Are you looking for high-yield stocks? If so, it pays to look at Dow Jones Industrial Average components. These stocks are cheaper than S&P 500 stocks and have higher average yields. In this article, I will explore the three highest-paying dividend stocks in the Dow Jones.
Verizon
Verizon (NYSE: VZ) is a U.S. telco stock that has a 6.6% dividend yield. The company is the second-largest telco in the United States. The reason why VZ has such a high yield is because its stock has been beaten down. Since its US$62 peak in 2019, it has fallen 35% in price. However, it has paid steady dividends over that period, with its dividend up 2% on a compounded annual growth rate (CAGR). On a cumulative basis, the dividend has risen 10%. Today, with VZ’s earnings going down, investors might not get much of a capital gain. However, the dividend yield is enticing.
3M
3M Co (NYSE: MMM) is an engineering firm that manufactures practical items for household use. Examples include duct tape, glue and cleaning supplies. The company has a number of patents that help ensure that the margins it gets from selling its products are fairly high.
Unfortunately, 3M is not the most profitable company in the world. Its net income was negative in the trailing 12-month period, as well as in 2022. This isn’t the first Dow Jones stock I’d buy. However, it does have a sumptuous 6.5% dividend yield.
Dow Inc
In a fantastic name/category synergy, Dow Inc (NYSE: DOW) is itself among the top three Dow Jones Industrial Average dividend stocks. It is a materials science company that mainly supplies chemicals for industrial end users. Examples include pesticides, makeup, and silicon foam control agents. Unfortunately, DOW’s performance over the last five years has been rather poor. Over that period, the company’s revenue declined 2%, and its earnings fell 33% CAGR. If current trends persist, DOW stock will perform poorly. Nevertheless, it has a tempting 5.23% dividend yield.
Canadian stocks in the Dow Jones Industrial Average?
The three highest-yielding Dow Jones Industrial Average stocks certainly aren’t looking great right now. However, if you’re Canadian, you might want to buy a Canadian high-yield stock instead of one of these. As luck would have it, I found a TSX stock that has both a high yield and growth!
If so, you might want to consider a company like BCE (TSX: BCE). BCE is a telco like Verizon, the highest-yielding stock in the Dow Jones Industrial Average. BCE has a 7.92% dividend yield at today’s prices, which is even higher than Verizon’s yield. And, as a Canadian stock, BCE incurs no dividend withholding taxes for Canadian shareholders.
That’s not to say that everything is all sunshine, lollipops, and rainbows with BCE. The company has a media division that, like most traditional media outlets, is seeing its revenue decline due to advertisers leaving for digital platforms. However, on a whole-company basis, profit is rising modestly while free cash flow is growing at a frothy 243% year-over-year pace.
Telco stocks got beaten down last year because they were heavily indebted, meaning that the Bank of Canada’s interest rate hikes caused their interest expenses to surge. Now, though, the shares are so cheap that they may be worth it. I don’t own any, but I’d be perfectly comfortable holding BCE stock if I had some.
