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DEFINITION of 'Dow Jones Industrial Average (DJIA) Yield'

The Dow Jones Industrial Average (DJIA) yield is the aggregate dividend yield on the 30 stocks that make up the Dow Jones Industrial Average. Investors can calculate the DJIA yield by adding the dividends of all 30 component stocks, dividing the result by the price-weighted DJIA index value and factoring in the Dow multiplier. Many investors use the DJIA yield as a trading indicator. Yields below 3% are considered a selling signal, and yields above 6% are considered a buying signal.

BREAKING DOWN 'Dow Jones Industrial Average (DJIA) Yield'

The DJIA is no longer a purely industrial index; today's DJIA contains healthcare, technology, and financial companies, which traditionally pay lower dividends than mature, industrial-based stocks.  

The following are the DJIA's component companies, as of January 4, 2018:

  • 3M (MMM)
  • American Express (AXP)
  • Apple (AAPL​)
  • Boeing (BA)
  • Caterpillar (CAT)
  • Chevron (CVX)
  • Cisco (CSCO​)
  • Coca-Cola (KO)
  • Disney (DIS)
  • DowDuPont Inc (DWDP)
  • Exxon Mobil (XOM)
  • General Electric (GE)
  • Goldman Sachs (GS)
  • Home Depot (HD)
  • IBM (IBM)
  • Intel (INTC​)
  • Johnson & Johnson (JNJ)
  • JPMorgan Chase (JPM)
  • McDonald's (MCD)
  • Merck (MRK)
  • Microsoft (MSFT​)
  • Nike (NKE)
  • Pfizer (PFE)
  • Procter & Gamble (PG)
  • Travelers Companies Inc (TRV)
  • United Technologies (UTX)
  • United Health (UNH)
  • Verizon (VZ)
  • Visa (V)
  • Walmart (WMT)

Dow Jones Industrial Average (DJIA) Yield and Trading Indicators

As mentioned above, the Dow Jones Industrial Average (DJIA) yield is a trading indicator. Investors use trading indicators in technical analysis to predict the direction of a security price, given a certain condition.

Technical analysts focus on support and resistance levels (areas where stock prices reverse direction) and timing predictions (when pivots could occur).

Technical analysis differs from fundamental analysis, which focuses on a company’s operations, management, and financial statements within the context of the economic environment.

Dow Jones Industrial Average (DJIA) Yield and Market Average

Another measurement that analysts can use to determine the overall health of a market is the market average. To calculate this price level for a specific group of securities, an analyst must sum all current values of the securities and divide them by the total number in the group.

Some market averages are less straightforward to calculate. The Dow Jones Industrial Average, for example, as of July 6, 2018, was 24,487.43. This is far higher than any security generally trades. The denominator of the Dow is adjusted for the stock splits of its components, which have been numerous since the Dow 30 was established in 1928. Today the divided-by number is not 30; it is closer to 0.2.

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