Preview of the 2007 “Dogs of the Dow” (Preliminary List 12/12/06)

As we get to the end of each year, investors begin to look at the “DOGS OF THE DOW.”

This is a portfolio the 10 highest yielding stocks out of the 30 DowJones Industrial Average stock components.  Some investors even takethis a step farther and go for the Dow 5 by only looking at the 5highest yielding components in the index.  We decided to compile a listof these stocks as it stands today, but please recall this may changebefore January 1, 2007 as we still have more than two weeks of tradingbefore New Years.

These are listed in order by the highest yielding first.  The 10Dogs of the Dow have one change on a preliminary basis: AT&T (T)has been added and Coca-Cola (KO) has been dropped, and the order isdifferent and the top 5 area different in those smaller “5 Down Dogs”stocks.  This list includes the market cap of each stock, the currentdividend yield, the 52-week trading range, the price change off the lowof the year, and we even put the price-to-book ratio for each stock. 

Here is the preliminary list of stocks:

Verizon (VZ) $35.46:  Market Cap $103.53B; Yield 4.60%
52-Week Range: $30.00 to $38.95 (+$5.53);   Price/Book: 2.25 

Altria (MO) $84.68: Market Cap $177.48B;  Yield  4.10%
52-Week Range: $68.36 to $85.55 (+$16.38);  Price/Book: 4.33    

Citigroup (C) $51.96: Market Cap $255.31B; Yield 3.80%
52-Week Range: $44.81 to $52.88 (+$7.18); Price/Book: 2.22

Pfizer (PFE) $25.16:   Market Cap $181.41B; Yield  3.80%
52-Week Range: $20.27 to $28.60 (+$4.88);  Price/Book: 2.61   

AT&T (T) $35.48:  Market Cap $136.35B; Yield  3.80%
52-week range: $24.24 to $35.33 (+$11.23);  Price/Book: 2.45      

Merck (MRK) $43.54:  Market Cap $94.53B;  Yield 3.50%      
52-Week Range: $27.99 to $46.37 (+$15.63);  Price/Book:  4.96   

General Motors (GM) $29.70: Market Cap $16.80B;  Yield  3.40%   
52-Week Range: $18.33 to $36.56 (+$11.40);   Price/Book:  1.52      

DuPont (DD) $46.83: Market Cap $43.07B;  Yield 3.20%   
52-Week Range: $38.52 to $48.87 (+$8.31);  Price/Book: 4.41   

General Electric (GE) $35.60: Market Cap $367.5B;  Yield  3.14%       
52-Week Range: $32.06 to $36.48 (+$3.12)   Price/Book: 3.26   

J.P.Morgan (JPM) $47.60:    Market Cap $165.12B;  Yield  2.90%   
52-Week Range: $37.88 to $48.57 (+$9.73);   Price/Book: 1.45    

It may be worth noting that J&J (JNJ), Home Depot (HD),McDonalds (MCD), and 3M (MMM) all have roughly a 2.3% yield; andCoca-Cola (KO) has a 2.5% yield.  So if any of the lower-yieldingpreliminary Dogs have a substantially rally or if any of these "almostDogs" see their share prices fall sharply then you could see a changeto these names.  Also, this list does include the change to GE based ontheir dividend hike today.

Jon C. Ogg
December 12, 2006

Also, it may be worth noting that that this data was taken fromsources deemed reliable but no assurances can be made as to theaccuracy of any claims or figures.  Please verify all data on your ownbefore making any investment decisions.  The author of this report doesnot own securities of the companies mentioned.  All stock prices and values based on data around 2PM EST on DEC 12, 2006.