Investing
Meet the 2017 Dogs of the Dow: Massive Dividends and Expected Upside
December 31, 2016 11:14 am
Last Updated: January 12, 2020 4:15 pm
7. Coca-Cola
> Yield: 3.38%
Coca-Cola Co. (NYSE: KO) generated a return of −0.36% in 2016 but was up 2.75% in December. Its post-election move has not been impressive due to a lack of caring about defensive stocks in a rising interest rate environment. Investors right now prefer growth and infrastructure, or those that can win more under the Trump plans.
Shares of Coca-Cola closed out 2016 at $41.45. The consensus price target is $45.54 (down over $1 in December alone), and the 52-week range is $39.88 to $47.13.
8. IBM
> Yield: 3.37%
International Business Machines Corp. (NYSE: IBM) has seen its performance lag for longer than most shareholders would like to admit. Still, it performed with a 25% gain in 2016, and just 2.3% of that move was in December.
Warren Buffett has honestly had very little new to say here on his huge stake in IBM, just holding on to the great American future and earnings power. IBM’s position in the Dogs of the Dow lost one place over the final two weeks of December, but it is in the spot where just five Dow dividends yield within 12 basis points of each other.
Despite the woes, IBM has room to keep gradually raising its dividend ahead even if the core IBM business is taking a backseat to its smaller new business initiatives. Those growth initiatives just are not currently expected to be able to grow fast enough, but what if analysts are wrong?
Shares of IBM closed out 2016 at $165.99. The consensus price target is $156.62, and the 52-week range is $116.90 to $169.95.
9. Exxon Mobil
> Yield: 3.32%
Even though Exxon Mobil Corp. (NYSE: XOM) so far has underperformed Chevron in the past year, its 19.9% return in 2016 was after a 3.4% return in December. This marked a handy difference from the drop in oil that was seen from late in 2014 into early 2016. Exxon also has a strong balance sheet and can keep raising its payout ahead.
With CEO Rex Tillerson selected as Secretary of State under Donald Trump, Exxon is about to get new leadership — Tillerson might have been headed for retirement soon anyhow. It seems that Exxon and the oil industry (and even rival Chevron) will have a good relationship with Washington, D.C., in 2017 and beyond.
Shares of Exxon Mobil closed out 2016 at $90.26, with a consensus price target of $88.05 and a 52-week range of $71.55 to $95.55.
10. A Tie at 3.19% — sort of!
It is unusual for this to occur, but there are two Dow stocks that closed out 2016 with yields at an identical 3.19%, if you just use two decimal places. That tie exists between Merck & Co Inc. (NYSE: MRK) and Procter & Gamble Co. (NYSE: PG).
Merck’s dividend was shown to be 3.1934% if we go four decimals out, versus a yield for P&G that was actually 3.1874%.
Merck shares posted a simple gain of 11.5% in 2016, even after losing 3% in December. P&G closed out 2016 at $84.08, with a share price gain of 5.9% for the year, after rising right at 2% in December.
Yield and performance metrics are from FINVIZ, and other data from Yahoo! Finance and Thomson Reuters.
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