Investors with a clear investment strategy are benefited. They follow rules with more or less success. One popular and much discussed strategy is the Dogs of the Dow theory by Michael O’Higgins. The strategy is to buy 10 stocks of the Dow Jones with the highest dividend yield and lowest price to earnings ratio at the beginning of the year and to hold these stocks for a year. After this period, the investor should sell stocks that are no more Dogs of the Dow and then buy new Dogs of the Dow.
I screened the Dow Jones Index by Dogs and sorted the results by the highest yield. The ten cheapest stocks of the Dow Jones have an average dividend yield of 3.90 percent, as well as a forward P/E ratio of 10.60. The average P/B ratio amounts to 2.35 and P/S ratio is 1.78. The two best results are still ATT (T) and Verizon (VZ). Both companies come from the domestic telecom services industry. The second strongly represented industry is the major drug manufacturing industry, covering the following positions. Compared to the results from the previous month, the only new stock in our list is JPMorgan Chase (JPM), which replaced Kraft Foods (KFT). These are the detailed results:
1. ATT (T) has a market capitalization of $197.52 billion. The company generates revenues of $126,723.00 million and has a net income of $4,184.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $27,595.00 million. Because of these figures, the EBITDA margin is 21.78% (operating margin 7.27% and the net profit margin finally 3.30%).
The total debt representing 23.95% of the company’s assets and the total debt in relation to the equity amounts to 61.36%. Last fiscal year, a return on equity of 3.63% was realized. Twelve trailing months earnings per share reached a value of $0.69. Last fiscal year, the company paid $1.73 in the form of dividends to shareholders. The earnings are expected to grow 7.14% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 48.68, forward P/E 13.21, Price/Sales 1.56 and Price/Book ratio 1.89. Dividend Yield: 5.22%. The beta ratio is 0.57.
2. Verizon Communication (VZ) has a market capitalization of $117.76 billion. The company generates revenues of $110,875.00 million and has a net income of $10,198.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $29,376.00 million. Because of these figures, the EBITDA margin is 26.49% (operating margin 11.62% and the net profit margin finally 9.20%).
The total debt representing 23.93% of the company’s assets and the total debt in relation to the equity amounts to 153.33%. Last fiscal year, a return on equity of 6.45% was realized. Twelve trailing months earnings per share reached a value of $0.93. Last fiscal year, the company paid $1.98 in the form of dividends to shareholders. The earnings are expected to grow 11.55% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 44.53, forward P/E 14.80, Price/Sales 1.06 and Price/Book ratio 3.27. Dividend Yield: 4.83%. The beta ratio is 0.51.
3. Merck Co. (MRK) has a market capitalization of $114.21 billion. The company generates revenues of $48,047.00 million and has a net income of $6,392.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $15,478.00 million. Because of these figures, the EBITDA margin is 32.21% (operating margin 15.26% and the net profit margin finally 13.30%).
The total debt representing 16.66% of the company’s assets and the total debt in relation to the equity amounts to 32.13%. Last fiscal year, a return on equity of 11.49% was realized. Twelve trailing months earnings per share reached a value of $2.26. Last fiscal year, the company paid $1.52 in the form of dividends to shareholders. The earnings are expected to grow -3.14% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 16.64, forward P/E 10.15, Price/Sales 2.38 and Price/Book ratio 2.09. Dividend Yield: 4.47%. The beta ratio is 0.62.
4. Pfizer (PFE) has a market capitalization of $165.71 billion. The company generates revenues of $67,425.00 million and has a net income of $8,739.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $23,011.00 million. Because of these figures, the EBITDA margin is 34.13% (operating margin 18.93% and the net profit margin finally 12.96%).
The total debt representing 20.72% of the company’s assets and the total debt in relation to the equity amounts to 47.39%. Last fiscal year, a return on equity of 10.24% was realized. Twelve trailing months earnings per share reached a value of $1.06. Last fiscal year, the company paid $0.80 in the form of dividends to shareholders. The earnings are expected to grow 5.41% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 20.79, forward P/E 9.46, Price/Sales 2.46 and Price/Book ratio 2.04. Dividend Yield: 3.98%. The beta ratio is 0.71.
5. Johnson Johnson (JNJ) has a market capitalization of $171.68 billion. The company generates revenues of $65,030.00 million and has a net income of $9,672.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $15,993.00 million. Because of these figures, the EBITDA margin is 24.59% (operating margin 19.01% and the net profit margin finally 14.87%).
The total debt representing 17.27% of the company’s assets and the total debt in relation to the equity amounts to 34.39%. Last fiscal year, a return on equity of 17.02% was realized. Twelve trailing months earnings per share reached a value of $3.64. Last fiscal year, the company paid $2.25 in the form of dividends to shareholders. The earnings are expected to grow 6.45% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 17.18, forward P/E 11.47, Price/Sales 2.64 and Price/Book ratio 2.98. Dividend Yield: 3.90%. The beta ratio is 0.54.
6. Chevron Corporation (CVX) has a market capitalization of $195.02 billion. The company generates revenues of $253,706.00 million and has a net income of $27,008.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $60,545.00 million. Because of these figures, the EBITDA margin is 23.86% (operating margin 18.78% and the net profit margin finally 10.65%).
The total debt representing 4.85% of the company’s assets and the total debt in relation to the equity amounts to 8.36%. Last fiscal year, a return on equity of 23.75% was realized. Twelve trailing months earnings per share reached a value of $13.61. Last fiscal year, the company paid $3.09 in the form of dividends to shareholders. The earnings are expected to grow 0.67% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 7.26, forward P/E 7.32, Price/Sales 0.77 and Price/Book ratio 1.61. Dividend Yield: 3.64%. The beta ratio is 0.78.
7. Procter Gamble (PG) has a market capitalization of $171.23 billion. The company generates revenues of $82,559.00 million and has a net income of $11,797.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $18,656.00 million. Because of these figures, the EBITDA margin is 22.60% (operating margin 19.16% and the net profit margin finally 14.29%).
The total debt representing 23.14% of the company’s assets and the total debt in relation to the equity amounts to 47.33%. Last fiscal year, a return on equity of 18.32% was realized. Twelve trailing months earnings per share reached a value of $3.21. Last fiscal year, the company paid $1.97 in form of dividends to shareholders. The earnings are expected to grow 8.55% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 19.47, forward P/E 14.91, Price/Sales 2.07 and Price/Book ratio 2.60. Dividend Yield: 3.60%. The beta ratio is 0.44.
8. JPMorgan Chase Co. (JPM) has a market capitalization of $127.52 billion. JPMorgan generates revenues of $61,293.00 million and has a net income of $18,976.00 million. JPMorgan’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $41,603.00 million. Because of these figures, the EBITDA margin is 67.88% (operating margin 27.51% and the net profit margin finally 19.52%).
The total debt representing 30.22% of JPMorgan’s assets and the total debt in relation to the equity amounts to 373.04%. Last fiscal year, a return on equity of 10.21% was realized. Twelve trailing months earnings per share reached a value of $4.50. Last fiscal year, JPMorgan paid $1.00 in the form of dividends to shareholders. The earnings are expected to grow 21.01% for the next fiscal year.
Here are the price ratios of JPMorgan: The P/E ratio is 7.45, forward P/E 6.06, Price/Sales 1.31 and Price/Book ratio 0.72. Dividend Yield: 3.58%. The beta ratio is 1.32.
9. E.I. Du Pont De Nemours (DD) has a market capitalization of $45.35 billion. The company generates revenues of $38,719.00 million and has a net income of $3,510.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $6,289.00 million. Because of these figures, the EBITDA margin is 16.24% (operating margin 11.06% and the net profit margin finally 9.07%).
The total debt representing 25.89% of the company’s assets and the total debt in relation to the equity amounts to 146.08%. Last fiscal year, a return on equity of 39.82% was realized. Twelve trailing months earnings per share reached a value of $3.73. Last fiscal year, the company paid $1.64 in the form of dividends to shareholders. The earnings are expected to grow 11.11% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 12.96, forward P/E 10.30, Price/Sales 1.17 and Price/Book ratio 5.36. Dividend Yield: 3.55%. The beta ratio is 1.48.
10. General Electric (GE) has a market capitalization of $203.28 billion. The company generates revenues of $147,300.00 million and has a net income of $14,366.00 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $31,015.00 million. Because of these figures, the EBITDA margin is 21.06% (operating margin 13.64% and the net profit margin finally 9.75%).
The total debt representing 63.22% of the company’s assets and the total debt in relation to the equity amounts to 389.43%. Last fiscal year, a return on equity of 11.06% was realized. Twelve trailing months earnings per share reached a value of $1.22. Last fiscal year, the company paid $0.61 in the form of dividends to shareholders. The earnings are expected to grow 13.55% for the next fiscal year.
Here are the price ratios of the company: The P/E ratio is 15.70, forward P/E 10.91, Price/Sales 1.38 and Price/Book ratio 1.74. Dividend Yield: 3.54%. The beta ratio is 1.58.
Disclosure: I am long JNJ, PG, GE.
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