In this article, we discuss 13 highest yielding dividend stocks in the Dow. You can skip our detailed analysis of high dividend stocks and their performance over the years, and go directly to read 5 Highest Yielding Dividend Stocks in the Dow.
Dividend yield holds significant importance in dividend investing, serving as a key metric for investors. Experts often recommend prioritizing companies that demonstrate consistent growth in their dividend payouts over time. Nevertheless, there is also notable interest among investors in companies offering high dividend yields. Over time, high-yielding stocks and companies with consistent dividend growth have demonstrated comparable performance, showing a close race in their investment returns. The Dow Jones Dividend 100 Index Series employs a distinctive methodology aimed at tracking the performance of 100 stocks with high dividend yields across various markets. These stocks are chosen based on their consistent history of dividend payments and strong fundamental metrics. Over the long term, this index has demonstrated superior yields and comparable capital gains compared to standard benchmarks. According to a report by S&P Dow Jones Indices, between June 30, 2001, and June 30, 2023, the Dow Jones U.S. Dividend 100 Index achieved an annualized total return of 11.7%, surpassing its benchmark, the Dow Jones U.S. Broad Stock Market Index, which yielded 10.2% annually. Similarly, in the international market, the Dow Jones International Dividend 100 Index outperformed its benchmark, the S&P Global Ex-U.S. LargeMidCap, in both price return and total return over the past 15 years.
Heartland Advisors conducted an in-depth analysis utilizing data provided by Kenneth French, sourced from the US Stock Database Center for Research in Security Prices (CRSP) and the University of Chicago Booth School of Business. This dataset encompassed all equity securities listed on major US exchanges, including NYSE, Amex, NASDAQ, and NYSE Arca, spanning from 1928 through 2017. The study focused on examining monthly and annual value-weighted total returns of non-dividend-paying U.S. stocks and five portfolios consisting of dividend-paying stocks. These portfolios were constructed based on dividend yields. The research tracked the performance of each portfolio from January 1928 to December 2017, with dividends reinvested. Notably, the findings revealed that all portfolios comprising dividend-paying stocks outperformed the portfolio comprised solely of non-dividend-paying stocks over the entire period studied. Furthermore, the analysis indicated that, in general, portfolios with higher dividend yields tended to outperform those with lower dividend yields. This suggests a positive correlation between dividend yield and investment performance, with higher-yielding quintiles demonstrating stronger returns compared to lower-yielding quintiles.
The impressive performance of high-yielding dividend stocks has garnered significant popularity among investors, leading many to turn to the Dow Jones Industrial Average as a key source for such investment opportunities. Employing a strategy known as the 'Dogs of the Dow', investors focus on acquiring the highest-yielding stocks within the DJIA. The outcomes of this strategy have been varied and inconsistent over time. According to data sourced from Barron's in one of our articles, over a 20-year period ending in 2023, the Dogs of the Dow strategy yielded an average annual return slightly above 8%, inclusive of dividends. This performance lags behind the S&P 500 by a little over 1% annually. However, when assessing the period from the end of 2003 to 2018, the Dogs of the Dow were actually outperforming the S&P 500 by approximately 1% each year.
Verizon Communications Inc. (NYSE:VZ), 3M Company (NYSE:MMM), and Dow Inc. (NYSE:DOW) are some of the highest-yielding dividend stocks in the Dow among others that are discussed below in this article.
Photo by Dan Dennis on Unsplash
Our Methodology:
For this list, we began with a pool of 30 stocks from the Dow Jones Industrial Average (DJIA) and identified dividend-paying stocks from this selection. As a majority of the stocks in the index offer dividends, we specifically picked the 13 stocks with the highest dividend yields as of February 12. The stocks are ranked in ascending order of their dividend yields. We also mentioned hedge fund sentiment data for these stocks using Insider Monkey's database of Q3 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
13. McDonald's Corporation (NYSE:MCD)
Dividend Yield as of February 12: 2.30%
McDonald's Corporation (NYSE:MCD) is a global fast-food restaurant chain that operates and franchises a wide range of quick-service restaurants. On February 8, the company declared a quarterly dividend of $1.67 per share, which was in line with its previous dividend. Overall, it has been growing its dividends for the past 47 consecutive years, which makes MCD one of the highest yielding dividend stocks on our list. The stock's dividend yield on February 12 came in at 2.30%.
Recently, Morgan Stanley analysts added McDonald's Corporation (NYSE:MCD) to their Fresh Money buy-rated stock list and maintained a $327 price target on the stock.
At the end of Q3 2023, 70 hedge funds tracked by Insider Monkey reported having stakes in McDonald's Corporation (NYSE:MCD), up from 68 in the previous quarter. These stakes have a collective value of over $2.5 billion.
12. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of February 12: 2.38%
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational financial services company that offers a suite of banking services to businesses of all sizes, including lending, treasury services, cash management, and merchant services. The company offers a quarterly dividend of $1.05 per share. With a dividend yield of 2.38% as of February 12, JPM is one of the best dividend stocks on our list.
The number of hedge funds tracked by Insider Monkey owning stakes in JPMorgan Chase & Co. (NYSE:JPM) grew to 109 in Q3 2023, from 106 in the previous quarter. The total value of these stakes is over $6.6 billion. With over 11.3 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
11. Merck & Co., Inc. (NYSE:MRK)
Dividend Yield as of February 12: 2.46%
Merck & Co., Inc. (NYSE:MRK) is next on our list of the highest yielding dividend stocks. The global pharmaceutical company focuses on discovering, developing, manufacturing, and marketing a wide range of healthcare products. It has raised its dividends for 12 years in a row and currently pays a quarterly dividend of $0.77 per share. As of February 12, the stock has a dividend yield of 2.46%.
Insider Monkey's database of Q3 2023 indicated that 85 hedge funds owned investments in Merck & Co., Inc. (NYSE:MRK), up from 78 in the preceding quarter. These stakes have a consolidated value of more than $5.06 billion.
10. Johnson & Johnson (NYSE:JNJ)
Dividend Yield as of February 12: 3.02%
Johnson & Johnson (NYSE:JNJ) is a multinational corporation that operates primarily in the healthcare sector. On January 2, the company announced a quarterly dividend of $1.19 per share, which was consistent with its previous dividend. It holds one of the longest dividend growth track records in the market, spanning over 61 years, which places JNJ on our list of the highest yielding dividend stocks. The stock offers a dividend yield of 3.02%, as of February 12.
At the end of September 2023, 84 hedge funds in Insider Monkey's database held stakes in Johnson & Johnson (NYSE:JNJ), down slightly from 88 in the previous quarter. The total value of these stakes is over $4.1 billion. Among these hedge funds, Fisher Asset Management was the company’s largest stakeholder in Q3.
9. Amgen Inc. (NASDAQ:AMGN)
Dividend Yield as of February 12: 3.08%
Amgen Inc. (NASDAQ:AMGN) is a leading biotechnology company specializing in the development, manufacturing, and commercialization of innovative medicines. The company offers a quarterly dividend of $2.25 per share, having raised it by 5.6% in December 2023. Through this hike, the company achieved its 11th consecutive annual dividend increase. With a dividend yield of 3.08% as of February 12, AMGN is one of the highest yielding dividend stocks on our list.
As of the close of Q3 2023, 60 hedge funds tracked by Insider Monkey reported owning stakes in Amgen Inc. (NASDAQ:AMGN), up from 57 in the previous quarter. These stakes have a collective value of more than $2.16 billion.
8. The Coca-Cola Company (NYSE:KO)
Dividend Yield as of February 12: 3.10%
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) is next on our list of the highest yielding dividend stocks. The company was a part of 57 hedge fund portfolios at the end of Q3 2023, compared with 61 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds have a collective value of over $25 billion.
The Coca-Cola Company (NYSE:KO) offers a quarterly dividend of $0.46 per share and has a dividend yield of 3.10%, as of February 12. The company holds an impressive 61-year track record of consistent dividend growth.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Dividend Yield as of February 12: 3.13%
Cisco Systems, Inc. (NASDAQ:CSCO) is a California-based technology company that designs, manufactures, and sells networking hardware, software, telecommunications equipment, and other high-technology products and services. The company has been rewarding shareholders with growing dividends for the past 16 consecutive years. Currently, it offers a quarterly dividend of $0.39 per share and has a dividend yield of 3.13%, as of February 12.
With a collective stake value of over $1.6 billion, 64 hedge funds in Insider Monkey's database owned positions in Cisco Systems, Inc. (NASDAQ:CSCO). In comparison, 55 funds held stakes in the company in the previous quarter.
6. International Business Machines Corporation (NYSE:IBM)
Dividend Yield as of February 12: 3.57%
International Business Machines Corporation (NYSE:IBM) is a multinational technology company that offers a wide range of products and services in various industries. As of February 12, the stock has a dividend yield of 3.57% and it pays a quarterly dividend of $1.66 per share. The company's dividend growth streak currently spans over 28 consecutive years. It ranks sixth on our list of the highest yielding dividend stocks in the Dow.
According to Insider Monkey's database of Q3 2023, 53 hedge funds owned stakes in International Business Machines Corporation (NYSE:IBM), growing from 51 in the preceding quarter. The total value of these stakes is roughly $843 million. Among these hedge funds, Marshall Wace LLP owned the largest stake in the company in Q3.
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Disclosure. None. 13Highest Yielding Dividend Stocks in the Dowis originally published on Insider Monkey.
