Meet the Full 2016 Dogs of the Dow for Massive Dividends

Investing

Published: January 4, 2016 8:50 am

Last Updated: January 13, 2020 3:29 pm

At the end of every year, investors look for opportunities and safe harbors in the year ahead. Now that 2015 has turned into 2016, investors who love dividends may want to consider the so-called Dogs of the Dow. Quite simply, this is the 10 highest yielding stocks in the Dow Jones Industrial Average (DJIA). It also turns out that the “Dogs” actually are dogs when you consider that only three of these 10 actually made money for investors on a total return basis in 2015.

24/7 Wall St. has featured each Dog on its own here, with a montage at the end of the report. With seven of these 10 stocks being so negative in 2015, some investors may take even more interest than in prior years.

Keep in mind that 14 strategists see a positive but choppy 2016 for stocks. Now consider than half to two-thirds of total returns for investors actually comes from dividends.

The 2015 Dogs of the Dow yielded closer to 3.6% on average a year ago, but the new list of 2016 Dogs has an average yield of closer to 3.85% — and that 3.85% is closer to the yields of the 2014 Dogs of the Dow.

Some of these stocks are high-yield due to major pullbacks in the underlying stocks. Other dividend yields are high due to companies and sectors simply having high dividends as a part of a return of capital strategy for their shareholders.

Meet the formal 2016 Dogs of the Dow.

Verizon

> Dividend yield: 4.89%
> 2015 closing: $46.22
> 52-week range: $38.06 to $50.86
> Analyst target: $50.12
> Market cap: $188.0 billion

Verizon Communications Inc. (NYSE: VZ) is the top Dog of the Dow for 2016. A year earlier it had been AT&T, but now AT&T is out. Verizon barely outperformed the market in 2015, with a 3.6% total return, but that current 4.89% dividend yield was the single driving force. Verizon is still in a price war, but no one expects its business to come apart. It is also cheaply valued at about 12 times forward earnings, and the $46.22 close implies more than 10% upside for total return in 2016, if analysts are right.