The Best Dividends on the Dow

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) is known for containing nothing but the bluest of the blue-chip stocks. These are companies that are vital to our economy and are viewed as more resistant to the ups and downs of the market than your average stock.

As a result, when it comes to payouts, the Dow Jones Industrial Average contains some of the best dividend stocks on the market. Here are the three that will pay you the most.

AT&T (NYSE: T  ) has the best dividend yield on the Dow at 5.1%. The company, as it is today and in previous forms, has a 74-year history of paying a dividend.

One of the reasons investors can be confident in this dividend is AT&T's position in the wireless business. It holds a quasi-duopoly in wireless with Verizon Wireless, a position that allows the two companies to invest billions in upgrading infrastructure and keeping competitors at bay. As you can see below, despite the recession, AT&T and Verizon both still hold a captive audience for their products, resulting in little revenue variation. After all, could you give up your cellphone?

T Revenue (TTM) Chart

T Revenue (TTM) data by YCharts.

Speaking of Verizon Communications (NYSE: VZ  ) , the former AT&T segment spun off when the government split up the monopoly is the No. 2 dividend on the Dow. Its 4.2% dividend yield is more than a 30-year Treasury bond pays, and the payout goes back to 1984, when Verizon was known as Bell Atlantic. After buying the 45% of Verizon Wireless it didn't already own, Verizon has a dominant position in wireless, setting up dividend payouts for years to come.

The pharmaceutical business has been through its ups and downs over the past few years, but Merck (NYSE: MRK  ) still holds the third-best dividend on the Dow with a 3.8% yield. The sector may be facing changes, but with a long line of pharmaceuticals, consumer goods, and animal health products, Merck is prepared to weather the storm. Investors could even see a boost if Merck spins off noncore assets.

3 more top dividends
Can't get enough of dividend stocks? If you're looking for some long-term investing ideas that will pay you back for decades, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2721861, ~/Articles/ArticleHandler.aspx, 10/23/2014 10:14:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement