The Five Worst Performing Stocks on the Dow

24/7 Wall St.

The Dow Jones Industrial Average is up more than 19% so far this on the year. The DJIA, an index of 30 stocks from some of the country’s largest companies, is a widely followed indicator of the stock market’s performance.

The Dow’s growth in recent months has largely been a result of the country’s improving economy. Unemployment continues to fall, the housing market is recovering and the country’s largest companies, including Nike, Boeing and American Express, have benefited from recovering consumer confidence. As a further boon to the market, interest rates remain low and quantitative easing has, according to many market followers, driven investors’ appetites for stocks.

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Click here to see The Five Worst Performing Stocks on the Dow

However, several DJIA stocks simply are not living up to the performance of the broader stock market. 24/7 Wall St. reviewed year-to-date share price changes and dividend yields for all 30 Dow Jones stocks. We identified the five companies that have posted the worst total returns, after accounting for dividends paid, for the year.

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Each of these five companies has failed to deliver strong returns for different reasons. Some of the companies have been hampered by their international operations. IBM, which is down nearly 6% for on the year, has seen slowing demand for its hardware, especially from China. Mining business at Caterpillar, shares of which are down more than 6%, has suffered from the end of the global commodities boom.

However, some companies also face challenges domestically. Coca-Cola has had to contend with a decline in soda drinking by Americans. Exxon Mobil’s refining profits have slipped as the difference in price between domestic and foreign oil has narrowed.

To identify the worst-performing stocks in the Dow Jones Industrial Average, 24/7 Wall St. reviewed total return figures, which include price changes and dividends paid, for each of the 30 component stocks. The DJIA is a price-weighted index, meaning the relative prices of each component affect their weighting in the index. Total return figures for individual companies are are from FINVIZ.

These are the five worst performing stocks on the Dow.

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5. Coca-Cola
> Total return: 11.67%
> Price: $39.63
> Price-to-earnings ratio: 20.6
> Dividend yield: 2.8%

Coca-Cola Co. (KO) shares have returned just under 12%, including dividends, this year. The company’s stock has recovered from recent lows of roughly $37; however, it still remains below its high this year of $43.43. Coca-Cola has had to contend with weak demand for soda among U.S. consumers, as well as weaknesses in emerging markets’ currencies. This week, Coca-Cola announced it would issue $5 billion in new debt, through a combination of both fixed-rate and floating-rate securities.

4. McDonald’s
> Total return: 11.49%
> Price: $96.03
> Price-to-earnings ratio: 17.6
> Dividend yield: 3.4%

Despite a total return of 11.5%, McDonald’s Corp. (MCD) has lagged most of the Dow so far in 2013. The company’s recent earnings releases have disappointed Wall Street. For the third quarter of its current fiscal year, McDonald’s announced sales that missed analyst estimates. Sales at restaurants open for at least 12 months rose just 0.9% from the year before. Struggles at the global fast-food leader have been blamed by some on the company’s inability to expand its menu. By comparison, Yum! Brands’ Taco Bell chain has sold $1 billion worth of its new Doritos Locos tacos, while Wendy’s recently introduced a pretzel burger as part of its plans to boost sales.

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3. Exxon Mobil
> Total return: 4.70%
> Price: $88.85
> Price-to-earnings ratio: 11.2
> Dividend yield: 2.9%

Oil prices have exceeded $100 a barrel for much of the year, which may make the relatively weak performance of Exxon Mobil Corp. (XOM) seem surprising. However, the oil industry has been less profitable for refiners, including Exxon Mobil, as price differences between U.S. and foreign oil have narrowed. The company’s production of oil and gas also has slowed recently. Still, shares have returned nearly 5% for the year, including dividends.

2. IBM
> Total return: -4.64%
> Price: $180.28
> Price-to-earnings ratio: 14.4
> Dividend yield: 2.1%

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This year has been filled with bad news for International Business Machines Corp. (IBM). The company’s stock has fallen by 4.64%, after accounting for dividends paid, while the Dow has risen by more than 19%. As a result of its falling price, IBM is no longer the heaviest-weighted DJIA stock. Visa has taken that position, with a share price more than $20 higher than IBM’s. In its third-quarter earnings release, IBM announced its revenue had declined by 4% from the year before. The company hopes to increase operating earnings to $20 per share by 2015. To help the company achieve that target, IBM recently announced a $15 billion share buyback, in addition to a previously authorized $5.6 billion buyback. At current prices, this would allow the company to purchase more than 10% of its outstanding shares.

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1. Caterpillar
> Total return: -4.92%
> Price: $83.50
> Price-to-earnings ratio: 15.9
> Dividend yield: 2.8%

Caterpillar Inc. (CAT) has been the worst performing DJIA stock, with a -4.92% return so far this year. The heavy equipment maker continues to suffer from a decline in demand for mining equipment, and it recently cut its sales and profit forecast for 2013. Last quarter, Caterpillar’s sales fell in every geographic region except Latin America. Shares are currently trading near $83.50, down from a 52-week high of nearly $100. Recently, analysts at J.P. Morgan and Raymond James downgraded the stock.

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