The Dow Jones Industrial Average (DJINDICES: ^DJI) is an index of 30 top blue chip stocks. These are leaders in their fields, and since they’re mostly large and established, they lean toward value, not growth. Indeed, 29 of them pay a dividend, with the exception being Amazon, which became a Dow component only a few weeks ago.
Investing in Dow Jones stocks can be a smart move as these are companies with leading positions that provide strong moats protecting them from competition and potential. But being in the Dow doesn’t automatically make a stock a buy. Even a high dividend yield doesn’t make a stock a default buy. In fact, it’s often a reason for caution, since it could be caused by a declining stock price.
The three top-yielding Dow Jones stocks as I write this are Verizon (NYSE: VZ), 3M (NYSE: MMM), and Dow Inc. (NYSE: DOW). Let’s see if they look like worthy investments right now.
1. Verizon: 6.4% yield
Verizon stock hasn’t delivered for investors over the past few years; it’s down 28% over the past five years, and that includes a 13% gain year to date. Even with dividends included, it has seriously underperformed the broader market as measured by the S&P 500 index over the past five years.
However, as the year-to-date gain demonstrates, things might be changing at Verizon. Some of Verizon’s older businesses have been sluggish, but its investment in its 5G infrastructure, which is the newest available technology, is paying off.
Wireless services revenue increased 3% year over year in the fourth quarter, and the company is now benefiting from its investments with higher free cash flow and lower expenditures. It added 413,000 net broadband subscribers in the 2023 fourth quarter, representing the fifth consecutive quarter over 400,000.
Verizon has raised its dividend for 17 years, which is a reliable track record and an important consideration when choosing dividend stocks. If you’re looking for passive income, Verizon can provide that, and it doesn’t look like the dividend is in any danger.
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2. 3M: 5.8% yield
3M has also disappointed investors over…
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