For investors looking for high-yielding dividend stocks to buy, the highest dividend payers in the Dow Jones Industrial Average (DJIA) is a common starting point. Below is a list of the 10 highest yielding Dow stocks.
Today, the average yield of the 10 highest-yielding Dow Jones Industrial Averages stocks is 5.2%. You can see their individual yields in the table below. Click the company name for more information on each stock. To view the entire list of Dow stocks ranked by yield, click here.
Highest Yielding Dow Jones Industrial Average Stocks
|Company Name||Dividend Yield|
|Dow Inc. (DOW)||8.3%|
|ExxonMobil Corp. (XOM)||8.1%|
|Chevron Corp. (CVX)||5.8%|
|International Business Machines Corp. (IBM)||5.4%|
|Walgreens Boots Alliance Inc. (WBA)||4.4%|
|Verizon Communications (VZ)||4.3%|
|Pfizer Inc. (PFE)||4.0%|
|3M Corp. (MMM)||4.0%|
|JPMorgan Chase & Co. (JPM)||3.9%|
|Caterpillar Inc. (CAT)||3.7%|
Selecting dividend stocks on the basis of dividend yield alone hasn’t been a winning investment strategy historically. As we pointed out in our post on the highest yielding S&P 500 stocks, a strategy that buys stocks with the highest yields in the market underperforms a strategy that buys companies with above-average yields.
Why the Highest-Yielders Underperform
The reason the highest-yielders underperform? Low quality and dividend cuts. Companies with the highest yields may be lower quality businesses or the companies most at risk of slashing their dividends.
Does investing in the highest-yielding Dow stocks have similar drawbacks? In some sense it does, but Dow stocks are essentially a pre-screened list of 30 of the biggest most established blue-chip stocks traded in the U.S. When a Dow stock has a high-yield, it may be a sign of value as opposed to a signal of risk. That is not always true, as investors who owned shares of former Dow component General Electric in 2017 can testify.
The historical record does show that buying the highest yielding Dow stocks is a better strategy than buying the highest yielding stocks in the broader market.
Historical Performance of Dow Highest Yielders
Investing in the 10 highest-yielding Dow stocks each year and rebalancing annually is known as the Dogs of the Dow strategy. The strategy was pioneered and popularized by Michael B. O’Higgins.
Since year-end 1997, the Dogs of the Dow strategy has kept pace with the Dow Jones Industrial Index. Obviously buying only 10 stocks isn’t the best way to diversify a stock portfolio. The Dogs of the Dow Strategy we back-tested has about the same return as the Dow Jones Industrial Average, but it is more volatile and it has more single stock risk.
Table: Dogs of the Dow Performance vs. Dow Jones Industrial Average
|Year||Dogs of the Dow Strategy||Periodic Return (INDU)|
At Young Research, we advise many of the highest-yielding Dow Stocks in our Retirement Compounders® Strategy (RCs). The RCs is a more diversified portfolio (more than 10 stocks) of global companies that not only pay high dividends but are also likely to increase their dividends over-time.
The 10 Highest Yielding Dow Jones Industrial Average Stocks
Dow Inc. combines one of the broadest technology sets in the industry with asset integration, focused innovation and global scale to achieve profitable growth and become the most innovative, customer-centric, inclusive and sustainable materials science company. Dow’s portfolio of performance materials, industrial intermediates and plastics businesses, delivers a broad range of differentiated science-based products and solutions for our customers in high-growth segments, such as packaging, infrastructure and consumer care. Dow operates 113 manufacturing sites in 31 countries and employs approximately 37,000 people.
ExxonMobil, one of the world’s largest publicly traded energy providers and chemical manufacturers, develops and applies next-generation technologies to help safely and responsibly meet the world’s growing needs for energy and high-quality chemical products.
Chevron is one of the world’s leading integrated energy companies. The company is involved in virtually every facet of the global energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemicals and additives; generates power, and develops and deploys technologies that enhance business value in every aspect of the company’s operations.
Incorporated in 1911 as the Computing-Tabulating-Recording Company (C-T-R), in 1924, C-T-R became International Business Machines Corporation (IBM). Today IBM is the world’s largest information technology company and the 8th largest corporation in the world.
Walgreens Boots Alliance (Nasdaq: WBA) is a global leader in retail and wholesale pharmacy, touching millions of lives every day through dispensing and distributing medicines, its convenient retail locations, digital platforms and health, and beauty products. The company has more than 100 years of trusted health care heritage and innovation in community pharmacy and pharmaceutical wholesaling. Including equity method investments, WBA has a presence in more than 25 countries, employs more than 440,000 people and has more than 18,750 stores.
Verizon Communications is a global communications and technology leader active in 4G and 5G wireless networks, broadband and fiber optics, video and advertising platforms, and internet of things.
Pfizer’s global portfolio includes medicines and vaccines as well as many of the world’s best-known consumer health care products. Every day, Pfizer colleagues work across developed and emerging markets to advance wellness, prevention, treatments, and cures that challenge the most feared diseases of our time.
3M Co. is a technology company, which manufactures industrial, safety and consumer products. It operates through the following five segments: Industrial, Safety & Graphics, Health Care, Electronics & Energy, and Consumer. 3M’s success is driven by our 93,000 3Mers in 87 countries who work across a network of business segments and areas.
JPMorgan Chase & Co. is a leading global financial services firm with assets of $3.1 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. JPMorgan Chase & Co. serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands.
For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2018 sales and revenues of $54.722 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three primary segments – Construction Industries, Resource Industries and Energy & Transportation – and also provides financing and related services through its Financial Products segment.
|International Business Machines Corp.||IBM||5.4%|
|Walgreens Boots Alliance Inc.||WBA||4.4%|
|Verizon Communications Inc.||VZ||4.3%|
|JPMorgan Chase & Co.||JPM||3.9%|
|The Coca-Cola Co.||K||3.6%|
|Travelers Cos. Inc.||TRV||3.5%|
|Cisco Systems Inc.||CSCO||3.5%|
|Merck & Co. Inc.||MRK||3.1%|
|Raytheon Technologies Corp.||RTX||3.1%|
|Goldman Sachs Group Inc.||GS||2.8%|
|Johnson & Johnson||JNJ||2.7%|
|Procter & Gamble Co.||PG||2.7%|
|American Express Co.||AXP||2.0%|
|The Walt Disney Co.||DIS||1.7%|
|UnitedHealth Group Inc.||UNH||1.5%|
|The Boeing Co.||BA||0.0%|