We recently compiled a list of the 13 Highest Yielding Dividend Stocks in the Dow.In this article, we are going to take a look at where The Procter & Gamble Company (NYSE:PG) stands against the other high yield dividend stocks.
Dow is one of the most well-known and influential stock market indices globally. It monitors the performance of 30 publicly traded companies on US stock exchanges, covering a broad array of industries. In the past 12 months, the index has surged by over 15%, compared with a nearly 25% return of the broader market.
Today, tech stocks have dominated the market, as seen by the NASDAQ's nearly 30% gain over the past year, outperforming both the Dow and the broader market. However, the Dow's underperformance in this period contrasts with its historical performance. A report from Barron’s highlighted that in 1978, 1980, and 1992, the Dow outpaced the Nasdaq by at least seven percentage points. The most notable period of Dow dominance occurred during the dot-com bubble's collapse, with 12 instances of outperformance between 1999 and 2002.
When comparing the Dow to the broader market, the Dow has also shown strong results. According to S&P Global, from the past 30 years up until June 2021, the market returned 10.6%, while the Dow slightly exceeded that with an 11.16% return. This outperformance is largely due to the Dow's stable, industry-leading companies that offer reliable dividends and steady yields.
Investing in high-yielding Dow Jones stocks can be an appealing strategy for those seeking reliable income and potentially higher returns. When selecting dividend stocks for their portfolios, investors often focus on dividend yields. However, it's important to recognize that companies with high yields but lacking financial stability may be at risk of cutting dividends, especially amid global economic challenges and rising interest rates. Therefore, investment strategies that target high yields should also emphasize the financial strength and stability of the companies involved.
The Dow Jones Dividend 100 Index tracks the performance of 100 high-dividend stocks selected for their reliable dividend payments and strong financial fundamentals. In any income-focused strategy, investors typically aim for both yield and capital appreciation. The Dow Jones Dividend 100 Indices have consistently provided higher yields and comparable capital gains over the long term when compared to their benchmarks. According to S&P Dow Jones Indices, between June 30, 2001, and June 30, 2023, the total return of the index, assuming dividends were reinvested, averaged 11.7% annually, outperforming the Dow Jones US Broad Stock Market Index, which returned 10.2% during the same period.
When evaluating dividend yields, many investors adopt the 'Dogs of the Dow' strategy, which involves picking the ten Dow stocks with the highest dividend yields. While this strategy hasn't performed well in recent years, it has historically outpaced its benchmark over the long term. Michael O'Higgins discovered that, over a 26-year period, a hypothetical portfolio of high-dividend Dow stocks achieved an annualized return of 17.9%. This performance outperformed the Dow Jones Industrial Average’s annualized return of 13% during the same period. According to the Wall Street Journal, the investment strategy outperformed the DJIA in 2022 for the first time since 2018. This happened as investors turned to safer options amidst the market's unpredictable swings. Given this, we will take a look at some of the highest yielding dividend stocks in the Dow.
Our Methodology:
For this article, we examined the companies within the Dow Jones index and identified 13 stocks with the highest dividend yields as of January 16. It's worth noting that the majority of companies in the Dow Jones are dividend payers. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
Is Procter & Gamble Company (PG) the Best Dividend King Stock to Invest in Now?
A happy couple viewing the products of this household and personal product company in a mass merchandiser store.
The Procter & Gamble Company (NYSE:PG) ranks tenth on our list of the best highest yielding dividend stocks in the Dow. On January 14, the multinational consumer goods company declared a quarterly dividend of $1.0065 per share, which was in line with its previous dividend. Overall, the company holds one of the longest history of increasing its dividends, spanning over 68 years. The stock offers a dividend yield of 2.52%, as of January 16.
The Procter & Gamble Company (NYSE:PG) is grabbing investors' attention because of its strong operational performance. In the past 12 months, the stock has surged by over 7%. Despite inflationary pressures, the company has consistently delivered strong performance by effectively implementing significant price increases, achieving organic sales growth in every quarter of fiscal 2023.
In fiscal Q1 2025, The Procter & Gamble Company (NYSE:PG) reported revenue of $21.7 billion, a 1% decrease compared to the same period last year. The company generated $4.3 billion in operating cash flow, with an adjusted free cash flow productivity of 82%, meeting expectations. P&G also continued to return value to shareholders, distributing $4.4 billion through dividends and share buybacks.
In addition to strong performance in its recent quarter, The Procter & Gamble Company (NYSE:PG) also provided an upbeat outlook for fiscal 2025, anticipating sales growth between 2% and 4%, along with a 10% to 12% increase in diluted net EPS, compared to $6.02 in fiscal 2024. Should the company reach the midpoint of its forecast, it would set a new record with a diluted EPS of $6.68 for fiscal 2025.
The Procter & Gamble Company (NYSE:PG) was included in 68 hedge fund portfolios at the end of Q3 2024, up from 64 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds are worth more than $8.8 billion in total. Ken Fisher's Fisher Asset Management was the company's leading stakeholder in Q3.
Overall PG ranks 10th on our list of the highest yielding dividend stocks in the Dow. While we acknowledge the potential for PG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
