The 30 companies in the Dow Jones Industrials (DJINDICES:^DJI) are among the cream of the crop in blue-chip stocks, and they all share one thing in common: They pay dividends. Yet even in this elite group, you can find a wide disparity across the spectrum in terms of how much these stocks pay their shareholders. A few pay between 4% and 5%, while some are a lot closer to the 1% level.

The top-yielding Dow stocks all have dividends that are well above the average for the entire stock market. Yet there are some reasons for income investors to pause to consider them more closely before simply buying them. In some cases, high dividends reflect risks you might not want to take on in your portfolio.

The top 10 dividend yields in the Dow

Here are the 10 highest-yielding stocks in the Dow Jones Industrials, as of Feb. 27:

Stock

Dividend Yield

Verizon Communications (NYSE:VZ)

4.9%

ExxonMobil (NYSE:XOM)

4%

Chevron (NYSE:CVX)

4%

IBM (NYSE:IBM)

3.9%

Pfizer

3.7%

Coca-Cola

3.5%

Merck

3.5%

Procter & Gamble

3.4%

General Electric (NYSE:GE)

3.3%

Cisco Systems

2.6%

Data source: Yahoo! Finance.

In general, the members of the Dow that you'll find on this list are consistent with what you'd expect at a time when industrial stocks are going through a cyclical upswing. Sometimes, the consumer-goods, pharmaceutical, and telecom companies that traditionally have higher dividend yields give way to industrial powerhouses during cyclical downturns because prices of industrial stocks fall to such low levels that their yields look enticing. That's no longer the case, with former high-yielding industrials now sporting dividends much closer to the market average after impressive share-price advances.

Blue background with word DIVIDENDS and sector symbols arranged as square tiles on a slanted field.

Image source: Getty Images.

The impact of energy

However, there are reasons to be cautious about some of the top-yielding Dow stocks. The energy sector is well represented on the list, with both integrated oil majors in the top three and General Electric making the top 10, as well. For ExxonMobil and Chevron, there's been an obvious challenge from oil prices that remain well below the triple-digit levels that the companies enjoyed throughout much of the early 2010s.

What some investors don't realize is that both ExxonMobil and Chevron have had to work increasingly hard to replace their production with new reserves. That might be good news for the energy market more broadly in the long run because of the potential upward impact on pricing, but eating too far into reserves will threaten the dominance that Chevron and ExxonMobil have enjoyed for decades.

General Electric has a long story of its own, but what dividend investors need to realize first and foremost is that its yield makes the top 10 in the Dow, even though the industrial conglomerate slashed its dividend payout by 50% just a few months ago. After the company shifted away from a financial concentration toward energy in the aftermath of the 2008 recession, the decline in oil prices proved that strategy to be another ill-timed move. General Electric now faces the daunting task of figuring out how to reposition itself yet again, and the announcement that it would have to restate financial results sent another shockwave through the investing world, and sent the stock toward new multi-year lows.

Other challenges facing the Dow's top dividend stocks

Elsewhere, you can find evidence that other companies are facing challenges. IBM has been engaged in a long struggle to keep up with the times, watching some of its most important contributors historically to its overall performance lag due to increased competition and technological advances that have rendered older products obsolete. Only in the past quarter has Big Blue managed to post its first year-over-year revenue increase in five years, and even with those gains, falling segment sales in key areas like cloud platforms and global business services point to the need for further action. A depressed share price has helped to push IBM's yield higher, but substantial risks remain.

Even Verizon, which frequently tops this list, has a tough time ahead. The evolution of 5G communications means that the wireless-network provider will have to go through another costly upgrade cycle, and political issues have arisen that could threaten Verizon's ability to control its own destiny as the industry's leader. The upsurge in the Internet of Things and other initiatives that rely on wireless availability should help to support Verizon's business, but the huge capital expenditures involved in competing effectively in wireless telecom always introduce an element of risk that most other Dow components don't have.

Tread carefully

High-yield stocks can be lucrative for dividend investors, but there are always potential traps for the unwary. As long as you understand exactly what challenges these high-yielding Dow stocks have before making an investment, you'll be in a better position to decide whether the returns are worth the risk.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool is short shares of General Electric and IBM. The Motley Fool recommends Cisco Systems. The Motley Fool has a disclosure policy.