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What a quarter it was on the Dow Jones Industrials Average (INDEX: ^DJI ) . Just when it looked like the index was going to close out the period down more than 4%, the market rallied 2.2% on Friday and whittled the quarterly loss down to a manageable 2%. The catalyst for the cheer was an agreement by European leaders to prop up ailing banks. Leaders debated until 4:30 in the morning before deciding to allow countries to recapitalize banks directly without increasing their deficit.
The past three months have been a serious roller coaster ride. The Dow took off its rose-colored glasses from the first quarter and crashed through all of May, falling below its opening price for the year. Then the index whipsawed higher through June to bring us just shy of 13,000 points yet again. So how did it do it?
It was a tug-of-war all the way through between volatile and cyclical stocks, and steady-eddy big domestic dividends. Though we still closed the quarter down, it would have been much worse if not for a few strong performances.
On the hero column we have the two highest dividend yielders on the index, AT&T and Verizon (NYSE: VZ ) , posting the first and third largest gains, respectively. It's easy to see why, too. In times of crisis, those near 5% dividend yields can mean the difference between a good night's sleep and cold sweats. More importantly though, both of these companies generate 100% of their revenue from the United States, which has shown itself to be surprisingly resilient in a sea of economic uncertainty.
Wal-Mart (NYSE: WMT ) was the real savior, though. Despite being the second best performing Dow stock, because of its larger weighting on the index it drove twice as many positive points as AT&T. This dividend aristocrat collects 78% of its operating profit here in the U.S., so it's easy to see what all the hype was about.
The anchors on the index included Caterpillar (NYSE: CAT ) , JPMorgan Chase, and Cisco (Nasdaq: CSCO ) . Caterpillar was the biggest loser, down almost 20% for the quarter. Because of its high index weighting, it singlehandedly accounted for nearly all the Dow's quarterly drop as well. Being a cyclical and globally focused stock, Caterpillar is going to swing in exaggerated patterns to the market, and it could just as easily rocket higher if the global economy improves.
Cicsco has been nailed by weak business spending in Europe, and JPMorgan has become a Wall-Street dunce after its enormous, and growing, $2 billion trading loss.
It's quarters like this that demonstrate how valuable great dividend stocks are in long-term wealth building. But a great dividend is characterized by more than a high yield alone. That's why JPMorgan didn't make our list of "The 3 Dow Stocks Dividend Investors Need."
After taking an in-depth look at all 30 Dow components, though, I'm confident that these three are essentials for any long-term investor. Read more about these top three stocks that you can buy today.