With just 30 component stocks, the Dow Jones isn't a very broad stock index. And since it's full of the big blue chips that never wiggle more than a percent or two in a single trading session, it's often seen as a stodgy grouping of companies without much to offer investors.
But while the Dow certainly has its detractors among short-term traders with a need for instant gratification, these big-name blue chips have a lot of appeal to conservative investors. And some of the biggest selling points for Dow stocks are their healthy dividends.
In fact, the "worst" dividend stock out of the top 10 high dividend yield components returns an even 3 per cent annual rate. If you're looking for stable stocks with a hefty dividend payout, the Dow is full of them. We start with the worst of the 10 and end with the best.
Johnson & Johnson
Market Cap: $180.3-billion
Annual Dividend: $1.96
Dividend Yield: 3.0 per cent
Health care products giant Johnson and Johnson is the company behind profitable brands like Tylenol, Sudafed and Listerine. JNJ has posted strong quarterly profits in each of the last four quarters, topping expectations every time, and should perform well again when it reports earnings on April 20.
Johnson and Johnson boosted its quarterly dividend in spring of 2009 for the forty-seventh consecutive year, and it's realistic to think that the company will do so again at some point in 2010. With popular products projected to rake in over $64 billion in revenue this year, JNJ will have plenty of profits to share.
Market Cap: $125.1-billion
Annual Dividend: $1.76
Dividend Yield: 3.2 per cent
Coca-Cola raised its dividend in mid-February by over 7 per cent after a strong showing at the end of 2009. The strength of Coke's international sales continue to be a huge source of growth for this company. It its fourth-quarter earnings report, Coke's profit soared 55 per cent in the fourth-quarter compared with 2009, thanks to a 5 per cent increase in worldwide beverage sales. Coca Cola will report earnings again on April 20.
Market Cap: $74.4-billion
Annual Dividend: $2.20
Dividend Yield: 3.2 per cent
McDonald's has raised its dividend each and every year since paying its first dividend in 1976 and remains one of the most reliable dividend providers on Wall Street.
The largest fast-food chain in the world continues to be as dominant as ever, with almost 32,000 locations worldwide. This global reach has been great for McDonald's recently, since a slight drop in U.S. sales was more than offset with an impressive fourth-quarter growth rate of 4.3 per cent in Europe, Asia, the Middle East and Africa. MCD stock reports earnings on April 21.
Market Cap: $163.9 billion
Annual Dividend: $2.72
Dividend Yield: 3.4 per cent
In August 2009, Energy giant Chevron declared a 4.6 per cent increase to its quarterly dividend to 68 cents per share (or $2.72 a year). As crude oil prices have broken through $85 and look to move higher, CVX stock could see bigger gains ahead and more incentive for another dividend increase.
The company has consistently increased its dividends for more than two straight decades. Chevron reports first-quarter earnings on April 30.
Market Cap: $46 billion.
Annual Dividend: $1.16
Dividend Yield: 3.8 per cent
After consistently raising dividends every year since it went public in 2001, Kraft Foods hit the brakes in 2009 by freezing its dividend.
However, there may be a boost in the works sometime soon to the company's already high 3.9 per cent dividend yield. The world's second-largest food company reported strong fourth-quarter profits in February that were quadruple the numbers from last year thanks to a successful three-year restructuring of its business.
It is set to report first-quarter earnings on May 6. The company's recent acquisition of British snack maker Cadbury should also keep KFT firmly in the black with plenty of profits to share.
Market Cap: $112.3 billion
Annual Dividend: $1.52
Dividend Yield: 4.1 per cent
Merck is one of the biggest names in big pharma, with blockbuster drugs that include the heart disease treatment Zocor, asthma and allergy drug Singulair and osteoporosis medication Fosamax.
But while these treatments are relatively new discoveries, Merck is an old company with a long history of dividend payouts -- more than five decades to be exact. After buying out competitor Schering-Plough in mid-2009, MRK has tapped into a greater range of products and research that should renew the company's momentum.
With a 4.1 per cent dividend yield, investors have a healthy incentive to go along for the ride. Merck reports earnings May 4.
Market Cap: $137.1 billion
Annual Dividend: $0.72
Dividend Yield: 4.2 per cent
One of the biggest names in big pharma, Pfizer is the brains behind blockbuster cardiovascular medications Lipitor (for elevated cholesterol), Norvasc (for high blood pressure) and Caduet (for angina).
Pfizer is a high-yield dividend stock that has moved up among Dow Jones ranks. PFE just paid a dividend in early March of 18 cents on the quarter, a 12.5 per cent increase over the previous quarter and boosting its annualized dividend to 72 cents. Pfizer reports earnings alongside fellow big pharma dividend stock Merck on May 4.
Market Cap: $35.5 billion
Annual Dividend: $1.64
Dividend Yield: 4.2 per cent
DuPont just paid out a first-quarter dividend of 41 cents per share in March, marking the 418th consecutive quarterly dividend since the company's first dividend in the fourth quarter of 1904.
While many things on Wall Street are uncertain, DD's dividend is all but a sure thing. This high yield dividend stock is scheduled to report first quarter earnings on April 27 and is looking to build on a record of four straight earnings surprises.
Market Cap: $83.8 billion
Annual Dividend: $1.90
Dividend Yield: 6.3 per cent
In September of 2009, Verizon's Board approved a quarterly dividend increase of 3.3 per cent as a sign that the company was getting back on track. This marked the third consecutive year of a Verizon quarterly dividend increase.
As Verizon sells the iPhone this summer it should see continued success. And even if it takes a while to prime the pump, shareholders can take comfort in VZ's high dividend yield of over 6 per cent.Watch for Verizon earnings on April 22.
Market Cap: $154.9 billion Annual Dividend: $1.68
Dividend Yield: 6.4 per cent
From the end of 1999 up until December 2009 this dividend growth stock has delivered a negative annual average total return of about -11 per cent to its shareholders. Ouch!
But on the plus side, AT&T remains one of the biggest dividend providers in the Dow.
While many traders will scoff at a "lost decade" in the stock market, an annual payout of $1.68 per share as of this writing (and a track record of slow and steady dividend growth) is certainly nothing to scoff at. Look for T stock earnings on April 21.