Created in 1896 by Charles Dow, the Dow Jones Industrial Average is one of the oldest and most followed equity indexes for overall stock market health. The Dow Jones Industrial Average consists of 30 stocks on a price-weighted basis.
The index has changed its holdings many times throughout history and tries to provide a balanced look at top sectors and value names. Many of the companies included in the index pay quarterly dividends.
At the time of writing, 27 of the 30 holdings pay dividends. Boeing Inc. and The Walt Disney Company suspended dividend payouts due to the COVID-19 pandemic.
Salesforce.com does not pay a dividend.
The average dividend yield is 2.4 percent of the 30 stocks in the index.
Here is a look at the five highest-yielding components of the Dow Jones Industrial Average.
International Business Machines Corp.
- Stock Price: $123.48
- 52-Week Range: $114.56 to $152.84
- Dividend Yield: 5.4 percent
- Dow Inclusion: 1979
- Performance: YTD +3 percent, 5-Year -23 percent
Software company and IT services company IBM has been in the Dow since 1979 and is currently the highest yielding stock in the index. The company is working on transforming itself into a cloud and artificial intelligence focused company. IBM has cloud revenue of $27.8 billion over the last 12 months, up 14 percent year-over-year. The company sees cloud being one of the key growth items. IBM beat analyst estimates in two of the three quarters reported in the current fiscal year. IBM will report fourth-quarter financial results in January, which is its largest revenue-generating quarter. IBM has consistently been raising its dividend each year.
- Stock Price: $53.18
- 52-Week Range: $51.33 to $71.38
- Dividend Yield: 5.2 percent
- Dow Inclusion: 2019
- Performance: YTD -3 percent, 5-Year N/A
Chemical manufacturing company Dow reported third-quarter sales up 53 percent year-over-year, seeing gains in all segments and regions. The company is reducing debt and working on increasing EBITDA by over $3 billion as part of a strategic plan to decarbonize its footprint and grow earnings. Market demand is seen extending into 2022 and beyond, which could lead to increased earnings and cash flow, the company said. The company expects to deliver “significant long-term value for shareholders.”
Dow has beat Street estimates for revenue in each of the last eight quarters. Earnings per share estimates from the Street have been beaten in the last six straight quarters.
- Stock Price: $50.83
- 52-Week Range: $49.69 to $61.06
- Dividend Yield: 5.1 percent
- Dow Inclusion: 2004
- Performance: YTD -14 percent, 5-Year -2 percent
Communications company Verizon has lagged the overall market with a double-digit share price drop in 2021 and a nearly flat return over the last five years. Third-quarter revenue of $32.9 billion was up 4.3 percent year-over-year. The company reported 129,000 net new broadband account additions in the third quarter. Retail postpaid net additions totaled 429,000 in the third quarter, bringing the company’s total retail connections to 122 million. Verizon said it is using a disciplined strategy in growing its 5G business and broadband subscribers.
Verizon missed third-quarter estimates from the Street for revenue after two straight beats. The company raised its full year fiscal revenue estimates for revenue growth and earnings per share. Verizon has increased its dividend for 15 consecutive years.
- Stock Price: $114.24
- 52-Week Range: $83.53 to $119.26
- Dividend Yield: 4.6 percent
- Dow Inclusion: 2008
- Performance: YTD +38 percent, 5-Year +0.2 percent
Energy company Chevron has had a strong year with its shares up 38 percent year-to-date. The return marks a nice surprise from near-flat performance over the last five years. Third-quarter revenue of $43 billion beat Street estimates, marking three quarters in a row after three straight misses. The company’s third-quarter earnings were the highest since 2013 and free cash flow in the third quarter was the best in company history.
Chevron has been raising its dividend consistently every year. A rebound for the company along with the high yield could make Chevron one of the best in the energy sector.
Walgreens Boots Alliance
- Stock Price: $49.07
- 52-Week Range: $39.03 to $57.05
- Dividend Yield: 3.9 percent
- Dow Inclusion: 2018
- Performance: YTD +24 percent, 5-Year -42 percent
With over 21,000 stores in 50 states and 11 countries, Walgreens Boots Alliance is one of the world’s largest pharmacy companies. The company reported fourth-quarter sales of $34.3 billion, up 12.8 percent year-over-year. Fiscal 2021 sales of $132.5 billion were up 7.5 percent year-over-year. Fourth-quarter results exceeded company expectations for all business segments. The company beat Street estimates for three of the four quarters in fiscal 2021.
Walgreens provided 13.5 million COVID-19 vaccinations in the fourth quarter and 34.6 million in fiscal 2021, ahead of its goal. The company saw an increase in its MyWalgreens membership in the fourth quarter and strong curbside and drive-thru pickup orders, showing strength in its omnichannel offerings.
Walgreens has been raising its dividend consistently each year going from quarterly payouts of $0.44, $0.4575, $0.4675, and $0.4775 over the last four years.
By Chris Katje
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