The lineup of the Dogs of the Dow, simply the ten highest dividend yield stocks of the thirty Dow Jones Industrial Average components, appears to be undergoing a bit of change for 2012.  There is a significant horserace taking place for the number-ten spot on the 2012 Dogs.  The average yield comes to about 4% depending upon the final order.

The nearly certain nine Dogs of the Dow are as follows: AT&T Inc. (NYSE: T); Verizon Communications Inc. (NYSE: VZ); Merck & Company, Inc. (NYSE: MRK); Pfizer, Inc. (NYSE: PFE); General Electric Co. (NYSE: GE); E.I. du Pont de Nemours (NYSE: DD); Johnson & Johnson (NYSE: JNJ); Intel Corporation (NASDAQ: INTC); and The Procter & Gamble Company (NYSE: PG).  The horserace for the tenth spot on the Dogs is taking place among three DJIA components, with a distant fourth in the running: Microsoft Corporation (NASDAQ: MSFT); Kraft Foods Inc. (NYSE: KFT); Chevron Corporation (NYSE: CVX); and J.P. Morgan Chase & Co. (NYSE: JPM).

Here is the current expected order of the 2012 Dogs of the Dow, with dividend yields included:

• AT&T Inc. (NYSE: T) 5.9%
• Verizon Communications Inc. (NYSE: VZ) 5.2%
• Merck & Company, Inc. (NYSE: MRK) 4.5%
• Pfizer, Inc. (NYSE: PFE) 3.7%… After the most recent dividend hike which has not been paid out, the new yield will be 4.06% rather than a rounded off 3.7%.
• General Electric Co. (NYSE: GE) 3.6%
• E.I. du Pont de Nemours (NYSE: DD), or DuPont, 3.6%
• Johnson & Johnson (NYSE: JNJ) 3.5%
• Intel Corporation (NASDAQ: INTC) 3.4%
• The Procter & Gamble Company (NYSE: PG) 3.14%

The four DJIA stocks competing for the tenth-spot:

• Microsoft Corporation (NASDAQ: MSFT) 3.07%
• Kraft Foods Inc. (NYSE: KFT) 3.08%
• Chevron Corporation (NYSE: CVX) 3.03%
• J.P. Morgan Chase & Co. (NYSE: JPM) 2.98%

What is so interesting about this list is that Microsoft is entering the Dogs for what may be the first time ever.  McDonald’s Corporation (NYSE: MCD) is actually not in the list this year.  Those which have recently raised dividends outside of Microsoft are AT&T, Merck, Pfizer, and G.E.

If you average the top nine DJIA yields, investors get an average of about 4.06%.  If you include a 3.05% average for the competing four to go into the tenth spot, then the average dividend yield comes to 3.96%. As far as how this compares to the 2011 list, the lowest yield a year ago was roughly 3.1% as well.

Is it any coincidence that the average yield last year among the ten Dogs was 4.01%?  Here is the 2011 Dogs of the Dow review from a year ago for comparison.

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JON C. OGG

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