The Dow Jones Industrial Average isn't anything special. It's an index of 30 large, significant, blue chip companies, (most of which are no longer industrials), whose stocks prices are added up, and then dividend by a periodically updated number, known as the Dow Divisor, to produce an average.
The average is a neat and easy way to follow market movements, but as a dividend investor, I'm not interested in short-term fluctuations. More important to me, and dividend investors in general, is watching the DJIA for yield movements. I specifically keep an regular eye on stocks in the DOW that break the 3% yield barrier.
This doesn't necessarily mean I buy the stock, but it narrows the field of stocks for further research, or signals it's time to add more to stocks I already own.
These stocks are all members of the DJIA, and are listed in order from highest yield to lowest.
Price - $29.42
Yield - 5.9%
AT&T is a provider of telecommunications services in the United States and worldwide. The stock has been stuck between $27-$32 for the past year, and it's 3rd quarter earnings release showed weak revenue, but strong cash flow, and earnings were up 13% quarter over quarter.
AT&T has paid an increasing dividend for 27 consecutive years, and is a dividend champion.
Verizon Communications, Inc. (NYSE:VZ)
Price - $37.24
Yield - 5.37%
Verizon, through its subsidiaries, is a provider of communications services. The company has two segments: domestic wireless and wireline.
Though the company lost about $0.05 per share in the 3rd quarter from a combination of natural disasters and a workers strike, the company still expects 5-8% earnings growth this year. The last dividend raise was a paltry 2.6%, but the company has a 7 year history of raising dividends, making it a dividend contender.
Merck & Co. (NYSE:MRK)
Price - $35.73
Yield - 4.7%
Merck & Co. is a global health care company. Merck delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products.
The company recently raised it's dividend for the first time in 7 years, with an 11% bump to $0.42.
Pfizer Inc. (NYSE:PFE)
Price - $19.87
Yield - 4%
Pfizer Inc. is a research-based, global biopharmaceutical company. The company operates in two segments: biopharmaceutical and diversified.
After halving the dividend in 2009, it has been raised twice, once in 2010 and again in 2011. The company is facing strong headwinds however, as its best selling drug Lipitor goes generic on November 30.
General Electric Company (NYSE:GE)
Price - $16.20
Yield - 3.7%
General Electric Company is a diversified technology and financial services corporation.
Another case like Pfizer, GE cut its dividend in 2009, but has since started raising it again. Net earnings were up 11% in Q3, and GE is expecting a good year.
Johnson & Johnson (NYSE:JNJ)
Price - $64.99
Yield - 3.5%
The company and its subsidiaries are engaged in the research and development, manufacture and sale of a range of products in the health care field.
J & J is a dividend aristocrat, having raised it's dividend consistently for 49 years. The company has been hammered with recalls and problems at it's McNeil Division, though international sales have shown some growth and softened the declining domestic numbers. Top end full year estimates are up to $5.00 a share.
E.I. du Pont de Nemours & Company (DD)
Price - $48.30
Yield - 3.4%
Dupont offers a range of products and services for markets, including agriculture and food, building and construction, electronics and communications, general industrial and transportation.
Though DD does not have the regular dividend increases investors love, it does have a history of raising it's dividend, though the current annual dividend of $1.64 has been stuck there since 2008. The company is experiencing strong revenue growth, and expecting full year earnings between $3.97 and $4.05.
Price - $25.34
Yield - 3.3%
Intel Corporation is a semiconductor chip maker company. The company develops advanced integrated digital technology products, primarily integrated circuits, for industries, such as computing and communications.
Intel is a favorite stock of mine, and one of my holdings. Dividend growth has been outstanding, and 2011 alone had two dividend increases, first a 15% increase to $0.1812 and then another 16% bump to $0.21. In addition, the stock is up about 22% this year.
Proctor & Gamble (NYSE:PG)
Price - $63.28
Yield - 3.3%
The Procter & Gamble Company is focused on providing consumer packaged goods. The company’s products are sold in more than 180 countries worldwide.
PG is a dividend arisocrat and has a 55 year history of raising dividends. The company is a steady and reliable performer, but dividend growth has slowed in recent years, and though fiscal year 2011 had higher revenue, operating income and net earnings were down from 2010.
Kraft Foods Inc. (KFT)
Price - $35.18
Yield - 3.3%
Kraft Foods Inc. manufactures and markets packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products.
Kraft is the second largest food company in the world, with annual revenues over $49 billion. The $1.16 dividend has been flat since 2009, though the dividend had regular growth from 2001-2009. 2011 is looking better than expected, with estimates of $2.27 for full year earnings.
Chevron Corporation (NYSE:CVX)
Price - $101.05
Yield - 3.2%
Chevron is one of the world's leading integrated energy companies, with worldwide operations and many different businesses.
A dividend contender, CVX has increased it's dividend payout for the past 24 years, and the past 5 years have averaged growth of 10%. The dividend was raised twice in 2011, for a total of 11%.
JPMorgan Chase & Co. (NYSE:JPM)
Price - $31.47
Yield - 3.2%
JPMorgan Chase & Co. is a leading global financial services firm with assets of $2.1 trillion and operations in more than 60 countries.
Like most large US banks, the dividend took a big cut in 2009 - a 65% slash from $1.52 in 2008 to just $0.53 in 2010, and then another cut to $0.20 in 2010. 2011 came back with a vengeance however, with a whopping 400% increase, from $0.05 to $0.25 per quarter.
The Home Depot, Inc. (NYSE:HD)
Price - $37.84
Yield - 3.1%
The Home Depot, Inc. is a home improvement retailer. The Home Depot stores sell an assortment of building materials, home improvement, and lawn and garden products and provide a number of services.
After a few years of no dividend growth, HD has gotten into the swing of yearly increases, paying out raises in 2010 and 2011. The latest dividend increase of 16% came on the back of solid Q3 results, including 4% revenue growth and 18% earnings growth over the same period last year.
Microsoft Corporation (NASDAQ:MSFT)
Price - $26.07
Yield - 3.1%
Microsoft Corporation is engaged in developing, licensing and supporting a range of software products and services. It also designs and sells hardware, and delivers online advertising to the customers.
Though a questionable history of acquisitions, the company has strong fundamentals, and a great balance sheet. MSFT has gotten into the rhythm of raising dividends yearly, though they never seem to fully commit. They won't be posting results of the Skype acquisition till Q2 of 2012, and many investors are interested to see those numbers.
McDonalds Corporation (NYSE:MCD)
Price - $93.15
Yield - 3%
McDonald’s Corporation franchises and operates McDonald’s restaurants in the global restaurant industry.
A dividend aristocrat, MCD has raised distributions for the past 35 years, with a CAGR over the past 10 years over 20%. The company has been successful at changing with the times by adding healthier options to their menus, in addition to premium products, such as the McCafe beverage line. The stock has had a good year, up about 24% since the beginning of 2011.
Disclosure: I am long JNJ, INTC, MCD.