Let's start with the central fact dividend investors need to
know about Dow Chemical (
). The company is financially solid, but this is a really, really
cyclical stock. As one of the world's largest petrochemical
makers, Dow's profits, revenues, and share price routinely soar
and tumble along with the global economy. Even in stable
financial times when chemical prices are strong, one industry
player or another goes for the gold by opening a new plant --
flooding the market with excess capacity and squashing margins.
Or, as is currently happening, an unexpected glut can send
natural gas prices
plunging and that benefits Dow's profit margins. Take a look at
- but don't get seasick.
But. Dow Chemical's
tends to move around a lot less than its profits do. When the
wheels came off the economy a few years ago, directors broke a
97-year string of not cutting its payout - but last month
directors bumped up the dividend by 28 percent. That's why the
stock is yielding an attractive 4.3% these days.
DOW Dividend Yield
Bottom line: While Dow's price volatility can be unsettling,
the stock's historically solid and relatively stable yield makes
this a comfortable holding for dividend investors. Of course,
yield-oriented dividend investors should always remember we're
buying the underlying stock as well, so it makes sense to study
up on the company's fundamentals. The stock symbol links above
can help you get started, and a careful read of the company's
10-K annual report is always worth the time.
James P. Miller is an editor for the
YCharts Pro Investor Service
which includes professional