3 Top 'Dogs Of The Dow'

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Includes: INTC, MRK, PFE
by: Dividend Screen

Investors benefit from having a clear investment strategy. They follow rules with more or less success. One popular and most discussed strategy is the Dogs of the Dow theory by Michael O'Higgins. 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. Compared to the previous results of the Dogs of the Dow a month before, Procter & Gamble (NYSE:PG) and Kraft Foods (KFT) replaced Chevron (NYSE:CVX) and The Travelers Companies (NYSE:TRV).

I screened the Dow Jones index by Dogs and sorted the results by lowest forward P/E ratio. Here are the 3 top Dogs of the Dow by forward price to earnings ratio:

1. Pfizer (NYSE:PFE) is acting within the major drug manufacturing industry. The company has a market capitalization of $150.4 billion, generates revenues in an amount of $67.2 billion and a net income of $8.6 billion. Its following P/E ratio is 18.0 and forward price to earnings ratio 8.6, Price/Sales 2.2 and Price/Book ratio 1.7. Dividend Yield: 4.2 percent. The expected growth for next year amounts to zero and 3.5 percent for the upcoming 5 years.

2. Merck & Co. (NYSE:MRK) is acting within the major drug manufacturing industry. The company has a market capitalization of $103.3 billion, generates revenues in an amount of $47.0 billion and a net income of $4.3 billion. Its following P/E ratio is 24.3 and forward price to earnings ratio 8.7, Price/Sales 2.2 and Price/Book ratio 1.9. Dividend Yield: 4.5 percent. The expected growth for next year amounts to 3.0 and 4.4 percent for the upcoming 5 years.

3. Intel (NASDAQ:INTC) is acting within the broad line semiconductor industry. The company has a market capitalization of $129.7 billion, generates revenues in an amount of $51.6 billion and a net income of $12.8 billion. Its following P/E ratio is 10.7 and forward price to earnings ratio 10.2, Price/Sales 2.5 and Price/Book ratio 2.8. Dividend Yield: 3.4 percent. The expected growth for next year amounts to 3.4 and 10.7 percent for the upcoming 5 years.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.