Should You Buy the 3 Highest-Paying Dividend Stocks in the Dow Jones? (One Recently Yielded 6%.)

It's astute to beryllium a dividend capitalist due to the fact that dividends are terrific contributors to not lone the portfolios of retirees but besides those of younger folks. After all, that reasonably regular and dependable income tin besides beryllium utilized to bargain much shares of stock.

It's important, though, not to conscionable question the highest dividends you tin find. So, don't conscionable drawback up shares of the highest-paying dividend stocks successful the Dow Jones Industrial Average (The Dow).

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First, let's reappraisal immoderate dividend basics. To comparison apples to apples, we typically measure a stock's dividend yield, which is its yearly dividend magnitude divided by its existent banal price. So, if Scruffy's Chicken Shack (ticker: BUKBUK) pays $1 per 4th and is trading astatine $80 per share, the dividend output is $4 divided by $80, which is 0.05, oregon 5%.

It's important that the dividend output tin beryllium expressed arsenic a fraction, with the dividend connected apical and the stock terms below. That shows that erstwhile the stock terms shrinks, the yield's worth goes up and vice versa. For example, if Scruffy's banal falls and is trading astatine $60, disagreement $4 by $60, and you'll get 0.067, oregon 6.7%. The banal is down, but the output -- the percent of the banal terms that you'll person annually successful the signifier of a dividend -- goes up.

That's wherefore we request to tread cautiously erstwhile we're dividend-stock hunting and brushwood outsize yields.

Back to our archetypal question. The reply is...it depends. Do instrumentality an extra-long look astatine immoderate specified stocks to marque definite the yields are not precocious owed to superior challenges the companies are facing. Here are the 3 Dow components with the highest caller dividend yields.

Verizon Communications (NYSE: VZ) is simply a banal I would beryllium consenting to bargain astatine caller prices -- and really own. It has the astir customers among its peers and has precocious been gaining much astatine its rivals' expense. It's not apt to turn briskly, but it's a coagulated bluish spot banal with a hefty dividend yield.

Chevron (NYSE: CVX) is different banal that doesn't look alarming, contempt its above-average yield. It's a well-regarded, vertically integrated vigor institution with astir 40 years of yearly dividend increases and a steadfast equilibrium sheet. Buying banal successful Chevron doesn't look precise risky to me.