Solid Dow Dividends With Little European Exposure

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Last week, fellow Fool Dan Caplinger asked investors if they were ready for the meltdown that's on the horizon because of the eurozone crisis.

Taking his story a step further, I'll show you stocks in the Dow Jones Industrial Average (INDEX: ^DJI  ) that have dividends that are: (1) large, (2) safe, and (3) have less exposure to Europe than others.

Dividends, narrowing the field
It's no secret that during recessionary times, dividend stocks can save a portfolio. Not only do they provide consistent payouts to shareholders, but their prices are also prone to be far less volatile because investors are still willing to pay a premium for the dividend yields.

In narrowing my search for Dow dividend stocks that could weather a eurozone meltdown, I wanted to throw out those with yields that were puny. I did this by eliminating from consideration any company that didn't at least offer its shareholders a 2.5% yield.

Furthermore, I wanted to be sure that the dividends were healthy. In order to do this, I checked out the company's dividend payout ratio. Essentially, this measures the amount of a company's earnings that are used to pay out its dividends. I eliminated all companies with payout ratios above 80%.


Dividend Yield

Payout Ratio

3M (NYSE: MMM  ) 2.9% 37%
Boeing (NYSE: BA  ) 2.7% 33%
Chevron 3.5% 22%
Coca-Cola 2.9% 34%
DuPont (NYSE: DD  ) 3.7% 45%
ExxonMobil 2.5% 22%
General Electric (NYSE: GE  ) 4.1% 48%
Home Depot 3.2% 43%
Intel (Nasdaq: INTC  ) 3.7% 32%
Johnson & Johnson 3.7% 54%
JPMorgan Chase 3.5% 13%
Kraft 3.4% 64%
McDonald's 3% 48%
Microsoft 3.3% 23%
Pfizer 4.3% 54%
Procter & Gamble (NYSE: PG  ) 3.4% 51%
Travelers 3.1% 41%
United Technologies (NYSE: UTX  ) 2.7% 34%
Wal-Mart 2.6% 30%

Source: Yahoo! Finance.

OK, what about Europe?
Now that we've got a list of 19 candidates with large, safe dividends, it's time to dive in and see what their exposure to Europe looks like. I chose to go back to each company's annual report and investigate how much revenue -- percentagewise -- was derived from Europe.

Wal-Mart, Travelers, and Microsoft didn't offer detailed enough information on European exposure in their reports, so they were thrown out of the equation for this exercise. Of the remaining 16 companies, here is how they stacked up, listed from least to most European exposure.


Percent of Revenue From Europe, 2010

Home Depot 0%
Chevron 7%
Boeing 12%
Intel 13%
Coca-Cola 15%
ExxonMobil 21%
General Electric 21%
3M 23%*
Kraft 24%
United Technologies 25%
Johnson & Johnson 26%**
DuPont 26%*
McDonald's 40%
JPMorgan Chase 28%*
Pfizer 28%
Procter & Gamble 34%*

Source: Reuters, company SEC filings. *Includes Europe, Middle East, and Africa. **For first nine months of 2011.

Next steps
Looking at these numbers, it seems like Home Depot, Chevron, Boeing, Intel, and Coca-Cola are all worthy of further consideration.

Because I know comparatively little about the aerospace and housing industries -- though I think the latter will take quite a while to recover -- I'm personally not going to chase after shares of Boeing or Home Depot.

I also won't be giving Chevron a green thumb on my CAPS profile -- for two reasons. First, a recession in Europe would likely lead to slowed demand for oil worldwide, driving the price of gas and, likely, shares of Chevron lower.

Two companies I do like, and have already made a CAPScall on in my profile, are Coca-Cola and Intel. Though demand might dip slightly in the case of a recession, these two have powerful brands, large and healthy dividends, and a balance sheet to stave off a recession.

If you're looking for a few more dividend ideas for your portfolio, I encourage you to check out our special free report: "Secure Your Future With 11 Rock-Solid Dividends." In much the same manner that I presented here, you'll get the names and the reasoning behind 11 stocks that our analysts believe will boost any portfolio's performance. Get your copy today, absolutely free!

Fool contributor Brian Stoffel owns shares of Intel, Coca-Cola, and Johnson & Johnson. You can follow him on Twitter at @TMFStoffel.

The Motley Fool owns shares of Microsoft, Johnson & Johnson, Intel, Wal-Mart Stores, Coca-Cola, and JPMorgan Chase. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores, Johnson & Johnson, Procter & Gamble, The Home Depot, Pfizer, Coca-Cola, McDonald's, Chevron, Microsoft, Intel, and 3M; creating a bull call spread position in Microsoft; creating a diagonal call position in Johnson & Johnson; creating a bull call spread position in Intel; creating a diagonal call position in 3M; and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (12) | Recommend This Article (43)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 28, 2011, at 5:30 PM, TMFCheesehead wrote:

    Hmmm, that's funny, my second reason for not buying Chevron wasn't mentioned. For those interested, it's because NOV is my main energy and oil play.

    Brian Stoffel

  • Report this Comment On November 28, 2011, at 5:42 PM, xetn wrote:

    I am about equally worried about exposure to US equities as I am to Euro equities.

  • Report this Comment On November 28, 2011, at 6:46 PM, TMFDarwood11 wrote:

    NOV is my top energy investment, followed by XOM and CVX.

    Of the 19 companies mentioned, I own 8. I also own a few others.

    I concluded a while ago that if a president of CEO is inclined to avoid dividends and do as Buffett professes "spend the money better than I can" that such CEOs aren't for me. "Trust me" isn't worth much when it comes to my money. I could just as well give it to the any one of many services which send me emails each and every day. Oh, but Warren has a track record, many will say. Yes, and BRK.B is worth about the same as it was about 5 years ago. I might as well put my money in a MMF. Enough said.

    Frankly, I'm tiring of the "rear mirror" analysis at the MF. It's time to step out of the box.

  • Report this Comment On November 28, 2011, at 7:18 PM, salemsam wrote:

    Not bad, but I would rather have my money in high div stocks that people use and will not give up. T, otto, win, kmp, tef, tfe to name a few. people will never give up their cell phone, heat in the winter and the power to turn on the lights. Yes I have a couple of the above and maybe add INTC but not until next year.

  • Report this Comment On November 28, 2011, at 7:20 PM, salemsam wrote:

    ps - look to North Dakota - otto is the electric company that will power the Bakkins oil fields - great div and growth

  • Report this Comment On November 28, 2011, at 8:05 PM, canadacomments wrote:

    I'm with xetn. Brian, I would really like to see you extend this analysis to include the U.S. exposure of each of your candidates.

  • Report this Comment On November 28, 2011, at 8:08 PM, UgolinoII wrote:

    "Yes, and BRK.B is worth about the same as it was about 5 years ago."

    Thats why right now its a screaming buy!

  • Report this Comment On November 28, 2011, at 8:37 PM, sumrall wrote:

    Question: In the listing of DJIA firms, Intel (INTC) was listed. I'm quite sure it is traded on the NASDAQ. How can it be on the Dow-Jones?

    Come back...

  • Report this Comment On November 28, 2011, at 9:05 PM, TMFCheesehead wrote:

    @canada, xetn-

    Not a bad idea for a future article: DJIA stocks with heavily Asian influence?


    INTC and MSFT were the first two (I believe) Nasdaq stocks to be listed on the DJIA.

    Brian Stoffel

  • Report this Comment On November 28, 2011, at 10:41 PM, police12345 wrote:

    When the EU and the Euro collapse there will be a catastrophic financial markets tsunami which will bring many western economies to the brink of financial collapse. The wave will wipe out most of the value of all stocks regardless of their ties to Europe, Get prepared to head to the high ground of safety if any may be found.

    Now, consider how easy it will be to have a one world currency with a level playing field for all people. Of course a "new world order" is prepared to bring peace and order out of this disorder and tumultuous violence, brought to the front by the world's economic collapse.

  • Report this Comment On November 29, 2011, at 2:36 AM, Chontichajim wrote:

    This grouping is also one I like and own 6 of them. I thought Coca Cola (KO) was non Europe while CCE was Coca Cola Europe, but if KO is only 15% that is still not too bad.

    Another smaller group I like for dividends and price discounts are European owned companies with much of their revenue from outside of Europe. That includes non-Euro British companies. I like some oil, utilities, and international consumer products if they are either from a non-tax country (England or German if in an IRA), or dividend minus tax is still a good deal like TOT (5% dividend after tax is subtracted).

  • Report this Comment On December 06, 2011, at 9:36 AM, curilla wrote:

    Anybody investing with a time horizon of 20-30 years should avoid US equities and specially bonds. The US debt in % of GDP is by far larger than in the whole European Union put together. Additionally, the US is doing nothing to reduce its debt, increasing it merrily with a new 9% budget deficit (and look at the past years...).

    Additionally, no action is being taken by the US Congress, too busy in small village politics (do those people have a passport at all?) instead of thinking about the future generations of Americans who will have to pay all that back.

    And the enormous US current-account deficit... THAT is one more story.

    Talking about high debt levels, high unemployment, high budget deficit, structural inabilities, underemployment and difficulties to reduce the debt load with budget discipline? Do not think of Greece or Spain, I mean the US !!

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