3 Things You Should Know About the New Dow

3. Don’t expect a big dividend boost.
One of the common complaints among the companies getting kicked out of the Dow was that none of them paid particularly high dividends. Unfortunately, none of the incoming stocks are particularly generous with their payouts either. Of the six companies involved in the shift, only outgoing Hewlett-Packard yields more than 2%.

In the long run, though, dividend investors might be happier with the replacements. Both Visa and Goldman have payout ratios of less than 20%, while NIKE, Inc. (NYSE:NKE) weighs in at 30%. That gives those companies much more of a chance to boost their dividends in the future — and especially given the high weights that Goldman and Visa have, their dividends could make the Dow’s overall payout yield soar.

The article 3 Things You Should Know About the New Dow originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Goldman Sachs, Nike, and Visa and owns shares of IBM, Nike, and Visa.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.