The Dow Jones Industrial Average (^DJI +1.24%) may be the most elite club in the stock market.
The vaunted index holds only 30 blue chip stocks, making it a great source if you're looking for reliable industry leaders that pay dividends. In fact, one time-tested investment strategy known as the Dogs of the Dow calls for buying stock in the 10 highest dividend-yielding Dow Jones stocks and rebalancing annually.
Let's take a look at the three top Dow Jones Industrial Average dividend stocks to see if any are worth buying.
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1. Verizon: 6.9% dividend yield
Verizon (VZ +0.21%) has long been the top dividend payer on the Dow and is a popular choice among dividend investors as it competes in a telecom triopoly with AT&T and T-Mobile in an industry with high barriers to entry.
Verizon currently offers a dividend yield of 6.9%. However, the business has struggled to grow as T-Mobile has gobbled up market share, and Verizon's stock performance has been underwhelming. Over the last four years, the stock price is down 33%, though it has bounced off its low in 2023.
The company made a bad bet on C-band and millimeter wave spectrum that doesn't serve its 5G network well. It spent $52 billion on C-band network infrastructure, a move that allowed T-Mobile to grab market share.
NYSE: VZ
Key Data Points
Growth has been sluggish as operating revenue rose just 0.6% in 2024 to $134.8 billion, and adjusted earnings per share (EPS) fell from $4.71 to $4.59.
Verizon is acquiring Frontier Communications in order to improve its position in the broadband market and expand its fiber optic network, but it will come at a cost, and the company already has $118 billion in debt.
Given the company's lack of growth, market share losses, and debt burden, investors can find better dividend stocks elsewhere despite Verizon's high yield.
2. Chevron: 4.6% dividend yield
Following ExxonMobil's removal from the Dow in 2020, Chevron (CVX 3.88%) is the only oil major in the index.
Energy stocks are known for paying juicy dividends, and Chevron is no slouch in that department with a 4.6% dividend yield. However, the stock has also underperformed as oil and gas companies face declining oil consumption in much of the world due to environmental and fuel economy standards and the rise of alternatives like electric cars. Additionally, investors generally perceive it as a declining industry. Chevron stock is up 39% over the last five years, significantly underperforming the S&P 500, which is up 86%. Even with dividends reinvested, Chevron still loses.
NYSE: CVX
Key Data Points
Chevron continues to generate billions in free cash flow, though its adjusted EPS fell from $11.36 to $9.72. The company had a record year for production, but its profits are tied to the market price of oil over which it has little control.
For investors willing to stomach the cyclicality of the oil and gas industry, Chevron isn't a bad choice, but there are income stocks with better long-term prospects.
3. Johnson & Johnson: 3.4% dividend yield
Johnson & Johnson (JNJ 0.50%) is the safest of these three stocks. In fact, it's one of the safest stocks on the market, even after spinning off its consumer-products business, built around products like Tylenol and Band-Aid, into Kenvue.
It's one of only two U.S. stocks with a AAA credit rating from S&P Global -- the other being Microsoft. It's now focused on medical devices and pharmaceuticals following the Kenvue spin-off, and has made several acquisitions, including Shockwave Medical, Protelogix, and V-Wave.
NYSE: JNJ
Key Data Points
Revenue for 2024 rose 4.3% to $88.8 billion, and adjusted EPS rose 11% to $5.79. The company also touted significant progress in pipeline drugs Rybrevant and Lazcluze.
Looking ahead, Johnson & Johnson called for 2025 operational sales growth of 2.5% to 3.5% and 8.7% growth in the adjusted EPS at the midpoint of its guidance of $10.75 to $10.95.
Johnson & Johnson has the best growth opportunities of these three stocks, especially as it focuses on acquisitions, and it's the most recession-proof of the group as healthcare spending isn't generally sensitive to the overall economy.
If you're looking for a safe, stable dividend stock to own, Johnson & Johnson looks like a good choice.
