7 Dow Laggards with Compelling Dividend Yields
The Dow Jones index has disappointed many investors by dipping 2.6% in 2010. Of course that is much better than the 34% drop we saw in 2008, but not nearly the 19% rally that investors experienced last year.
Most investors probably aren’t too surprised to see stocks like Alcoa (AA: 8.48 -0.70%) and Bank of America (BAC: 13.24 +0.23%) posting negative returns. After all, both stocks plunged more than 65% in 2008 and slashed their dividends to almost nothing. The fact that these stocks are struggling again in 2010 is no surprise since they can’t even afford to pay a decent dividend.
However, investors may be surprised at this list of 7 Dow laggards with compelling dividend yields.
It’s been a long time since Exxon Mobil (XOM: 91.53 -0.28%) stock yielded over 3%. However, with XOM shares down 14% this year, the oil giant is now paying a 3.1% dividend yield. Exxon Mobil has disappointed Wall Street the past few quarters, but rising oil prices should help the company.
Johnson & Johnson
JNJ shares have fallen below $60 per share this year and now sport a dividend yield of 3.7%. However, Johnson & Johnson (JNJ: 86.82 -0.45%) is considered a dividend aristocrat and has increased their dividend in each of the past 48 years.
Poor Pfizer (PFE: 29.04 -0.24%) continues to be one of the major laggards in the Dow index. PFE shares have already fallen 19% this year and now have a compelling dividend yield of 5.2%. However, even with the recent Wyeth acquisition it’s difficult to see how Pfizer is going to grow revenue in 2011.
So much for the claims that the housing markets were in full recovery mode! HD (HD: 78.99 +0.10%) shares have slid over 6% this year, but that doesn’t tell the full story. The stock plunged 17% in June and is down 26% since late April. This has pushed the dividend yield to 3.5%, which is well above the 2.2% yield that Lowe’s (LOW: 42.64 -0.12%) offers.
Walmart (WMT: 77.31 +1.28%) was the top Dow performer during the Great Recession of 2008. That makes this year’s 7% decline all the more surprising. Walmart stock only yields 2.6% which makes it a below average dividend stock, but the company has increased their dividend every year since 1974.
Despite being the exclusive carrier of the Apple (AAPL: 445.15 +0.68%) iPhone, AT&T (T: 36.75 +0.03%) is disappointing investors again in 2010. The telecom stock is down 11% this year which has pushed its generous dividend yield even higher to 6.9%.
The final stock on this list also happens to be the Dow Jones index’s highest yielding stock. That will happen when your stock price falls over 19% in just six months. Verizon shares now yield 7.4%, but have been increasing that the company may begin selling the Apple iPhone in 2011.
With the exception of Pfizer, all of these Dow laggards are expected to grow revenues next year. Dividend investors may look back on the summer of 2010 as a great opportunity to buy quality, blue chip stocks with compelling dividend yields.