The Dow Jones Industrial Average, while maybe not as relevant a gauge of the American economy as it once was, is still one of the most-followed indices in U.S. markets thanks to its makeup of solid, dependable blue chips.
It’s also pretty popular among income investors.
After all, nearly half the index yields more than 3% in dividends and the group as a whole yields 2.5% via the SPDR Dow Jones Industrial Average ETF (NYSE:DIA). That’s not too shabby considering the relatively chinsy 1.8% you’re getting from a 10-year Treasury or this laughable “top national CD account rate” of 1.19% — neither of which would even keep up with the current “low” 2% rate of inflation.
Sadly, they can’t all be winners. While we regularly love to laud the Dow Jones’ most generous stocks, a number of components aren’t holding their own on the dividend side of things. Some are just hugging onto cash for dear life, paying out far less as a percentage of earnings than the current 34% average across the S&P 500 or the 52% historic average. Others just are flopping so hard on the business side that they can’t afford to shell out any more each quarter.
That isn’t to say these Dow dividend losers are bad stocks overall … in fact, a number of them have been carrying the index with outsized returns. But if you’re an investor who puts income above all else, consider these stocks off-limits until they can up the dividend ante.