Fun Financial Dow Facts
May 20th 2013 2:03PM
Updated May 20th 2013 3:20PM
The Dow Jones Industrial Average is just about the most elite club on the market. The 30 component stocks made their way in through decades of rock-solid performance, a sterling business reputation, and a certain je ne sais quoi that sets the cream apart from the crop.
But even a top-shelf collection like this one contains a wealth of paradoxes. For example, Bank of America is a traditional value and income stock - with a nearly nonexistent dividend and stellar share price growth. The megabank is still clawing its way back from the brink of oblivion, thanks to the 2008 subprime implosion.
AT&T and Verizon pay the richest dividend yields on the Dow right now - but they are among the worst when it comes to growing those payouts. That's a truly mature industry at work. Meanwhile, nobody boosts dividend policies quite like insurance giant UnitedHealth but its yield still ranks among the thinnest on the Dow. That's a nice problem to have, since it stems from a rapidly rising share price.
Bank of America and Alcoa look downright pricey if you focus on their trailing P/E ratios. But turn your eye to forward estimates instead, and their nosebleed valuations drop to eminently reasonable 12 and 15 times forward estimates, respectively. If analysts are correct about the next-year prospects of these beaten-down stocks, then it takes more than a pesky economy crisis to keep a good stock down.
The article Fun Financial Dow Facts originally appeared on Fool.com.Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Bank of America. Motley Fool newsletter services have recommended buying shares of UnitedHealth Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.