Current Dividend Yield: 3.6%
Performance So Far in 2012: -42%
You might be surprised to see a tech stock like Hewlett-Packard (NYSE:HPQ) so high on this list — and even more shocked to see the big headline yield!
But tech stocks are increasingly paying dividends (I’m looking at you, Apple (NASDAQ:AAPL), and Dow components are no exception. In fact, in addition to (spoiler alert!) No. 3 Intel (NASDAQ:INTC), Dow components Cisco (NASDAQ:CSCO) and Microsoft (NASDAQ:MSFT) both barely missed the cut with dividends of about 3% apiece.
Hewlett-Packard has indeed increased its payouts, from 8 cents a quarter in early 2011 to 13 cents currently … however, HPQ has more so been a tale of gut-wrenching declines that have inflated its yield recently. After all, the most common way for a $30 stock to double its yield is to become a $15 stock — not to start paying twice the dividends. So keep that in mind.
There are major problems at Hewlett-Packard that should give all investors pause — most notably the ugly HP analyst meeting where Meg Whitman essentially said, “We are in it deep, but gimme five years and I’ll fix things. Be patient!”
If you believe in the turnaround, well, the big yield could give you incentive to tread water until HP moves in the right direction. But it’s a risky play despite the big yield.
HP reports earnings on Nov. 20.