In this article, we will take a look at some of the best highest yielding dividend stocks in the Dow.
The Dow Jones Industrial Average, or simply the Dow, is one of the most well-known and influential stock market indices globally. It monitors the performance of 30 publicly traded companies on US stock exchanges, covering a broad array of industries. In the past 12 months, the index has surged by over 15%, compared with a nearly 25% return of the broader market.
Today, tech stocks have dominated the market, as seen by the NASDAQ’s nearly 30% gain over the past year, outperforming both the Dow and the broader market. However, the Dow’s underperformance in this period contrasts with its historical performance. A report from Barron’s highlighted that in 1978, 1980, and 1992, the Dow outpaced the Nasdaq by at least seven percentage points. The most notable period of Dow dominance occurred during the dot-com bubble’s collapse, with 12 instances of outperformance between 1999 and 2002.
When comparing the Dow to the broader market, the Dow has also shown strong results. According to S&P Global, from the past 30 years up until June 2021, the market returned 10.6%, while the Dow slightly exceeded that with an 11.16% return. This outperformance is largely due to the Dow’s stable, industry-leading companies that offer reliable dividends and steady yields.
Investing in high-yielding Dow Jones stocks can be an appealing strategy for those seeking reliable income and potentially higher returns. When selecting dividend stocks for their portfolios, investors often focus on dividend yields. However, it’s important to recognize that companies with high yields but lacking financial stability may be at risk of cutting dividends, especially amid global economic challenges and rising interest rates. Therefore, investment strategies that target high yields should also emphasize the financial strength and stability of the companies involved.
The Dow Jones Dividend 100 Index tracks the performance of 100 high-dividend stocks selected for their reliable dividend payments and strong financial fundamentals. In any income-focused strategy, investors typically aim for both yield and capital appreciation. The Dow Jones Dividend 100 Indices have consistently provided higher yields and comparable capital gains over the long term when compared to their benchmarks. According to S&P Dow Jones Indices, between June 30, 2001, and June 30, 2023, the total return of the index, assuming dividends were reinvested, averaged 11.7% annually, outperforming the Dow Jones US Broad Stock Market Index, which returned 10.2% during the same period.
When evaluating dividend yields, many investors adopt the ‘Dogs of the Dow’ strategy, which involves picking the ten Dow stocks with the highest dividend yields. While this strategy hasn’t performed well in recent years, it has historically outpaced its benchmark over the long term. Michael O’Higgins discovered that, over a 26-year period, a hypothetical portfolio of high-dividend Dow stocks achieved an annualized return of 17.9%. This performance outperformed the Dow Jones Industrial Average’s annualized return of 13% during the same period. According to the Wall Street Journal, the investment strategy outperformed the DJIA in 2022 for the first time since 2018. This happened as investors turned to safer options amidst the market’s unpredictable swings. Given this, we will take a look at some of the highest yielding dividend stocks in the Dow.
Our Methodology:
For this article, we examined the companies within the Dow Jones index and identified 13 stocks with the highest dividend yields as of January 16. It’s worth noting that the majority of companies in the Dow Jones are dividend payers. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
13. JPMorgan Chase & Co. (NYSE:JPM)
Dividend Yield as of January 16: 1.98%
JPMorgan Chase & Co. (NYSE:JPM) is an American multinational financial services and investment banking company. The company recently announced its Q4 2024 earnings and reported revenue of $43.74 billion, which showed a 13.4% growth from the same period last year. Its payment fees experienced double-digit growth for the fourth consecutive quarter, contributing to a record $18.1 billion in Payments revenue for the year. In the Consumer and Community Banking (CCB) segment, the company continued to expand its customer base across Consumer Banking, Business Banking, Card, and Wealth Management. For instance, nearly 2 million net new checking accounts were opened in 2024.
Investors are drawn to JPMorgan Chase & Co. (NYSE:JPM) due to its diverse revenue streams, which make it an attractive investment choice. By operating across consumer and commercial banking, capital markets, and asset management, the company’s diversification allows strong performance in one area to balance out challenges in another, contributing to greater overall stability. In the past 12 months, the stock has outperformed the market, surging by over 51%.
JPMorgan Chase & Co. (NYSE:JPM) is one of the best dividend stocks on our list as the company has been paying regular dividends to shareholders since 1972. It has also remained committed to its shareholder return, returning $3.5 billion to investors through dividends in the most recent quarter. It currently offers a quarterly dividend of $1.25 per share and has a dividend yield of 1.98%, as of January 16.
At the end of Q3 2024, 105 hedge funds tracked by Insider Monkey held stakes in JPMorgan Chase & Co. (NYSE:JPM), compared with 111 in the previous quarter. The collective value of these stakes is over $8.6 billion. Among these hedge funds, Fisher Asset Management was the company’s leading stakeholder in Q3.
12. 3M Company (NYSE:MMM)
Dividend Yield as of January 16: 2.01%
3M Company (NYSE:MMM) is an American multinational conglomerate that operates in a wide range of industries. The company earned a reputation for its commitment to research and development, focusing on creating unique products that offer pricing power and help expand market share. This sales growth drives margin improvement as higher volumes boost efficiency, leveraging 3M’s global reach. Moreover, new product introductions (NPI) often come with enhanced pricing capabilities. Altogether, NPI growth represents an opportunity not just for increasing revenue, but also for enhancing profit margins.
While 3M Company (NYSE:MMM) now presents a positive image, it faced significant challenges last year. These included spinning off its healthcare division and reducing its dividend by 50%. In addition, it has been grappling with ongoing legal and regulatory pressures for several years. However, the company is actively addressing these issues with a strategic plan to manage the related expenses. This improvement is reflected in the stock’s performance as it gained nearly 55% in the past 12 months.
3M Company (NYSE:MMM) also reported stable earnings in the third quarter of 2024. The company’s revenue came in at.07 billion, which showed a modest growth of 1% from the same period last year. The revenue also beat analysts’ estimates by $10.66 million. The company also delivered robust operational results, achieving double-digit growth in adjusted earnings and strong adjusted free cash flow. It displayed a solid cash position for the quarter, generating $1.5 billion in free cash flow. This allowed 3M to return $1.1 billion to shareholders through dividends and share buybacks. Before cutting its dividend earlier this year, 3M had upheld a 66-year streak of consecutive dividend increases. Currently, it pays a quarterly dividend of $0.70 per share and has a dividend yield of 2.01%, as of January 16.
The number of hedge funds tracked by Insider Monkey owning stakes in 3M Company (NYSE:MMM) jumped to 82 in Q3 2024, from 66 in the previous quarter. These stakes have a total value of roughly $3.6 billion. With over 2.7 million shares, Citadel Investment Group was the company’s largest stakeholder in Q3.
11. NIKE, Inc. (NYSE:NKE)
Dividend Yield as of January 16: 2.25%
NIKE, Inc. (NYSE:NKE) is an Oregon-based multinational footwear and apparel company that offers products for men, women, and children. The company boasts a strong economic moat, bolstered by its well-established brand presence. With six decades of industry dominance, the company has built substantial mindshare and proven its resilience over time.
NIKE, Inc. (NYSE:NKE)’s exceptional marketing and storytelling abilities further enhance its global brand visibility, supported by high-profile athlete endorsements, such as LeBron James and Cristiano Ronaldo, and partnerships with major sports leagues, including the recently renewed agreement with the NFL to serve as its exclusive uniform provider until 2038. In addition, the company is recognized for creating innovative products that attract consumers.
NIKE, Inc. (NYSE:NKE) reported mixed results for fiscal Q2 2025. The company recorded revenue of $12.35 billion, a 7.7% decline compared to the same quarter last year. Wholesale revenues also saw a decrease of 3% on a Yoy basis, totaling $6.9 billion. Inventory levels remained steady at $8.0 billion, consistent with the previous year, driven by higher unit volumes offset by lower input costs and shifts in the product mix.
However, the company’s cash position remained stable, which makes it a solid investment option for income investors. NIKE, Inc. (NYSE:NKE) ended the quarter with $7.9 billion available in cash and cash equivalents, up 1% from the same quarter last year. In addition, the company returned $1.6 billion to shareholders through dividends and share repurchases. This cash position has enabled the company to grow its payouts for 23 consecutive years, which makes NKE one of the best dividend stocks on our list. Currently, it pays a quarterly dividend of $0.40 per share and has a dividend yield of 2.25%, as recorded on January 16.
NIKE, Inc. (NYSE:NKE) was a hedge fund favorite in Q3 2024 with 75 elite money managers investing in the company, up from 66 in the previous quarter, according to Insider Monkey’s database. The stakes owned by these funds are worth over $5 billion in total.
