10 Highest-Paying Dividend Stocks in the Dow

Dividend Stock Shares

All 30 stocks in the Dow Jones Industrial Average pay dividends, but not all of them are particularly high dividend yields. Sixteen of the 30 stocks in the Dow yield 3% or more, but because of the Dow’s selectivity, it can be a great place to turn for yield if you’re seeking Dividend Aristocrats (stocks that have raised their dividends at least 25 years in a row) or high dividend blue chip stocks. With that in mind, what are the highest-paying dividend stocks in the Dow today?

Highest-Paying Dividend Stocks In the Dow

  1. Exxon Mobil (XOM)
  2. Dow Inc (DOW)
  3. Chevron (CVX)
  4. IBM Corp (IBM)
  5. Boeing (BA)
  6. Pfizer (PFE)
  7. Verizon (VZ)
  8. Walgreens Boots Alliance (WBA)
  9. Coca-Cola (KO)
  10. JPMorgan Chase (JPM)

Like the index itself, the highest-paying dividend stocks in the Dow are well-established, high-quality American companies. Many are over 100 years old. For some of them, however, their best days are in the rearview mirror. Some have very high dividend payout ratios that show they’re returning most of their cash to shareholders at this point—rather than reinvesting in their business.

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Below, I take a closer look at each of the highest-paying dividend stocks in the Dow and separate the dogs from the dividend champs. 

1. Exxon Mobil (XOM)

Dividend Yield 9.1%

The first of two oil and gas companies on our list, Exxon is larger than Chevron (CVX), below, but has a distinctly higher dividend yield. Like the rest of the energy sector, Exxon faces a challenging economic climate due to collapsing oil prices, and XOM stock fell 54% from peak to trough in the first three months of this year. Exxon has elected to maintain its annual dividend increases, however, keeping its record of 37 years of consecutive dividend growth intact. This means it’s still on the Dividend Aristocrats list, although its dividend payout ratio hit 154% at one point.

This year analysts expect XOM’s revenues to fall 15% year over year, due largely to the impact of multi-decade low oil prices. Longer-term predictions are far more positive, though, as analysts foresee EPS growth in 2021 average about 172% and 82% the following year as global oil and gas demand are expected to rise. The stock, while choppy, looks like it may have bottomed in late March. However, be warned that the connection to oil prices means XOM can be volatile and the stock’s last sustained rally ended in April a year ago.

2. Dow Inc. (DOW)

Dividend Yield 9.2%

Dow is a commodity chemical producer, which many investors consider to be both a “contrarian cyclical” play as well having short-cycle exposure. In the wake of the recent market rout, some analysts have already upgraded DOW based on its operating leverage and excellent management. While DOW’s stock price fell 58% in the recent market rout, its long-term history of continually increasing its dividend makes it a worthwhile consideration for income-oriented investors.

Revenues for DOW are expected to decline 6% year over year in 2020, but analysts foresee a return to revenue growth in 2021 (+4% est.), and a projected 24% increase in per share earnings next year as global demand for commodities chemicals should increase once the coronavirus fallout has been completely contained.

3. Chevron (CVX)

Dividend Yield 7.4%

Chevron is one of the world’s largest oil companies, with energy exploration, production, refining, trading and transport operations that circle the globe. Founded in 1879, Chevron has paid dividends since 1970.

Like the rest of the energy sector, Chevron’s stock tanked in early 2020, but may have bottomed in late March, after losing 55% of its value.

Chevron has a steady record of dividend payments despite crises in the energy sector, most recently increasing its dividend 8% in early 2020, Although the stock’s dividend payout ratio has popped over 100% several times, CVX is currently on the Dividend Aristocrats list.

Revenues are expected to fall 27% this year, but the contraction will slow and possibly increase next year, with analysts estimating 8% year over year growth in 2021. EPS is expected to shrink 85% this year, but again, to grow 194% in 2021. The stock is equally choppy, and has a tendency to surge and crash with oil prices. But once oil prices finally bottom out, CVX could be worth a look for investors with strong stomachs.

4. IBM Corp. (IBM)

Dividend Yield 5.9%

Big Blue has been a laggard performer among Dow 30 stocks in recent years and fell 40% from its high to low during the early 2020 selling panic. IBM’s revenues have been declining since peaking at $107 billion in 2011. IBM was slow to adapt as computing and data storage moved to the cloud, and competitors were quick to swoop in. IBM reacted by winding down older operations and investing in faster-growing businesses, but margins and cash flow eroded despite their best efforts, and the stock peaked in 2013. The company has increased the dividend each year anyway, but IBM’s dividend payout ratio has come down considerably in recent quarters. Historically, IBM has maintained a payout ratio of between 20% and 30%, but had a 39% payout ratio in Q4 2019 compared to the average 76% payout ratio in the previous four quarters.

Things could be starting to turn around for IBM, however, as revenues are expected to continue growing (slightly) this year and next year after several years of shrinkage. EPS are also expected to rise by single-digits this year and next. However, I’d wait to see the start of an uptrend in the stock before committing.

5. Boeing (BA)

Dividend Yield 5.2%

Boeing took a drubbing early this year, falling 74% from last year’s high to the Q1 2020 market low. But in the final days of March, BA’s share price rose by an impressive 80% and was one of the Dow 30’s top performers. Fiscal stimulus was a major reason behind the turnaround, as the aerospace firm is eligible to receive a piece of the $500 billion made to distressed companies by the U.S. Congress in the wake of the coronavirus pandemic.

Boeing’s management has indicated the company will turn its attention to the investment-grade corporate debt market once it has finalized its corporate strategy. Consequently, analysts have begun upwardly revising BA’s price targets based on improved business prospects (assuming short-term liquidity threats can be alleviated).

Revenues for BA are expected to expand impressively in the next few years, starting with 11% growth in 2020 and 30% in 2021. Analysts expect essentially flat per-share earnings growth for 2020, but foresee an astounding 716% EPS increase in 2021. Given its strong fundamental backdrop compared to many of its Dow 30 peers, BA could well be a prime turnaround story in the making.

6. Pfizer (PFE)

Dividend Yield 4.9%

The sixth-highest dividend yield in the Dow belongs to Pfizer. Originally founded as a chemical manufacturer by cousins Charles Pfizer and Charles F. Erhart in 1849, Pfizer is now one of the world’s largest pharmaceutical companies. Pfizer’s blockbuster drugs include Advil, Lipitor and Viagra, as well as some of the most-prescribed treatments for bacterial infections, pain, inflammation, depression, anxiety and other common conditions.

Pfizer was a Dividend Aristocrat until the company was forced to cut its dividend payout during the 2008 financial crisis. The company’s dividends have been gradually increasing in the years since, but the ride has been bumpy.

Sales and earnings have fluctuated, and both revenues and EPS are both expected to decline this year before rebounding in the single digits next year. Of significance, PFE is actively researching a coronavirus vaccine along with a partner firm, and it may be ready for clinical trials by late April. That said, buy-and-hold investors may have to deal with a fair amount of volatility in the near term.

7. Verizon (VZ)

Dividend Yield 4.7%

Telecoms typically pay high dividends, and the highest dividend yield in the Dow almost always belongs to Verizon. Verizon is the largest U.S. wireless carrier, but faces stiff competition from number two AT&T (T) and its smaller (but newly merged) competitors Sprint (S) and T-Mobile (TMUS). All four telecoms have spent recent years lowering prices and sweetening plans to lure customers, which has resulted in good deals for consumers, but has cut into corporate revenues and earnings. Verizon’s sales peaked in 2015 and saw lower revenues in 2016-2017, but top-line growth has been on the upswing since 2018 and looks to continue this trend in 2020 and 2021.

For its part, Verizon is investing heavily in forward-looking ventures, including the “internet of things” and digital content. But the stock was hit by the early 2020 coronavirus panic. Keep in mind, however, that VZ has a tendency to outperform other Dow 30 components in periods of economic weakness, thanks largely to its healthy subscription-based business. In the Great Recession of 2008-2009, for instance, VZ experienced a price drop of only 33% compared with a far more devastating 50% drop for the broad market. More recently, VZ’s price declined by only 16% in Q1 2020, which is a far smaller decline than that suffered by most of its Dow peers.

The yield is also safe—VZ’s dividend payout ratio is 50%—but that’s probably the primary reason to own the stock right now.

8. Walgreens Boots Alliance (WBA)

Dividend Yield 4.42%

Goldman Sachs analysts recently classified WBA as a “dividend all-star,” and for good reason. The second-largest pharmacy store chain in the U.S., WBA’s dividend yield has risen at a compound annual rate of nearly 7% since 2015, and it has a multi-decade record of continual dividend increases. While the company’s earnings have been flat in recent years, revenue continues to grow by around 5% per year, and its earnings tend to hold up well during economic downturns. That’s definitely a selling point for investors in 2020 given the widespread recession fears surrounding the COVID-19 pandemic.

For 2020, WBA is one of the few Dow 30 stocks expected to see an increase in revenues. Analysts estimate revenues this year of $140 billion; and while the firm’s EPS is expected to decline 2% this year, analysts see per share earnings increasing 3% in 2021. Given WBA’s tendency to profit in a climate of slow economic growth, investors would do well to give it a closer look.

9. The Coca-Cola Company (KO)

Dividend Yield 3.9%

Coca-Cola is a blue-chip stock, a Dividend Aristocrat, and a household name. But revenues have been declining since 2013, as consumers become more nutritionally savvy. Sales of bottled water—Coke owns the Dasani brand—are strong, but are still a small piece of the pie compared to soda sales. Coke is pulling out all the stops to keep their flagship brands relevant, expanding Diet Coke in flavors like Strawberry Guava and Blueberry Acai, and launching Coke with coffee and Coke Energy in select international markets. These efforts are slowly translating into moderately stronger sales, and KO’s revenues appear to have finally bottomed out after several years of decline.

The good news for income investors is that the 38% stock price slump in early 2020 has pushed KO’s dividend yield to a multi-year high of 3.9%. Of course, KO’s dividend payout ratio is also high, and is currently 77%. Coca-Cola seems unlikely to let their Dividend Aristocrat status lapse, though, and if analysts are correct in their predictions that both revenues and earnings per share will increase this year and in the next few years to come, KO may regain its status as a blue chip worth holding for the long term.

10. JPMorgan Chase (JPM)

Dividend Yield 3.7%

JPM has a knack for outperforming many of its investment banking peers in a low interest rate environment. Its consistent strategy of making strategic investments in the technology sector has paid off in recent years, and despite the share price setback in early 2020, the firm appears to be on the road to recovery.

So committed is JPM to sustaining growth despite the weak economic environment that the firm’s management stated that technology investment spending would rise by $1.4 billion, to $12 billion, in 2020. Meanwhile, revenue is expected to post a fractional increase this year and rise 2% in 2021. Analysts forecast EPS to see 2% year over year growth in 2020 and 7% growth the following year. The firm’s dividends have also been rising in the last several years, and given its strong fundamental backdrop, JPM’s stock price should be able to bounce back once the economy regains its footing.

Bottom Line on the Highest-Paying Dividend Stocks in the Dow

Going purely by the numbers, those are the highest-paying dividend stocks in the Dow Jones Industrial Average. Not all of them are gems right now. Some of them are in shambles, and are using a high dividend yield as their only remaining life raft.

If you want the best dividend stocks right now, I highly recommend subscribing to our Cabot Dividend Investor advisory, where chief analyst Tom Hutchinson has a portfolio full of dividend-paying stocks that offer generous yields and strong share price growth.

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Timothy Lutts

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*This post has been updated from an original version, published in 2018.


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