Collectively, the 30 Dow Jones Industrial Average stocks are meant to represent the entire stock market. But as with any group, there are some that do things well … and some that bring up the rear.
One particular area of divergence is how Dow components pay dividends. The top 10 Dow dividend stocks offer yields as high as 6% — while the lower portion of these 30 components can’t even crack the 1% mark.
Some flat-out refuse to pay a decent dividend, hoarding their profits. Yes, dividend payout ratios are low across the board at about half their normal levels — roughly 25% compared to 50% payout ratios historically. But some Dow components are lower even than that. And then, of course, are the battered stocks that are flat-out incapable of increasing payouts because of poor operations.
Although the dividend yield for the broader market is pretty paltry at just south of 2%, these dead dividend stocks can’t even hop over that low bar.
To be clear, many of these stocks might be decent swing trades — and I’ll be the first to admit that some of these stocks I personally have singled out as good buys from a share appreciation perspective. But for the purpose of this conversation, we’re talking about investing from an income perspective — and if you’re an investor that places emphasis on yield first, you should put these seven dead Dow dividend stocks on your list of investments that don’t make the cut.
Let’s take a look: