Search Site:

Dow Industrial Average’s Top 3 Dividend Companies

By Benjamin Clark

CashPassGo

Dividends are one of the key components of any solid investment strategy.  Benjamin Graham taught that companies that pay dividends are often worthy of further research.  Looking at the Dow Jones Industrial Average components, these 3 companies seem to be the best bet for a second look by dividend investors.

  1. PFE – Pfizer Inc – 5.40% Pfizer passes our tests for the defensive and enterprising investors with a strong balance sheet.  It’d be nice if the earnings were growing a little bit more, but they have been very stable at least.  Our valuation model puts a price of $25 on the company, which puts it at approximately a 28% discount to the value.
  2. JNJ – Johnson & Johnson - 3.14% Johnson and Johnson passes the tests for the enterprising investor but fails for the defensive investor due to the price to book ratio being a little on the high side.  The earnings growth has been strong over the last 10 years and we value it at $97.
  3. PG – Proctor & Gamble – 2.92% Proctor & Gamble has had very strong earnings growth, causing it to pass the test for the defensive investor despite some balance sheet issues (poor current ratio and a lot of debt compared to the current assets).  We value the company at about $107.

As a reminder, all intelligent investors  should do their own research prior to making any purchase and should not rely on anything read on the internet.  That goes for speculators and unintelligent investors as well!

Full Disclosure:  Long PFE.

Photo by DavidDMuir

More on this topic (What's this?)
Dow 10,000: Buy it, Or Sell it? (Investment U, 10/19/09)
The Dow hit 10,000..that is so last century (Intelligent Speculator, 10/16/09)
As the Dow Cracks 10,000… What’s Next for the Market? (Investment U, 10/19/09)
Gold Against the Dow - The Forest (Gold Versus Paper, 10/22/09)
Read more on Dow Jones Industrial Average (DJI), Pfizer at Wikinvest

Related posts:

  1. 10 Dividend Companies for the Enterprising Investor Last month, I introduced the Dividend Portfolio and it turned...
  2. 10 Dividend Companies for the Enterprising Investor – December Update The following screen is the basis of the Dividend Portfolio. ...
  3. Introducing the Dividend Portfolio – 10 Dividend Stocks for the Enterprising Investor On the first Friday of every month, we will screen...
  4. 10 Undervalued Companies for the Enterprising Investor This screen is of the Modern Graham valuation database’s...

Related posts brought to you by Yet Another Related Posts Plugin.

This entry was posted on Tuesday, October 20th, 2009 at 6:00 am and is filed under Screens, Stocks. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

2 Responses to “Dow Industrial Average’s Top 3 Dividend Companies”

  1. Jeroen
    October 21, 2009 at 5:35 am

    Hi,
    First of all, I love to read your site. I always like your valuations. I was wondering whether you might do a valuation of Altria (MO) and also of some good international stocks, like my favourites:
    Nestle
    Royal Dutch Shell (A)
    Unilever NV
    Diageo plc
    GlaxoSmithKline
    Sanofi-Aventis
    AstraZeneca

    Keep up the good work!

    Thanks,
    Jeroen
    Amsterdam, the Netherlands

    #9001
  2. The Wikinvest Daily Angle » Dow Industrial Average’s Top 3 Dividend Companies
    October 23, 2009 at 4:32 am

    [...] Wire member Benjamin Clark of ModernGraham.com. You can read the full article on the Modern Graham Blog. Flash Player 9 or higher is required to view the chart Click here to download Flash Player [...]

    #9006