The Dow Jones Industrial Average (DJINDICES: ^DJI) stands as an index comprising of 30 premier blue chip stocks. These companies are industry leaders, and due to their large and established nature, they tend to emphasize value rather than growth. Most of these stocks, 29 out of 30, pay dividends, with the exception being Amazon, which was recently added to the Dow.
Investing in Dow Jones stocks can be a strategic decision as they are established companies with dominant market positions that provide strong barriers against competition and potential threats. However, just being a part of the Dow does not automatically signify a strong investment. A high dividend yield does not guarantee a stock to be a worthy purchase. In fact, it could sometimes be a cause for concern, as it may be a result of a declining stock price.
At present, the three highest-yielding Dow Jones stocks are Verizon (NYSE: VZ), 3M (NYSE: MMM), and Dow Inc. (NYSE: DOW). Let’s assess if they seem like promising investments at the moment.
1. Verizon: 6.4% return
Over the past few years, Verizon’s stock has not been performing well for investors. It has experienced a 28% decline over the last five years, despite a 13% increase year-to-date. Even with dividends factored in, it has notably underperformed the broader market compared to the S&P 500 index over the same period.
Despite its past performance, there are signs of a turnaround at Verizon. While some of its older business segments have been sluggish, its investments in 5G infrastructure, the latest technology, are starting to pay off.
In the fourth quarter, wireless services revenue saw a 3% year-over-year increase, and the company is reaping the benefits of its investments through higher free cash flow and reduced expenditures. It acquired 413,000 net broadband subscribers in the last quarter of 2023, marking the fifth consecutive quarter with over 400,000 additions.
With a history of increasing dividends for 17 years, Verizon has established itself as a reliable choice for investors seeking passive income. The dividend appears stable and isn’t currently at risk.
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2. 3M: 5.8% return
3M has also left investors disillusioned in recent years, primarily due to specific challenges it has been facing. The company has been grappling with various issues, particularly relating to the lack of innovation in its product pipeline…
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