Should You Buy the 3 Highest Dividend Paying Stocks in the Dow Jones Index?

Dow Jones Industrial Averageindices(DJINDICES: ^DJI)It is an index of 30 top blue-chip stocks. These stocks are leaders in their respective fields, and because most of them are large and old, they emphasize value rather than growth. In fact, 29 of these stocks pay dividends, and only one of them pays dividends.AmazonThe exception is the company, which became a component of the Dow Jones Index just a few weeks ago.

Investing in Dow Jones Index stocks is a smart move because these companies have leadership positions that provide a strong moat to protect them from competition and potential. But being in the Dow Jones Index does not automatically make a stock a buy. Even a high dividend yield doesn't make a stock a default buy. In fact, this is often a reason to be cautious, as it can be caused by a falling stock price.

As I write this, the three highest yielding stocks in the Dow Jones Index areVerizon (company) (NYSE: VZ),3M (New York Stock Exchange: MMM)(math.) andDow (NYSE: DOW)Let's see if they're worth investing in now. Let's see if they are worth investing in now.

1. Verizon: 6.41 TP3T Yield

Verizon's stock has failed to deliver for investors over the past few years; it's down 281 TP3T over the past five years, including a 131 TP3T gain so far this year. Even with dividends, the stock has underperformed by a significant margin over the past five years.Standard & Poor's 500The index measure of Big Pan.

However, judging by the year-to-date gains, things may be changing for Verizon, whose investments in 5G infrastructure, the latest available technology, are paying off as some of its older businesses have been languishing.

Fourth quarter wireless service revenues increased 3% year-over-year, and the company is now benefiting from its investments with increased free cash flow and lower expenses.2023 In the fourth quarter, the company added 413,000 net broadband subscribers, surpassing 400,000 for the fifth consecutive quarter.

Verizon has raised its dividend for 17 consecutive years, which is a solid track record and an important consideration when choosing a dividend stock. If you're looking for passive income, Verizon can provide it, and it doesn't look like the dividend is in any danger.

2.3M: 5.8% of yield

3M has also disappointed investors over the past few years, but for more serious reasons. The company has been dealing with a number of issues, notably the failure to launch its famously innovative products for many years. In addition, 3M is also dealing with a number of lawsuits. As a result, 3M's stock price has fallen 56% over the past five years.

The company has been making moves to get back on track, and this week it spun off a company calledSolventum The Company's healthcare business. Although sales declined slightly in the fourth quarter of 2023, margins improved. Starting May 1, the company will have a new chief executive officer, and some of the industries it serves, such as semiconductor materials, could be strong growth drivers in the near future.

Passive income investors may find the dividend yield attractive, and 3M is the king of dividends, with one of the longest annual dividend hikes of any stock at 65 years. However, much of what is currently happening at 3M is not attractive to investors, while other high-yield stocks offer greater stability.

3. Dow Chemical Company 4.9%

Dow is a chemical company that, in 2019, moved from its currentDuPont de Nemours The spin-off. Like many companies, Dow has been responding to the recent challenges of inflation, as it produces a wide range of chemicals for business-to-business customers in the products and manufacturing industries.

Dow stock has outperformed the other stocks on this list, rising 101 TP3T over the past five years and 71 TP3T year-to-date.

While pressure may continue to mount in the near term, Dow has a strong balance sheet that makes it attractive to investors. Since the spin-off, Dow has delivered on its promises made at the time, including industry-leading cash generation and debt reduction, as well as disciplined capital allocation, with a return on invested capital (ROIC) consistently above 13%.

Since 1912, Dow (or one of its affiliates) has paid 450 consecutive dividends, an incredibly glorious career. However, Dow has not raised its dividend since the spin-off, and currently pays $0.70 per share quarterly.

Dow may not deliver dividend growth, but it does offer a reliable, high-yield dividend and may be the most attractive stock on this list for investors looking for low-risk passive income.

Should you invest $1,000 in Dow now?

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John Mackey, former chief executive officer of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool's board of directors.Jennifer Saibil has no position in any of the stocks mentioned above.The Motley Fool's holdings recommend Amazon.The Motley Fool recommends 3M and Verizon Communications.The Motley Fool has a disclosure policy. The Motley Fool has a disclosure policy.

Should You Buy the 3 Highest-Dividend Stocks in the Dow? This post was originally published by The Motley Fool.