The Dow Jones Industrial Average consists of 30 blue chip companies, most of which pay dividends. However, only two stocks in the index yield over 5% – Verizon Communications and Dow. Despite its name, Dow is not related to the Dow Jones Industrial Average. Dow is an undervalued high-yield dividend stock with a 6.5% yield.
Dow recently discussed the demand dynamics for ethylene and polyethylene, noting that cash margins in China remain negative. However, the company has a cost advantage and is confident in turning the corner. Dow reiterated its guidance for achieving $6.4 billion in EBITDA for 2024, a significant improvement from the previous year.
The company has been investing in low-carbon efforts and new markets, aiming for growth in capacity, EBITDA, and emission reduction by 2030. Despite high capital expenditures, Dow has reduced its debt significantly over the past five years.
Dow has a clear capital-return policy, targeting a certain payout of operating net income through dividends and share buybacks. The stock has a 5.3% forward yield, with potential for growth as earnings increase. Analysts see an attractive valuation for Dow, making it a compelling option for income and value investors.
In conclusion, Dow offers a reliable high yield with long-term growth potential. While short-term stock performance may be stagnant, the company’s strategic investments and financial goals make it a worthwhile consideration for investors.