Dividend stocks are great because your cash outlay (stock purchase) turns into a cash inflow (dividend) within a relatively short period of time. The Dow Jones Industrial Average
Make the phone company pay you
AT&T and Verizon offer the highest yields in the Dow: 5.6% and 5.1%, respectively. Both businesses are capital intensive -- it isn't cheap to build a network -- but once the assets are in place, both businesses benefit from recurring revenues. The wireline business is declining, but that is offset by growth in wireless communications, in which AT&T and Verizon are particularly strong. Both have increased annual dividends significantly over the past five years -- AT&T (12%) and Verizon (10%).
Profit on growing health-care expenses
Merck, Pfizer, and Johnson & Johnson offer respective yields of 4.4%, 3.9%, and 3.6%. All three face regulatory risks associated with the Patient Protection and Affordable Care Act (PPACA), but in my opinion, that risk is already priced into the stocks. If I had to pick one, I'd choose scandal-plagued Johnson & Johnson. Although it offers the lowest yield, it has been the most persistent in increasing its dividend -- 9% annually over the past five years.
It's not too late to profit from Thomas Edison
Too-big-to-fail General Electric
Invest alongside Warren Buffett
Warren Buffett isn't necessarily a dividend investor, though he certainly likes to cash those dividend checks. He primarily invests in high-quality businesses with a sustainable competitive advantage. If he invests in a stock, it's worth consideration. Enter Procter & Gamble
Buy a "super major" oil stock
California-based Chevron is the highest-yielding (3.1%) energy stock in the Dow, and it's grown its dividend by 9% annually over the past five years. It's also the cheapest stock in the Dow based on price-to-earnings. If you're looking to generate income and profit on rising energy prices, Chevron is worth consideration.
The future is plastics
Dow stocks and beyond
If you're constructing a dividend portfolio, I'd take a close look at the 10 stocks above. But I also recommend taking a look at one of our newest special free reports: "Secure Your Future With 9 Rock-Solid Dividend Stocks." It details a group of dividend stocks, including familiar blue chips and some you may not have heard of, that you can count on to pay you back for decades to come. Get your free copy.
Brendan Mathews owns no shares of any of the companies mentioned. The Motley Fool owns shares of Intel and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, Pfizer, Intel, Procter & Gamble, and Chevron and creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.