Whether you are new or a pro at trading, you might have asked this question, “Are the 3 highest-paying dividend stocks in the Dow Jones worth buying?” Keep reading to find out.
The Dow Jones Industrial Average is a well-known stock market index with only 30 major companies. Investors often referred to these companies as “blue chip stocks.” They include Microsoft, Apple, and P&G. The companies are large and well-established businesses that pay regular dividends. They are considered leaders in their respective industries.
There is an investment strategy that focuses on buying stocks from some companies in the Dow. These companies are the top 10 companies that offer the highest dividend payments. They are called the “Dogs of the Dow.” Investors who follow this strategy buy these stocks and adjust their choices yearly.
Now, let’s look at the three Dow companies that currently pay the highest dividends and see if they might be good investment options.
1. Verizon
Verizon is a big company that provides internet and phone services. It has been one of the top companies with the highest dividend yield on the US stock market. Many people like investing in Verizon. This is because it is one of the three biggest companies in the telecom industry, along with AT&T and T-Mobile.
Verizon presently pays a 6.9% dividend, which is very high, but despite this, the company has been struggling. A lot of the company’s customers l moved to one of its major competitors, T-Mobile. This change in consumer behavior hurt Verizon’s business. Its stock price dropped by 33% over the past four years, though it started recovering slightly in 2023.
Verizon made a major mistake. It spent $52 billion on “C-band” and “millimeter wave spectrum” while working on its 5G network. Unfortunately, it did not work as well as the company expected it to. As a result, Verizon has not been growing much. In 2024, the company made about $134.8 billion in revenue. This was only 0.6% higher than it was in 2023. That’s not all; its profit per share dropped from $4.71 to $4.59.
Verizon tried to improve its business by buying another company. It made a move to buy Frontier Communications, a company that provides internet services. The purchase could help Verizon expand its fiber optic internet services. However, there was another problem: Verizon already had a lot of debt. It owes $118 billion, and this deal will add to the costs.
Verizon is not growing much; it is losing customers and has a lot of debt. Due to these, Investors might be better off looking for other companies to invest in, even though Verizon offers a high dividend.
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2. Chevron
ExxonMobil was removed from the Dow Jones stock index in 2020. This made Chevron the only big oil company still in the stock index.
Many energy companies are known for paying good dividends; Chevron has a dividend yield of 4.6%. However, the stock has not performed as well as other companies in other industries because oil and gas companies face challenges. Many countries use less oil due to environmental rules, fuel-efficient cars, and the growing popularity of electric vehicles. Another challenge is that many investors also believe that the oil industry is shrinking.
Over the past five years, Chevron’s stock price has increased by 39%, but it is much lower than the S&P 500, which went up by 86%. Even if investors reinvested their dividends, Chevron still would not have kept up.
Chevron is still making a lot of money, bringing in billions of dollars in extra cash after expenses. However, its earnings per share dropped from $11.36 to $9.72. The company produced more oil than ever, but its profits depend on oil prices, which are out of its control.
For investors who do not mind the ups and downs of the oil industry, Chevron could still be a decent option. However, for those looking for stocks with better long-term growth, there are stronger choices.
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3. Johnson & Johnson
Johnson & Johnson (JNJ) is the safest investment among these three stocks. It is actually one of the safest stocks you can buy. The company separated from its consumer-products business (which included brands like Tylenol and Band-Aid). It formed a new company called Kenvue. Even after making these moves, it still remains financially strong.
Only two companies in the US have the highest possible credit rating from S&P Global. Johnson & Johnson is one of them, and the other is Microsoft. After splitting from Kenvue, JNJ now focuses mainly on medical devices and prescription drugs. It has also bought several companies, such as Shockwave Medical, Protelogix, and V-Wave, to help grow its business.
In 2024, Johnson & Johnson made $88.8 billion in revenue, 4.3% more than the previous year. Its earnings per share also increased by 11%, reaching $5.79. The company is also making progress with new drugs, including Rybrevant and Lazcluze, which could boost future sales.
For 2025, JNJ expects its sales to grow between 2.5% and 3.5%, while its earnings per share could increase by about 8.7%. Healthcare is something people always need, even during economic downturns. Because of this, Johnson & Johnson is considered to be a strong and stable company that can perform well even in a recession.
So, are the 3 highest-paying dividend stocks in the Dow Jones worth buying? If you are looking for a reliable dividend stock that pays dividends, Johnson & Johnson seems like a solid choice.