As the end of 2011 approaches, we look naturally look ahead to
the next year of investing. With that outlook comes a peek at some
likely candidates to be in the 2012 "Dogs of the Dow" lineup.
"Dogs of the Dow" refers to a year-end portfolio strategy that
entails buying the highest-yielding
Dow 30 component stocks
as of the close of the last trading day of the year (which is this
Friday). Income-focused investors will sometimes look to carry this
particular portfolio into the new year, or accumulate several of
the names early in the new year.
Please note that we don't necessarily endorse this strategy
ourselves. We're just pointing out several names that investors
seem to have been flocking to over the past few weeks. Many of
these dividend stocks have seen their valuations stretched as a
To view the Dividend.com DARS™ Ratings on any of the stocks
below, just click their symbols to be taken to their profile
pages, which contain detailed ratings and dividend payout
) - The telecom giant is coming off a so-so 2011, but still sports
a near 6% dividend yield. We are not expecting much in the way of
share price appreciation at this point, but AT&T is still a
popular defensive play for income investors.
) - We like VZ a bit more than T at this point. That said, the
stock may also be near the top end of its valuation range. Its 5%
dividend yield is still very attractive, however.
) - In 2011, MRK raised its dividend for the first time since 2004.
That boost has helped its yield to the 4.5% range. The company's
growth prospects still appear minimal, so 2012 could bring another
year of minimal share price appreciation.
) - We liked PFE in early 2011, but advised our readers to hold off
on putting new capital in the name once it hit the $19 levels. The
stock is coming off a stellar 2011 performance, but we'd be very
surprised to see a repeat in 2012.
General Electric (
) - We warmed back up to this venerable dividend play following its
third dividend increase of the year
earlier this month. GE's valuation could be less attractive if
shares gravitate toward the $20 mark, however.
) - This company was one of the worst-performing Dow 30 stocks of
2011. Despite a seemingly-attractive 3.5% yield, we'd be cautious
around DD. The stock's recent price action still indicates a good
bit of uncertainty for the global economies.
Johnson & Johnson (
) - JNJ is another name we liked earlier in this year, but has been
stuck in a very tight trading range. The risk/reward for the stock
is about even as we look at 2012.
Intel Corp (
) - Similar to General Electric, Intel's management has been
aggressive with its dividend increases, much to our liking. The
stock could continue to slowly trickle higher if its yield
continues to grow through future dividend boosts. Otherwise,
earnings expectations have the shares sitting at about fair value
as we head into 2012.
Procter & Gamble (
) - This is another name we liked earlier in the year, but have
since become "Neutral" on. A fall in commodity prices could help
the company's bottom line, but at this point, the risk/reward
appears about flat.
Kraft Foods (
) - The company got a real boost from news it would be splitting
into two publicly-traded entities. The stock appears fully valued
at this point, but we don't want to underestimate the split-up
price share potential.
) - The stock continues to be dead money and at this point. MSFT's
only hope may be to attract new shareholders with generous special
dividend payouts (as it did back in 2004).
J.P. Morgan (
) - Once again, the "experts" are calling for the financials to be
a leading sector in 2012 as a popular contrarian strategy. If
they're right, the stock could indeed have a decent 2012 following
a weak 2011.
) - With oil prices remaining around $100 a barrel level at
year-end, the company's earnings potential should remain
attractive. However, the stock could be vulnerable if oil dips - as
we saw a few months back.
The "Dogs of the Dow" list normally consists of 10 stocks, but
we've profiled 13 above. Keep in mind the bottom five names could
shift around a bit, but in the end, the names you see above are all
leading candidates to be in the final "Dogs of the Dow"
We take a closer look at these names and many other well-known
dividend stocks in our 2012
"Beat The Market With Dividend Stocks"
275-page guide. Be sure to check it out!
And as always, you can consult our industry-leading
Best Dividend Stocks List
for the names we're currently recommending for long-term and