24/7 Insights
- The Dow Jones industrials are up over 10% this year.
- The highest-yielding Dow stock offers a dividend of over 6%.
- Access 2 legendary, high-yield dividend stocks Wall Street loves.
The Dogs of the Dow is a well-known strategy first published in 1991 by Michael Higgins. The plan seeks to maximize the yield of investments by buying the 10 highest-paying dividend stocks available from the Dow Jones Industrial Average each year. The highest-yielding stocks are also the lowest-priced stocks in the venerable average, as the lower a stock (or bond) goes in price, the higher the attached yield or coupon becomes.
While the Nasdaq surged 43% and the S&P 500 was up 24.2% in 2023, the former is up 13.3% and the latter 10.3% this year. It’s important to note that investors who try to chase the market rally may find themselves in a precarious position. This summer, attempting to pick up nickels in front of a bulldozer could be a risky strategy.
We decided to screen the Dogs of the Dow, looking for the companies paying among the biggest dividends, which also have decent upside potential and can provide some solid total return in June and the rest of 2024. Here at 247 Wall St., we consistently emphasize the power of total return to our readers. This strategy can significantly boost your overall investing success. Total return is the combined increase in a stock’s value and dividends.
Why should investors buy the Dogs of the Dow?
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Over the past 20 years, from the end of 2023, the Dogs have returned just over 8% a year on average, including dividends. While not lights-out stats, the stocks are typically less volatile than non-paying stocks and are well-known companies that have been around for decades.
Chevron
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This integrated giant is a safer way for investors looking to get positioned in the energy sector, and it pays a rich 4.14% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.
The company operates in two segments:
- Upstream
- Downstream
The Upstream segment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines
- Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum product
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
Chevron announced in the fall that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.
Three lawsuits have been filed against Hess, charging inadequate disclosure over the sale, and Chevron has said arbitration over Hess’ Guyana assets could delay the closing timeline until October 2025. However, most Wall Street analysts feel the deal ultimately will get done, and Chevron will emerge even more powerful in the energy sector.
Dow
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This company was spun out from Dupont in 2019 and offers investors growth and income potential with a hefty 4.82% dividend. Dow Inc. (NYSE: DOW) is a leading materials science company formed by the merger of Dow and DuPont in 2017 and subsequent spin in 2019.
The company is organized into three principal divisions:
- Performance Materials & Coatings
- Industrial Intermediates & Infrastructure
- Packaging & Specialty Plastics
The Company’s segments include Agricultural Sciences, which provides crop protection, seed/plant biotechnology products and technologies, urban pest management solutions, and healthy oils.
Consumer Solutions, which consists of:
- Consumer Care
- Dow Automotive Systems
- Dow Electronic Materials
- Consumer Solutions-Silicones businesses
Infrastructure Solutions, which consists of:
- Dow Building & Construction
- Dow Coating Materials
- Energy & Water Solutions
- Performance Monomers and Infrastructure Solutions-Silicones businesses
- Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses
- Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics
- Energy and Hydrocarbons business
IBM
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The legacy blue chip tech giant pays a solid 4% dividend and offers conservative investors a safer way to play the sector. International Business Machines Corp. (NYSE: IBM) provides integrated solutions and services worldwide.
The company operates through four segments:
- Software
- Consulting
- Infrastructure
- Financing
The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate.
The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry.
The Infrastructure segment provides on-premises and cloud-based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment.
The Financing segment offers client and commercial financing, and it facilitates IBM clients’ acquisition of hardware, software, and services.
The company has a strategic partnership with various companies including:
- Hyperscalers
- Service providers
- Global system integrators
- Software and hardware vendors that include Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics, SAP, and others
Verizon Communications
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This top telecommunications company offers tremendous value and pays investors a 6.46% dividend. Verizon Communications Inc (NYSE: VZ) through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide.
It operates in two segments:
- Verizon Consumer Group
- Verizon Business Group
The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smartwatches, and other wireless-enabled connected devices.
The segment also offers wireline services in the Mid-Atlantic and Northeastern United States through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.
The Business segment provides wireless and wireline communications services and products, including:
- FWA broadband
- Data
- Video and conferencing
- Corporate networking
- Security and managed network
- Local and long-distance voice
- Network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally
5 Best Dividend Stocks to Buy in June
Walgreens Boots Alliance
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This huge drugstore chain is a safe retail play, paying a 6.17% dividend. Walgreens Boots Alliance Inc. (NYSE: WBA) is a pharmacy-led health and beauty retail company with three segments:
- Retail Pharmacy USA
- Retail Pharmacy International
- Pharmaceutical Wholesale
The Retail Pharmacy USA segment sells prescription drugs and various retail products, including health, wellness, beauty, personal care, consumables, and general merchandise products, through its retail drugstores.
It also provides specialty pharmacy services and mail services. This segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States and six specialty pharmacies.
Walgreens Boots Alliance’s Retail Pharmacy International segment is a testament to its diverse product offerings. It sells prescription drugs, health and wellness products, beauty products, personal care products, and other consumer products through its pharmacy-led health and beauty stores and optical practices.
The International segment has operations in:
- The United Kingdom
- Thailand
- Norway
- The Republic of Ireland
- The Netherlands
- Mexico
- Chile
The company also operates 550 optical practices, including 165 on a franchise basis.
The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home healthcare supplies and equipment, as well as provides related services to pharmacies and other healthcare providers.
The shares were hit hard after the company cut the dividend earlier this year, but with managment once again trying to sell the Boots pharmacies, based in the United Kingdom, investors have once again started to bid the shares higher.
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