Prime time to consider dividend stocks. After a hard-fought midterm election inserted uncertainty into our politics and volatility into the markets, now is a pretty good time to look at dividend stocks as a strong…
Prime time to consider dividend stocks.
After a hard-fought midterm election inserted uncertainty into our politics and volatility into the markets, now is a pretty good time to look at dividend stocks as a strong foundation for your portfolio. And what better place to look for dividend stocks than the Dow Jones Industrial Average? This lineup of 30 stocks represents some of the biggest and best U.S. corporations, and while most are very mature with their best growth behind them, they still have a lot to offer. Here are the 10 top Dow dividend payers.
Cisco has taken great pains over the last decade to transform from a technology hardware outfit into a reliable dividend payer with stability from subscription-based software and services. Quarterly dividends have surged since their first payout of 6 cents in 2011 to 33 cents per quarter currently. Lately, thanks to improving earnings, this tech giant has really connected with investors with CSCO shares up more than 30 percent in the last 12 months. That’s good news for portfolio values, but also for future income potential as there are plenty of earnings to fuel additional dividend increases.
A rising-rate environment is typically good for banks, as the margin they enjoy on loans improves. But JPM stock has mostly been flat year-to-date amid the market volatility, and after the euphoria over pro-business policies out of Washington lost steam. None of that should take away from the tremendous income potential of JPM, however, which weathered the financial crisis better than any other bank. Its current payout rate of 80 cents a quarter comes after a massive 42 percent bump to payouts this year and is significantly above the 38 cents per share it was paying in 2008.
Drugmakers are as steady as they come, with regular revenue pouring in from the maintenance drugs of patients. These health care expenses are typically the last to be eliminated from a family’s budget. That stability leads to reliable and growing dividends at Merck. And on top of its market value of more than $190 billion and about $40 billion in annual revenue, this is not a company that’s going anywhere. Merck’s continued progress with hepatitis treatments, vaccines and animal health products will fuel future growth for this company, too.
While some big pharma stocks worry about the end of their product pipelines, Pfizer does a great job replenishing drugs that are facing patent expiration with a new generation of cures. Right now, PFE is riding high on the recent approval of a prostate cancer treatment. On top of that, Pfizer continues to seek out “biosimilar” drugs that can compete with other drugmakers’ products. Shares of PFE stock are up more than 20 percent in the last year, and the company just declared an amazing 320th straight dividend in September, which proves it has long-term income potential.
Cincinnati-based consumer products giant P&G provides some of the most recognizable items on your family’s shopping list, including Pampers diapers, Tide laundry detergent, Charmin toilet paper and Herbal Essences shampoo. With a deep bench of big brands like that, it’s no wonder this stock is one of the most stable on Wall Street. Admittedly, there isn’t a ton of growth in a mature consumer staples stock like this. But, Procter and Gamble has roughly doubled its dividend payments since 2008, showing its income potential is rising impressively even if its share price may never surge like a small-cap tech stock.
Coke has been on the outs in recent years as changing consumer tastes have moved grocery store sales toward healthy and fresh options instead of sweet pleasures like soda pop. However, KO stock has more than just its namesake beverage to offer with a product line that includes Powerade sports drinks, Dasani bottled water, Gold Peak tea and a host of international brands big outside of America. That diverse operation provides for consistent and growing dividends. There’s a reason that iconic investor Warren Buffett and his Berkshire Hathaway (BRK.A, BRK.B) own about 9 percent of this company.
Big oil stocks can be a bit more volatile than some of the other names on this list, since they frequently rise and fall depending on cyclical trends in energy use and the underlying price of crude oil. However, in the long run, a stock like Chevron delivers decent gains — and incredible dividends — for patient investors. And right now, thanks to strong earnings at the beginning of November and comparatively higher oil prices, Chevron is sitting pretty and on track to report more than double the profits this fiscal year compared with last year.
The same trends that have been favoring competitor Chevron has been lifting the largest U.S. energy company, Exxon. With decent growth lately and a $350 billion market cap, it’s safe to say that XOM stock is well positioned. More importantly, income investors can have confidence the dividend isn’t in danger. Exxon Mobil has raised its dividend once a year in each of the last 35 years — including the dot-com bust and the Great Recession.
After the departure of AT&T (T) from the Dow Jones Industrial Average in 2015, Verizon now sits at the top of the mountain as the largest telecom company — and, as a result, one of the biggest dividend payers in the index. While cable TV and landline phone service aren’t exactly long-term plans, Verizon generates the largest revenue from its U.S. wireless business among any company. Those regular bills generate regulate cash to support generous dividends.
Though IBM owns the ignominious distinction of being the single-worst performer in the Dow this year, the $100 billion tech giant isn’t exactly on the brink of collapse. Sure, sales have been incredibly challenged as revenue has dropped from more than $93 billion in 2013 to about $79 billion this fiscal year. But efficiencies and accounting quirks have allowed IBM to keep profits up. Those profits fuel a history of strong dividends. IBM has increased its payouts at least once a year for the last 23 years.