It's no secret that investors have been craving high-yielding dividend stocks over the past five years. Since the onset of the current economic malaise, the Federal Reserve's easy monetary policy has made respectable income-earning investments increasingly hard to come by. At the beginning of last year, many analysts were even speculating about the onset of a dividend bubble. With this in mind, every once in a while I like to check in on the status of the biggest dividend stocks on the Dow Jones Industrial Average (^DJI 0.63%).
|
Company |
Yield |
YTD Performance |
|---|---|---|
|
AT&T (T 1.21%) |
4.82% |
13.53% |
|
Verizon (VZ 0.74%) |
3.91% |
24.45% |
|
Merck (MRK 1.18%) |
3.77% |
12.63% |
|
Intel (INTC 3.00%) |
3.76% |
17.45% |
|
General Electric |
3.37% |
8.41% |
Source: Finviz.com.
The perennial high-yielding telecoms, AT&T and Verizon, continue to dominate the rest of the dividend stocks on the Dow. The key to these companies' success over the past few years has been the ability to offset their contracting landline business with expanding wireless volume thanks to the proliferation of smartphones. As my colleague Rick Munarriz discussed recently, their regional competitors, such as Frontier Communications, Windstream, and CenturyLink, haven't been as fortunate.
Pharmaceutical giant Merck comes in third, with a yield of 3.77%. At the beginning of this month, the company disappointed analysts with worse-than-expected first-quarter earnings. For the three months ended March 31, Merck saw earnings per share and revenue fall by 14% and 9%, respectively, on a year-over-year basis. For what it's worth, its competitor Pfizer notched similar results. Drugmakers are struggling to overcome a series of patent expirations known as the "patent cliff" -- click here to read about why the patent cliff exists.
Intel comes in fourth, with a 3.76% yield. Like the pharmaceutical companies, Intel is fighting its own demon -- a dying market for personal computers. Sales for PCs fell a staggering 14% in the first quarter of the year, the worst such showing since independent research company IDP began tracking the statistic. What's the culprit? According to fellow Fool Evan Niu, investors have Microsoft's Windows 8 largely to thank. "The new interface may be a bit too much for the average consumer to take in," Evan recently noted. "After all, killing an interface element like the Start menu that's been around for 17 years is a big risk."
Finally, General Electric rounds out the top five, yielding 3.37% at the close of the market last week. While it may not be obvious at first glance, GE is arguably one of the Dow's five most-loved stocks. What would lead Fool Sean Williams to proclaim this? The answer is that GE has one of the lowest short-interest ratios on the blue-chip index, coming in behind only Coca-Cola. This is good news for income investors with shares of GE in their portfolios, as it suggests an absence of negative sentiment in the market toward the popular stock.
