The 3 Worst Dividend Stocks on the Dow

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is a gold mine for long-term investors. It's particularly juicy if you're looking for high-quality income stocks, as these proven blue chips tend to deliver both high yields and reliable dividend growth. But there are stragglers in every herd, including this elite collection. Let me point out the three worst dividend stocks on the Dow today.

AA Dividend Chart

AA Dividend data by YCharts.

Bank of America (NYSE: BAC  ) is a horrible income stock right now, any way you slice it. No other Dow stock even comes close to its feeble 0.3% yield. Annual payouts have plunged 97% over the last decade, and regulators keep a heavy foot on B of A's throat to prevent the troubled bank from over-stretching its financial reserves. That financial crisis in 2008 wrought devastation on Bank of America's dividend appeal.

The second-thinnest dividend yield on the Dow is Walt Disney (NYSE: DIS  ) . The company does like to boost its payout rates, but its share price climbs even faster. With annual payouts at just 1.2% of current share prices, the House of Mouse doesn't exactly invite you to lock in dividend rates with an opportunistic stock buy. As mature as Disney may be (the company was founded 90 years ago!), its shares behave more like a growth vehicle than a dividend stock right now.

DIS Chart

DIS data by YCharts.

Like Bank of America, Alcoa (NYSE: AA  ) took the global crisis right on the chin. The aluminum producer was never the most generous dividend stock on the block, and it slashed payouts at the kneecaps in 2009. The results: A 10-year dividend reduction of 80% and an anemic 1.4% yield -- even though Alcoa's share price plunged right alongside its dividend.

^DJI Chart

^DJI data by YCharts.

These three Dow stocks may not be a great fit for income-generating portfolios -- but if you're looking for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.


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  • Report this Comment On May 07, 2013, at 9:10 PM, DonkeyJunk wrote:

    With regard to Disney, I don't know how you can complain about consistent and significant dividend growth while the company itself continues to grow. the former is a big positive, the latter a bonus. My only complaint is they only pay that dividend annually, so the compounding isn't as rapid.

  • Report this Comment On May 08, 2013, at 10:10 AM, shoefly11 wrote:

    With the rush to meet millage standards they are flocking to aluminum frames, bodies, motors and every where else they can lower the autos weight. All this thanks to Alcoas Patents & knowhow!!! Look for LME prices to skyrocket and a boon to Alcoa manufacturing! Now is the time to get in on the Aluminum commodity boon & Alcoas successful Business Model

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