Investing

Which Dogs of the Dow Are Best in 2012? (T, VZ, MRK, PFE, GE, DD, JNJ, INTC, PG, MSFT, CVX, JPM, KFT, MCD)

The lineup of the Dogs of the Dow, simply the ten highest dividend yield stocks of the thirty Dow Jones Industrial Average components, appears to be undergoing a bit of change for 2012.  There is a significant horserace taking place for the number-ten spot on the 2012 Dogs.  The average yield comes to about 4% depending upon the final order.

The nearly certain nine Dogs of the Dow are as follows: AT&T Inc. (NYSE: T); Verizon Communications Inc. (NYSE: VZ); Merck & Company, Inc. (NYSE: MRK); Pfizer, Inc. (NYSE: PFE); General Electric Co. (NYSE: GE); E.I. du Pont de Nemours (NYSE: DD); Johnson & Johnson (NYSE: JNJ); Intel Corporation (NASDAQ: INTC); and The Procter & Gamble Company (NYSE: PG).  The horserace for the tenth spot on the Dogs is taking place among three DJIA components, with a distant fourth in the running: Microsoft Corporation (NASDAQ: MSFT); Kraft Foods Inc. (NYSE: KFT); Chevron Corporation (NYSE: CVX); and J.P. Morgan Chase & Co. (NYSE: JPM).

Here is the current expected order of the 2012 Dogs of the Dow, with dividend yields included:

  • AT&T Inc. (NYSE: T) 5.9%
  • Verizon Communications Inc. (NYSE: VZ) 5.2%
  • Merck & Company, Inc. (NYSE: MRK) 4.5%
  • Pfizer, Inc. (NYSE: PFE) 3.7%… After the most recent dividend hike which has not been paid out, the new yield will be 4.06% rather than a rounded off 3.7%.
  • General Electric Co. (NYSE: GE) 3.6%
  • E.I. du Pont de Nemours (NYSE: DD), or DuPont, 3.6%
  • Johnson & Johnson (NYSE: JNJ) 3.5%
  • Intel Corporation (NASDAQ: INTC) 3.4%
  • The Procter & Gamble Company (NYSE: PG) 3.14%

The four DJIA stocks competing for the tenth-spot:

  • Microsoft Corporation (NASDAQ: MSFT) 3.07%
  • Kraft Foods Inc. (NYSE: KFT) 3.08%
  • Chevron Corporation (NYSE: CVX) 3.03%
  • J.P. Morgan Chase & Co. (NYSE: JPM) 2.98%

What is so interesting about this list is that Microsoft is entering the Dogs for what may be the first time ever.  McDonald’s Corporation (NYSE: MCD) is actually not in the list this year.  Those which have recently raised dividends outside of Microsoft are AT&T, Merck, Pfizer, and G.E.

If you average the top nine DJIA yields, investors get an average of about 4.06%.  If you include a 3.05% average for the competing four to go into the tenth spot, then the average dividend yield comes to 3.96%. As far as how this compares to the 2011 list, the lowest yield a year ago was roughly 3.1% as well.

Is it any coincidence that the average yield last year among the ten Dogs was 4.01%?  Here is the 2011 Dogs of the Dow review from a year ago for comparison.

JON C. OGG