Top 10 Dow Dividend Stocks

These Dow stocks all provide +3% dividends to shareholders

By Jeff Reeves, Executive Editor of InvestorPlace.com

http://invstplc.com/1fxiSxR

High Yield Dividend Stocks in the Dow

dow dividend stocks

High Yield Dow Dividend Stocks

With money market accounts yielding peanuts and bond returns so anemic only deflation will make them profitable, where else can conservative investors turn for low-risk investments? High yield dividend stocks are a great option — especially when they are stable blue chips offering  quarterly paydays.

As we close out a rather volatile 2010 that has seen small gains in the broader stock market, investors who jumped into dividend stocks early this year are probably patting themselves on the back. That’s because even if share prices have been pretty flat, their stocks have paid off with regular dividends of 4% or 5% or even 6% payback on their initial investment.

If you’re looking for big yields, here’s a list of the top 10 dividend stocks in the Dow that may contain some decent plays for your investment portfolio:

#10 – McDonald’s (MCD)
Dow Dividend Stocks - MCD

High Yield Dow Dividend Stocks

  • Market Cap: $81.8 billion
  • Annual Dividend: $2.44
  • Dividend Yield: 3.1%

Fast-food giant McDonald’s (NYSE: MCD) kicks off the list with “only” a 3.1% dividend yield.  2010 has been a great year for MCD, as the stock has jumped +25.5%.  Since September, the stock is up +7.3%.  Sweetening those returns is the nice dividend, which was increased 6 cents per quarter recently.  And since McDonald’s has been offering payments to its shareholders since 1976, you can bet the Golden Arches will be a dividend fallback in 2011 as well.  The next dividend will be paid Dec. 15 to shareholders of record by Dec. 1, so there is still a little time to get in on the next payday.

#9 – Chevron (CVX)

dow dividend Chevron

High Yield Dow Dividend Stocks

  • Market Cap: $166 billion
  • Annual Dividend: $2.88
  • Dividend Yield: 3.4%

Integrated oil and gas company Chevron Corp. (NYSE: CVX) is a true dividend aristocrat, having paid stockholders a dividend for 98 years.  This quarter, Chevron will give stockholders 72 cents a share on Dec. 10 – adding up to a yield close to 3.5%. Since January, CVX’s stock has gained +7.7%.  Likewise, the oil company has beaten earnings estimates two of the last three quarters.  Chevron also announced the discovery of new oil reserves in Western Australia earlier in 2010 and is looking good as inflation could lift crude prices next year.  The company claims that the reserve is the largest they’ve found in that area in over a year, which could really pay off when it is tapped.

#8 – Johnson & Johnson (JNJ)
Johnson and Johnson jnj stock

High Yield Dow Dividend Stocks

  • Market Cap: $173.4 billion
  • Annual Dividend: $2.16
  • Dividend Yield: 3.4%

Johnson & Johnson (NYSE: JNJ) has seen year-to-date returns of -2.1%.  However, the stock has rebounded after a dismal summer, and is up +10.4% since September.  While the news has been mixed, stockholders have been rewarded with a 3.4% dividend yield that they have been receiving every quarter like clockwork. JNJ has been paying a dividend since 1944, and it is almost certain that the dividend will continue to be paid in 2011. Additionally, the company’s CEO announced a company-wide change to improve manufacturing quality after several recalls at the end of the summer. That could mean bluer skies next year for this dividend stock.

#7 – Intel (INTC)
Intel

High Yield Dow Dividend Stocks

  • Market Cap: $117.5 billion
  • Annual Dividend: $0.72
  • Dividend Yield: 3.4%

Intel Corporation (NASDAQ: INTC) made huge waves several months ago, as the chip giant announced it is buying software/security maker McAfee (NYSE: MFE) for $7.7 billion. But don’t think that buyout sucked up Intel’s cash reserves – the company has paid dividends since 1992 and is now one of the best-yielding tech picks on Wall Street. INTC have shown modest returns this year, up +3.4%, so the dividend payout is a nice addition to those ho-hum returns. Intel is set to make its quarterly dividend payment on Dec. 1, and will be dishing out 16 cents per share.

#6 – DuPont (DD)
DuPontLogo

High Yield Dow Dividend Stocks

  • Market Cap: $41.7 billion
  • Annual Dividend: $1.64
  • Dividend Yield: 3.5%

EI duPont de Nemours & Company (NYSE: DD) has made significant strides in 2010. Up +36% since January, DuPont has also beaten earnings estimates four straight quarters. Add that to a dividend yield of 3.5% and DD has some very happy shareholders. In a recent press release DuPont’s CEO attributed 30% of the company’s sales to products developed in the last four years; a sign of the company’s innovation and ability to adapt. That could serve DD well in 2011.  Stockholders will receive their next quarterly dividend of 41 cents on Dec. 14.

#5 – Kraft (KFT)

Kraft Foods Logo

High Yield Dow Dividend Stocks

  • Market Cap: $53 billion
  • Annual Dividend: $1.16
  • Dividend Yield: 3.8%

Packaged food producer Kraft Foods Inc. (NYSE: KFT) has been providing a dividend since 2001.  With a yield of 3.8%, Kraft paid its shareholders a quarterly stipend of 29 cents on Oct. 14 so you’ll have to hang tight for a while for the next payday. But it could be worth your while to get into this stock sooner rather than later. Kraft has had a productive 2010 as the stock has gained +12.4% year-to-date. With four consecutive quarters of better-than-expected EPS, Kraft has momentum on its side. What’s more, the January acquisition of Cadbury could provide extra lift in 2011.

#4 – Pfizer (PFE)

Pfizer pfe stock

High Yield Dow Dividend Stocks

  • Market Cap: $133.4 billion
  • Annual Dividend: $0.72
  • Dividend Yield: 4.3%

Drug manufacturer Pfizer (NYSE: PFE) has had a rough go of it in 2010.  The company’s stock has fallen -9.1% since January, despite beating earnings estimates the last three quarters.  While the stock may be down shareholders can still bank on the large 4.3% dividend yield they received on Sept. 1.  Additionally, in October, Pfizer acquired King Pharmaceuticals, a clinical development company for $3.6 billion that could provide some potential in 2011. At any rate, the plump dividend yield could be worth your while even if shares move sideways for a while.

#3 – Merck (MRK)

merck mrk stock

High Yield Dow Dividend Stocks

  • Market Cap: $104.8 billion
  • Annual Dividend: $1.52
  • Dividend Yield: 4.4%

Healthcare company Merck & Co Inc. (NYSE: MRK) boasts an impressive dividend yield of 4.4% based on current valuations and an annual dividend of $1.52.  However, the stock has underperformed in 2010, falling -5.2% since January.  2010 has been a bumpy ride for the producer of vaccines, medicines, biological therapies and consumer products, and it will be interesting to see whether the stocks bounce back, or continue to slide. Time will tell, though some are optimistic that the 2010 acquisition of Millipore for $6 billion could yield growth next year to offset expiring patents.

#2 – AT&T (T)

att logo

High Yield Dow Dividend Stocks

  • Market Cap: $166.9 billion
  • Annual Dividend: $1.68
  • Dividend Yield: 5.9%

Having paid a dividend for the past 26 years, AT&T (NYSE: T) recently paid a dividend of 42 cents on Nov. 1.  While the service provider’s stock is flat since January (up just +0.1%), it has met or outperformed earnings estimates for four consecutive quarters.   Currently the extremely popular Apple (NASDAQ: AAPL) iPhone is only available on AT&T, lending a large and loyal Apple fan base to the service provider.  However, rumors are circulating that the iPhone will become available on competitor Verizon’s (NYSE: VZ) service sometime next year.  This could cut down on AT&T’s subscriber base significantly. Still, with a nearly 6% yield investors have incentive to bank on this telecom giant.

#1 – Verizon (VZ)

Verizon vz stock

High Yield Dow Dividend Stocks

  • Market Cap: $91 billion
  • Annual Dividend: $1.95
  • Dividend Yield: 6.0%

Verizon (NYSE: VZ) provides the largest dividend yield on this list.  With a whopping 6.0% yield, or $1.95 annual payout, shareholders can not help but be pleased with the company’s dividend payment.   As mentioned, the big rumor in the smartphone industry revolves around the iPhone’s potential migration to Verizon.  This of course would be huge news for the service provider that already carries the popular Blackberry and Android smartphone lines. But regardless of how VZ stock performs in relation to other Dow components next year, you can depend on a healthy dividend yield from this telecom pick in 2011.


Article printed from InvestorPlace Media, https://investorplace.com/2010/11/top-dow-dividend-stocks/.

©2018 InvestorPlace Media, LLC