price.  In general, Dow stocks don’t normally drop their dividends since they are more venerable, steady firms, but we did see several companies forced into dividend cuts stemming from the financial crash of 2008.  This year though, we’ve actually seen a few dividend increases from Verizon, Intel, Chevron, McDonald’s, and Microsoft.  Dividends are often dismissed as an old man’s game in an era of fast growing tech companies, but in the long run, dividends comprise almost half of all market returns.

The research I’ve done over the past few years shows that the Dogs of the Dow don’t necessarily perform any better than the market as a whole, but what this list does do for the individual investor, is provides some investment ideas, especially for those seeking high current yield.  Personally, I’ve always like AT&T and Verizon for their high yield and seemingly steady share prices.  AT&T didn’t lose a ton of value when the iPhone opened up competition to new carriers and neither company has had to cut their dividend.  These days, with Treasuries valued where they are, there’s no guarantee that bond prices won’t show the same sort of volatility stocks do, as they’re very richly valued themselves.

What Are Your Thoughts on High Yielding Dow Stocks vs. Treasuries?

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