The Dow Jones Industrial Average (DJINDICES:^DJI) and stock markets as a whole have been up and down throughout 2014. Economic data has been decent, but not great, and earnings haven't been inspiring.

^DJITR Chart

^DJITR data by YCharts.

After a sharp rise in the markets in 2013 that was driven almost entirely by multiple expansion, the market has taken a breather so far this year. What's interesting is that there are some rock-solid dividends hiding in plain sight for investors looking for value in a high-priced market.


The Dow's top dividend stocks
Two of the best dividends on the Dow come from telecom. AT&T (NYSE:T) is the top dividend, offering a 5.2% yield, and Verizon (NYSE:VZ) pays 4.5%. They're able to pay these dividends because they run stable, high-margin businesses that constantly generate cash. But why are their yields much higher than other dividend stocks?

Investors have been concerned that a price war will erupt between telecom companies, holding back their stocks in the last few years. The number of mobile subscribers isn't growing like it used to, and rivals T-Mobile and Sprint are both trying to grow subscriber numbers by offering lower prices and even buying out competing contracts for new customers.


Verizon's hold on mobile isn't going away soon, despite the efforts of competition.

Some customers may defect, but the lead AT&T and Verizon have built is more enduring than a few months or quarters can show. These two companies have spent billions building out their mobile networks; in the long term that investment will keep customers paying premium prices for the service they need around the country.

The next best dividend on the Dow comes from Chevron (NYSE:CVX), which pays investors a 3.4% annual yield but faces its own set of challenges. It's become more costly to extract new oil, and customers are no longer willing to pay ever-increasing amounts of money for gasoline. In fact, oil consumption in developed countries has been in decline over the past decade, which puts Chevron's business in long-term decline.

In Chevron's case, the high dividend may be more of a sign of an expected decline in earnings than anything else. Still, Chevron isn't going anywhere soon, and this is a safe dividend until we start using something other than oil, which is still decades away.

Top dividend stocks for the next decade
One of the best -- and easiest -- ways to create long-term wealth is through dividends like these. Knowing how valuable building a great dividend portfolio can be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Travis Hoium manages an account that owns shares of AT&T and Verizon Communications. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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