This article discusses the current top 10 dividend yields in the Dow, some related risks and also the well-known high yield investment strategy.
The Dow Jones Industrial Average consist of 30 blue-chip stocks. For dividend investors, this is an interesting list, since all 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. Let’s have a closer look at the top dividend yield.
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, as of Jan. 23, 2019:
| Stock | Ticker | Sector | Dividend yield (%) |
| International Business Machines Corporation | IBM | Technology | 5.13% |
| Exxon Mobil Corporation | XOM | Energy | 4.56% |
| Verizon Communications Inc. | VZ | Communication Services | 4.23% |
| Chevron Corporation | CVX | Energy | 3.99% |
| Pfizer Inc. | PFE | Healthcare | 3.41% |
| Coca-Cola Company | KO | Consumer Defensive | 3.27% |
| Procter & Gamble Company | PG | Consumer Defensive | 3.17% |
| JP Morgan Chase & Co. | JPM | Financial Services | 3.11% |
| Cisco Systems Inc. | CSCO | Technology | 2.95% |
| Merck & Company Inc. | MRK | Healthcare | 2.90% |
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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.
Fundamental metrics:
- Dividend & earnings per share
- Dividend Yield
- Price-to-earnings ratio
- Pay-out ratio
- Beta
Stock price performance metric (Members only):
- 5 years Dividend CAGR
- 5 years performance
- Years of consecutive dividend growth
- 10 year weighted compound annual growth rate (WCAGR / GEOPAK10)
- Win factor
- Loss ratio
- Total return
High dividends and risks
In some cases, even with blue-chip stocks, high dividends reflect risks, which you might not want to take on in your portfolio. An example is General Electric (GE) with its dividend cut in 2017. Before the dividend cut, the average yield was roughly in the range of 2.50% and 3.50%. In 2017 the dividend yield jumped to 5.50% in 2017, making it one of the highest dividend-yielding dow stocks. Since GE’s dividend was no longer in a balanced relationship with its free cash flow, the high yield jump could have been an early warning sign.
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 2019 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.
Also, our monthly newsletter and premium member data will help you to invest smarter.
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