The Dogs of the Dow aren't necessarily the worst performers of the prior year, but they pay the highest the dividend yields. We wanted to review the 10 Dogs of the Dow to see what the outlook and what the expectations could look like for 2008 after their performances in 2007 or longer. Some of the old Unit Investment Trusts that trade the Dogs were the top 5 yielding DJIA components, although most go for the 10 Dogs with the highest dividends.
Keep in mind that these could change if any of the DJIA components rally sharply or fall off a cliff in the last week. So how this is broken down is pretty simple. We broke these down with closing prices and dividend yields based upon last Friday's (DEC. 21) close. We then put in the average analyst price targets we found and rounded that out, and then in parenthesis we put in what would be the raw expected share price appreciation if the stock hit the target without taking the dividend into consideration. Then we added in our own commentary with suppositions and some conjecture for what could make or break their stock performance in 2008. With some of these pullbacks and some of the targets here, there are many that could have stellar 2008 returns.
Below we have outlined each DJIA component in the Dogs of the Dow, the closing price on Friday, December 21, 2007, the dividend yield, an average analyst price target from Wall Street, and what the approximate percentage gain would be if that target is reached. Here are the likely 2008 DOGS OF THE DOW:
We believe that the pole position in the Dogs of the Dow is going to ultimately cut its dividend in 2008, regardless of what it says today and regardless of other pundits defending the dividend. We think Wall Street is actually discounting that already. Vikram Pandit has a lot of work ahead of him. Look for serious layoffs and 2008 to be yet another restructuring year, and we think at least one unit gets shed by mid-2008.