3 Dow Dividends That Shouldn't Go Overlooked

AT&T, Verizon, and Chevron provide high dividend yields and have businesses that will be around for decades.

Apr 18, 2014 at 3:30PM

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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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