Mary Allen
Introduction: What are the "Dogs of the Dow"?
The "Dogs of the Dow" is a popular investment strategy that involves selecting the ten highest dividend-yielding stocks from the Dow Jones Industrial Average (DJIA) index at the end of each year. The strategy is based on the idea that high-quality companies with strong fundamentals will eventually recover from temporary setbacks and outperform the market in the long run. The term "dogs" refers to the fact that these stocks are often perceived as underperforming and undervalued.
The criteria for choosing the "Dogs of the Dow"
To qualify as a "Dog of the Dow," a stock must meet two main criteria. First, it must be one of the ten highest dividend-yielding stocks in the DJIA at the end of the year. Second, it must have underperformed the overall DJIA index in the previous year. The idea is that these stocks are likely to rebound and offer higher returns than the broader market in the following year.
Which stocks made it to the "Dogs of the Dow" for 2021?
The ten "Dogs of the Dow" for 2021 are as follows: Chevron Corporation (CVX), Dow Inc. (DOW), IBM Corporation (IBM), 3M Company (MMM), Merck & Co., Inc. (MRK), Pfizer Inc. (PFE), The Coca-Cola Company (KO), The Travelers Companies, Inc. (TRV), Verizon Communications Inc. (VZ), and Walgreens Boots Alliance, Inc. (WBA). These stocks have dividend yields ranging from 3.4% to 6.9%.
Company 1: Overview and financial performance
Chevron Corporation is a multinational energy corporation that operates in all aspects of the oil and gas industry. The company has a market capitalization of over $200 billion and operates in more than 180 countries worldwide. In 2020, Chevron reported a net loss of $5.5 billion due to the COVID-19 pandemic and the decline in oil prices.
Company 1: Reasons for being a "Dog of the Dow"
Chevron’s stock has underperformed the overall DJIA index in the previous year, mainly due to the decline in oil prices and the reduction in demand caused by the pandemic. The company has also faced regulatory and legal challenges related to its environmental impact and climate change. Additionally, Chevron’s dividend yield of 5.4% is one of the highest among the DJIA stocks, which could indicate that investors are skeptical about the company’s ability to maintain its dividend payments.
Company 1: Potential for growth and recovery
Despite the challenges faced by the energy industry, Chevron has a strong balance sheet and a diversified portfolio of assets that could help it weather the current market conditions. The company has also announced plans to reduce its capital spending and focus on cost-cutting measures to improve its profitability. Furthermore, Chevron is investing in renewable energy and low-carbon technologies, which could position it for long-term growth and sustainability.