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3 Dogs of the Dow Jones with Highest Expected Earnings Growth

I love to make profits with stocks but I also need to accept that I will lose some money in the stock market if I’m too greedy and take big risks. There are hundreds and thousands of asset strategies out there and every tactic to gain money from the stock market could work and give you a passive income if you are disciplined.

One investment strategy I would like to update today is the Dogs of the Dow Jones investing rule. The popular investment theory was introduced by Michael O’Higgins in 1991 and became very popular.

The philosophy 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 buy new dogs of the Dow. Below is an updated sheet of the 10 best dogs of the Dow. They have the lowest expected price to earnings ratio and highest dividend yield within the Dow Jones index.

In summary, the 10 cheapest stocks of the Dow Jones have an average dividend yield of 3.43 percent as well as a forward P/E ratio of 12.44. The average P/B ratio amounts to 2.73 and P/S ratio is 2.53.

Here are the three best earnings grower:

Intel (INTC)
has a market capitalization of $115.74 billion. The company employs 105,400 people, generates revenue of $53.341 billion and has a net income of $11.005 billion. Intel’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $22.160 billion. The EBITDA margin is 41.54 percent (the operating margin is 27.44 percent and the net profit margin 20.63 percent).

Financial Analysis: The total debt represents 15.94 percent of Intel’s assets and the total debt in relation to the equity amounts to 26.26 percent. Due to the financial situation, a return on equity of 22.66 percent was realized by Intel. Twelve trailing months earnings per share reached a value of $1.85. Last fiscal year, Intel paid $0.87 in the form of dividends to shareholders. Earnings of INTC are expected to grow by 11.0 percent yearly over the next five years.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.57, the P/S ratio is 2.15 and the P/B ratio is finally 2.23. The dividend yield amounts to 3.90 percent and the beta ratio has a value of 1.01.

General Electric (GE) has a market capitalization of $254.88 billion. The company employs 305,000 people, generates revenue of $147.359 billion and has a net income of $14.902 billion. General Electric’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $29.339 billion. The EBITDA margin is 19.91 percent (the operating margin is 11.81 percent and the net profit margin 10.11 percent).

Financial Analysis: The total debt represents 60.42 percent of General Electric’s assets and the total debt in relation to the equity amounts to 336.56 percent. Due to the financial situation, a return on equity of 12.24 percent was realized by General Electric. Twelve trailing months earnings per share reached a value of $1.40. Last fiscal year, General Electric paid $0.70 in the form of dividends to shareholders. Earnings of GE are expected to grow by 10.96 percent yearly over the next five years.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.59, the P/S ratio is 1.73 and the P/B ratio is finally 2.09. The dividend yield amounts to 3.08 percent and the beta ratio has a value of 1.69.

Verizon Communications (VZ) has a market capitalization of $146.02 billion. The company employs 181,900 people, generates revenue of $115.846 billion and has a net income of $10.557 billion. Verizon Communications’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $37.190 billion. The EBITDA margin is 32.10 percent (the operating margin is 11.36 percent and the net profit margin 9.11 percent).

Financial Analysis: The total debt represents 23.08 percent of Verizon Communications’s assets and the total debt in relation to the equity amounts to 156.79 percent. Due to the financial situation, a return on equity of 2.53 percent was realized by Verizon Communications. Twelve trailing months earnings per share reached a value of $0.54. Last fiscal year, Verizon Communications paid $2.03 in the form of dividends to shareholders. Earnings of VZ are expected to grow by 10.48 percent yearly over the next five years.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 94.32, the P/S ratio is 1.25 and the P/B ratio is finally 4.37. The dividend yield amounts to 4.06 percent and the beta ratio has a value of 0.42.

Take a closer look at the full list of the cheapest stocks from the Dow Jones Index - Dogs of the Dow. The average dividend yield of 3.43 percent as well as a forward P/E ratio of 12.44. The average P/B ratio amounts to 2.73 and P/S ratio is 2.53.

Selected Articles:

· 15 Stocks From The S&P 500 With Single P/E Ratios

· 10 Cheap Income Growth Stocks From The S&P High-Yield Dividend Aristocrats Index

· Dogs of the Dividend Aristocrats Index

· Cheapest Dividend Paying Large Caps As of July 2013

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About the author:

Dividend
I am a private full time investor searching for investments and investment ideas.

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