The Best- and Worst-Performing DJIA Stocks in 2014

The bull market may be five and a half years old, but stocks have been fighting each week to hit newer highs. The Dow Jones Industrial Average (DJIA) was up only 3.4% on the year as of Tuesday’s mid-day trading, but then it was also up 11% from the lows seen at the start of February.

Ten of the 30 members of the DJIA are up more than 10% this year through September 23. Technology companies are well-represented in this group, with Intel, Microsoft and Cisco all among the top performers. Health has also been a major theme among the top Dow performers as well. Health insurance provider UnitedHealth, pharmaceutical giant Merck, and Johnson & Johnson — which derives most of its revenue from its pharmaceuticals and medical devices segments — are all among the 10 best-performing DJIA members.

But not all Dow stocks are participating in this year’s bull market. In fact, eight of the 30 DJIA stocks have negative total returns in 2014. Total return figures include both share price change and dividends paid.

So far this year, financials and conglomerates have put in a poor showing. Two of the eight worst-performing companies are credit card providers Visa and American Express. General Electric and United Technologies, both conglomerates, were also among the poorest performers so far this year.

Sales trends have also been a problem for several of the DJIA’s worst performers. This is especially the case for McDonald’s and Walmart, both of which have had distressing sales trends in recent years. In its most recent monthly report, for instance, McDonald’s noted U.S. comparable sales were down 2.8% year-over-year, while sales for its Asia/Pacific, Middle East and Africa unit dropped 14.5% amidst concerns over supplier practices.

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Based on market information through Tuesday, September 23, 24/7 Wall St. identified the best- and worst-performing companies in the Dow Jones Industrial Average. We also reviewed consensus analyst price targets, 52-week trading ranges, and dividend yields for each company. For many companies, we have provided additionally analysis on positive and negative catalysts that may have contributed to share price changes. We have also highlighted potential catalysts investors may want to follow for certain stocks. Share prices are as of Tuesday’s closing bell.

These are the best- and worst-performing DJIA stocks so far in 2014.

The Best-Performing DJIA Stocks

10. DuPont
> Gain in 2014: 12.3%
> Dividend yield: 2.8%
> Share price: $71.13
> Avg. price target: $70.44
> 52-week range: $56.46 – $72.15

E.I. du Pont de Nemours and Co. (NYSE: DD) is among the 10 best Dow stocks so far in 2013, despite pressure from activist Nelson Peltz and his fund Trian Partners to break up. DuPont has made some efforts to please activists, but these actions have not been enough to satisfy activist concerns. However, the company is still a market leader in most of its businesses, sports a 2.8% dividend yield and would be a major beneficiary if global growth accelerates. Still, DuPont remains a boring company to most investors, and shares currently trade above Wall Street’s consensus price target.

9. Caterpillar
> Gain in 2014: 13.2%
> Dividend yield: 2.8%
> Share price: $100.52
> Avg. price target: $113.05
> 52-week range: $81.87 – $111.46

Caterpillar Inc. (NYSE: CAT) has been a surprisingly strong performer this year. While company’s key international growth markets remain under pressure, strength in North America has driven the machinery maker forward. While global mining activity has simmered down, analysts still see another 10% upside for Caterpillar, which also offers a dividend yield of close to 3%. Caterpillar attracted value buyers at the start of 2014, and now the question remains whether investors will chase the share price further upward because of the company’s relatively low price-to-earnings multiple. Caterpillar’s forward price-to-earnings (P/E) ratio of just under 14 times 2015 expected earnings remains a discount to the broader market.

8. Home Depot
> Gain in 2014: 13.4%
> Dividend yield: 2.3%
> Share price: $91.89
> Avg. price target: $95.92
> 52-week range: $73.74 – $93.75

A data breach at Home Depot Inc. (NYSE: HD), which affected some 56 million credit card accounts, may have been expected to negatively impact the company’s share price. However, the consensus view appears to be that the damage from this breach will be significantly lower than that at another big-box retailer, Target. Analysts still see another 5% upside, not including dividend gains. However, investors should wonder how much upside lies ahead, with shares trading at almost 18 times expected earnings for more than a year out. Still, homebuilders are getting more confident, and an improving economy has led more homeowners to undertake remodeling or home improvement projects.

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7. Cisco Systems
> Gain in 2014: 15.3%
> Dividend yield: 3.0%
> Share price: $24.73
> Avg. price target: $26.18
> 52-week range: $20.22 – $26.08

Cisco Systems Inc. (NASDAQ: CSCO) has managed to claw its way back somewhat following problems in Asia and other markets. However, the image of the company seems to have taken a hit again, as it recently announced a restructuring that will lead to another 6,000 layoffs and will cost up to $700 million. These are not the first significant layoffs the company has conducted in recent years either. Also, John Chambers is now the last of the big public technology company CEOs who has been in place since the mid-1990s, and investors may wonder what a post-Chambers Cisco will look like. Still, Cisco trades at only about 11 times expected earnings next year, with a 3% dividend yield.

6. Disney
> Gain in 2014: 16.8%
> Dividend yield: 1.0%
> Share price: $88.62
> Avg. price target: $94.32
> 52-week range: $63.10 – $91.20

Walt Disney Co. (NYSE: DIS) has just continued to impress. Disney is likely to declare a big dividend hike toward the end of 2014, and enthusiasm for a new Star Wars film is expected to be extremely high. Disney has proven to have pricing power at its theme parks, and its studios, including Pixar and Marvel, keep turning out hits year after year. While the consensus price target implies upside of about 5%, some analysts have started to lay out the path for Disney shares to exceed $100 or so by next year.

5. UnitedHealth
> Gain in 2014: 18.0%
> Dividend yield: 1.8%
> Share price: $86.98
> Avg. price target: $92.19
> 52-week range: $66.72 – $88.85

With the Affordable Care Act underway, investors may not have guessed that UnitedHealth Group Inc. (NYSE: UNH) would be among the best-performing Dow stocks. Analysts still see upside as well, while the 1.8% dividend yield likely has a lot of room to be increased down the road. UnitedHealth is now the largest health insurer in the United States, and it claims to cover roughly 70 million Americans. Increases in health care costs, and the ability to selectively grow, could further fuel UnitedHealth’s growth. Analysts forecast 6% revenue growth in 2014 and a further 7% revenue growth in 2015.

4. Johnson & Johnson
> Gain in 2014: 20.2%
> Dividend yield: 2.8%
> Share price: $107.59
> Avg. price target: $109.13
> 52-week range: $85.50 – $108.37

Quality control issues at Johnson & Johnson (NYSE: JNJ) seem to have abated. Consistent dividend growth year after year is certainly a positive, as is a 2.8% dividend yield. However, the current rally in shares has left the stock valued at 17 times next year’s projected earnings. Analysts see little more than another dollar in implied upside. They also see 5% revenue growth in 2014 and 3% revenue growth in 2015. If Johnson & Johnson falters, it is easy to imagine a scenario in which activist investors will go after management.

3. Merck
> Gain in 2014: 23.8%
> Dividend yield: 3.1%
> Share price: $60.45
> Avg. price target: $62.61
> 52-week range: $44.62 – $61.33

Merck & Co. Inc. (NYSE: MRK) may be a surprise as the third best-performing Dow Jones stock so far this year, but a major reorganization at the company, and the prospect of future tax inversions in the pharmaceutical industry, appear to have excited the investment community. However, sales at the company continue to languish. Revenue at Merck is expected to drop by 3% in this year, followed by another 3% decline in 2015. However, analysts still see more than $2 upside in Merck shares. It also has a dividend yield north of 3% that draws defensive investors.

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2. Microsoft
> Gain in 2014: 28.4%
> Dividend yield: 2.6%
> Share price: $46.68
> Avg. price target: $47.93
> 52-week range: $32.15 – $47.57

Microsoft Corp. (NASDAQ: MSFT) is the second best-performing stock in the index so far this year. New CEO Satya Nadella is leading the charge at Microsoft with a “Cloud First” strategy. Nadella is also free to pursue his own initiatives, now that he has brought in new board members and Steve Ballmer has gone on to worry about basketball. The 2.6% dividend yield is impressive for a tech giant. While Microsoft is approaching a $400 billion market cap again, shares still have some upside to Wall Street’s target price.

1. Intel
> Gain in 2014: 37.0%
> Dividend yield: 2.6%
> Share price: $34.71
> Avg. price target: $33.91
> 52-week range: $22.48 – $35.56

Intel Corp. (NASDAQ: INTC) is the best-performing company on the Dow Jones Industrial Average so far in 2014. Among the catalysts: the PC-era did not die off as many investors worried, Intel’s Internet of Things and data center business units grew considerably, and the company has been willing to bare losses to build its market share for tablet processors. Guidance has also been strong, and the company’s 2.6% dividend yield does not hurt either. In fact, Intel’s stock price has rallied so much this year that it is currently above Wall Street’s consensus price target.

The Worst-Performing DJIA Stocks

8. McDonald’s
> Loss in 2014: 1.2%
> Dividend yield: 3.4%
> Share price: $93.51
> Avg. price target: $98.93
> 52-week range: $90.53 – $103.78
> Market Cap: $92 billion

McDonald’s Corp. (NYSE: MCD) is a company that often seems lost. Management has had to deal with labor issues. The company’s move to a “healthier” offering of food items has not engineered the success once hoped for. McDonald’s same-store sales have largely been trending downward as well. Shares are not cheap, at 16 times next year’s consensus earnings estimates and 17 times trailing earnings. Still, there are some positives. The 3.4% dividend yield outpaces peers handily, and analysts do see some upside.

7. American Express
> Loss in 2014: 1.9%
> Dividend yield: 1.2%
> Share price: $88.31
> Avg. price target: $98.52
> 52-week range: $72.08 – $96.24

American Express Co. (NYSE: AXP) will not be deemed a loser as consumers embrace Apple Pay, something that some market observers thought might be a problem. Despite having pulled back 8% from its highs, American Express commands a premium market valuation compared to other financial companies, which may be due in part a premium client base compared to other credit card issuers. Another issue is that the company has a mere 1.2% dividend yield. The good news here is that analysts still see about $10 worth of upside in the stock. Another boost is that Warren Buffett’s Berkshire Hathaway remains a major long-term shareholder.

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6. Walmart
> Loss in 2014: 2.1%
> Dividend yield: 2.60%
> Share price: $75.60
> Avg. price target: $80.17
> 52-week range: $71.51 – $81.37

Wal-Mart Stores Inc. (NYSE: WMT) is another poor performing Dow stock. While labor woes are a constant struggle, flat and disappointing sales trends are a newer obstacle. A move to compete with dollar stores, such as Dollar General, may not be enough to move the needle. Analysts do see upside, however, and the stock’s forward P/E ratio is only about 14. Another boost is that its 2.6% dividend yield is above some of its peers. Lastly, Walmart has been an aggressive buyer of its own shares in recent years, with spending on buybacks exceeding cash paid for dividends in each of the past three full fiscal years.

5. Exxon Mobil
> Loss in 2014: 3.1%
> Dividend yield: 2.8%
> Share price: $96.03
> Avg. price target: $102.89
> 52-week range: $84.79 – $104.76

Exxon Mobil Corp. (NYSE: XOM) recently fell on hard times after its arctic venture in Russia fell victim to U.S. sanctions. Exxon stock was weak ahead of that news as well, in part due to the declining oil prices from summer’s peak. That drop in price eats directly into the profits of many key wells. Another drag is that Exxon Mobil does not seem to have hit a home run on its natural gas operations — at least not yet. There are some positives for Exxon Mobil: analysts still see upside and Berkshire Hathaway has become a large shareholder. The oil giant also offers a dividend yield of close the 3%, and it has been aggressive in buying back stock over the years.

4. Visa
> Loss in 2014: 4.1%
> Dividend yield: 0.8%
> Share price: $212.46
> Avg. price target: $250.68
> 52-week range: $180.11 – $235.50

Visa Inc. (NYSE: V) has underperformed American Express in 2014, and it holds an even less attractive 0.8% dividend yield. Visa is also far from cheap in valuation at 20 times next year’s expected earnings and almost 25 times trailing earnings. The good news here is that the more than $20 pullback has left much upside in the stock. The company also has massive room to raise its dividend. Other good news is that each new Visa account from emerging and developing markets is one more source of revenue as the world moves further away from cash.

3. General Electric
> Loss in 2014: 4.8%
> Dividend yield: 3.5%
> Share price: $26.02
> Avg. price target: $29.91
> 52-week range: $23.50 – $28.09

General Electric Co. (NYSE: GE) is in a transition period. Recently, the conglomerate reached an agreement to sell its appliances unit to Sweden’s Electrolux and it also began its exit from the U.S. consumer finance with the recent IPO of Synchrony Financial. GE also recently acquired Alstom’s power and grid businesses, although the deal has not yet managed to excite investors. GE leads conglomerates in dividends with its 3.5% dividend yield, and it is also cheap against the market, trading at just over 14 times next year’s earnings estimates. Lastly, the consensus forecast among analysts is for more than 15% upside in share price.

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2. Boeing
> Loss in 2014: 5.0%
> Dividend yield: 2.4%
> Share price: $127.38
> Avg. price target: $152.95
> 52-week range: $113.34 – $144.57

Boeing Co. (NYSE: BA) is having a rough year, with many concerned that aircraft manufacturers could struggle to increase production because of supply chain constraints. Yet, perhaps the biggest sin may simply be that Boeing’s stock nearly doubled in 2013, potentially making investors look elsewhere. However, as airline fleets continue to age, Boeing is making the move to capitalize on the demand, despite economic headwinds. Boeing also recently won a $4.2 billion NASA contract for the space taxi. Plus, Boeing has more than $426 billion in contractual backlog orders. A large pullback now leaves an implied 20% upside.

1. United Technologies
> Loss in 2014: 5.9%
> Dividend yield: 2.2%
> Share price: $105.42
> Avg. price target: $127.24
> 52-week range: $102.21 – $120.66

United Technologies Corp. (NYSE: UTX) has been a laggard in 2014, after rising more than 40% in 2013. The conglomerate’s dividend yield of 2.2%, while not necessarily poor, is hardly the highest in the DJIA. However, a recent $15 pullback in the stock has made United Tech look relatively inexpensive at 14 times next year’s expected earnings. The stock currently is only about $3 above its 52-week low. One issue that could attract new buyers soon is that the analyst community expects almost 20% upside in the stock.