The Dow Jones Industrial Average is up nearly 26% so far this year. While the index, which consists of stocks of 30 major U.S. companies, is a widely followed indicator of the overall market’s performance, several of its components have considerably underperformed.
The Dow’s growth in recent months has largely been the result of the country’s improving economy. Unemployment continues to fall and the housing market is recovering. The market also reacted favorably to news that GDP rose at a 4.1% annualized rate during the third quarter of the year, higher than previously estimated. As a further boon to the market, interest rates remain low, driving many investors into stocks.
However, several DJIA stocks have not performed as well as the broader stock market this year.24/7 Wall St. reviewed year-to-date share price changes for all 30 Dow Jones stocks. We identified the five companies that have posted the worst total returns, after accounting for dividends paid, for the year.
Each of these five companies has failed to deliver strong returns for different reasons. Some have been hampered by their international operations. Cisco (NASDAQ: CSCO), which is up on the year but still among the Dow’s laggards, has seen orders drop considerably in many emerging markets. Similarly, Caterpillar’s (NYSE: CAT) mining business has suffered from the end of the global commodities boom. Caterpillar’s shares have returned less than 4% in the year-to-date.
Other companies have had to contend with shifts in their own industries. McDonald’s (NYSE: MCD) has been unable to create successful new offerings at the same time that chains such as Burger King (NYSE: BKW) and Taco Bell have respectively announced innovative offerings such as lower-fat french fries, called “Satisfries,” and Doritos Locos Tacos. AT&T (NYSE: T) has had to respond to T-Mobile’s (NASDAQ: TMUS) pricing plans, which aim to separate service charges from phone payments, with similar plans of its own. The two companies that once intended to merge have become bitter rivals.
To identify the worst-performing stocks in the Dow Jones Industrial Average, 24/7 Wall St. performed a screen of all companies in the DJIA using FINVIZ. We then calculated total return based on adjusted-closing prices from Yahoo Finance as of December 31, 2012 and December 27, 2013. These prices account for dividends and stock splits. The DJIA is a price-weighted index, meaning the relative prices of each component affect their weighting in the index. Price as of market close on December 30, trailing price-to-earnings ratios, and forward annual dividend yields are from Yahoo Finance.
These are the five worst performing stocks on the Dow.