The Dow Jones Industrial Average consists of 30 blue-chip stocks. For dividend investors, this is an interesting list, since 29 of the 30 companies pay a dividend. Many stocks are able to increase their dividend for several consecutive years. The top-yielding Dow stocks all have dividends that are well above average yields in the stock market. Therefore they could be a reason for income investors to consider buying them, next to the fact that the dow stocks are also blue chips.
On August 31st, 2020, Exxon Mobil (XOM), Pfizer (PFE), and Raytheon (RTX) are replaced by Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
The Dow Jones 30 Dividend spreadsheet contains the following fundamental and stock price performance metrics for each stock in the Dow Jones Industrial Average index.
- Dividend & earnings per share
- Dividend Yield
- Price-to-earnings ratio
- Pay-out ratio
This article will discuss the composition of the Dow Jones Industrial Average, a list of the highest-yielding Dow stocks, and the dogs of the dow investment strategy.
The 30 stocks of the Dow Jones Industrial Average
Today, there are 30 stocks that make up the Dow Jones Industrial Average (DJIA). The total has grown over time: Initially, the index had just 12 components. The DJIA was first calculated in 1896 and created by The Wall Street Journal and Dow Jones & Company (co-founder Charles Dow). Although it is one of the most commonly followed equity indices, many consider the Dow not to be a good representation of the U.S. stock market because it only includes 30 large-cap companies, is not weighted by market capitalization.
Here is some history on how the DJIA components have evolved since 2015:
- On March 19th, 2015, Apple Inc. replaced AT&T, which had been a component of the DJIA since November 1916. Apple became the fourth company traded on the NASDAQ to be part of the Dow.
- On September 1st, 2017, DowDuPont replaced DuPont. DowDuPont was formed by the merger of Dow Chemical Company with DuPont.
- On June 26th, 2018, Walgreens Boots Alliance (WBA) replaced General Electric (GE), which had been a component of the DJIA since November 1907.
- On April 2nd, 2019, Dow Inc. replaced DowDuPont. Dow, Inc. is a spin-off of DowDuPont, itself a merger of Dow Chemical Company and DuPont.
- on August 31st, 2020, Exxon Mobil (XOM), Pfizer (PFE), and Raytheon (RTX) are replaced by Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
The top 10 dividend yields in the Dow
The average dividend yield for the Dow-30 is 2.62%, which is already a good rate. Also, the average number of consecutive years of dividend increase is high with almost 22 years. Getting close to the dividend aristocrats’ status. Here are the 10 highest-yielding stocks in the Dow Jones Industrials, (screener and data updated daily):
|Name||Ticker||Sector||Dividend Yield (%)|
|International Business Machines Corporation||IBM||Technology||4.61|
|Verizon Communications Inc.||VZ||Communication Services||4.51|
|Walgreens Boots Alliance||WBA||Consumer Defensive||3.82|
|Merck & Co., Inc||MRK||Healthcare||3.31|
|Dow Inc||DOW||Basic Materials||3.18|
|Coca-Cola Company (The)||KO||Consumer Defensive||2.95|
Members can use our Dow-30 stock screener for more metrics.
The ‘Dogs Of The Dow’ approach
The Dogs of the Dow is an investing strategy that consists of buying the 10 stocks with the highest dividend yield out of the Dow 30 at the beginning of the year. The portfolio should be adjusted at the beginning of each year to include the 10 highest yielding stocks. It’s important to note that this is a long-term investment strategy. In the long run, the average return of the Dogs should outperform the Dow-30. Read more about the Dogs of the Dow 2020 or check out our Dogs of the Dow portfolio tracker.
Other Sources of Dividend Investment Ideas
The Dividend Aristocrats list is not the only way to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market on the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 year of dividend can be an list of inspiration.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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