The Dow Jones Industrial Average (.DJI) is one of the most iconic indexes of stocks on the planet. Consisting of 30 large and established U.S. corporations, many investors look to the Dow for a sign of how publicly traded companies in general are performing. However, anyone who is familiar with Wall Street knows not all stocks are created equally.
If you're an income-oriented investor, it's worth exploring the top Dow dividend payers separately from the broader index itself.
Depending on your investment needs, adding some or even all of these names could be more in line with your overall strategy than simply relying on the DJIA on its own.
10. Coca-Cola Co.
One of the biggest brands on the planet, Coca-Cola is a well-run company with consistent revenue. It's also one of the most consistent dividend payers on Wall Street, marking its 57th consecutive year of dividend increases after a bump to quarterly payouts in February.
Changing consumer tastes have caused KO stock to lag other Dow components in recent years. But while sugary soft drinks may not be a growth business in an era of healthier, fresher foods, they continue to fuel strong baseline sales at Coke and a generous payday for income-oriented investors.
Heavy machinery company Caterpillar is an industrial icon, making everything from mining equipment to road construction gear. Like Coke, CAT also has a big brand and a big market share that keeps its revenue and dividends consistent – but also its share of troubles.
The company has faced headwinds in recent years, thanks largely to an all-in strategy focused on China that has backfired after unfortunate acquisitions as well as recent challenges created by trade conflicts. However, after a few tough years both earnings and revenue are set to move incrementally higher in fiscal 2019 now that the worst seems to be over.
Another relatively stable dividend payer is pharmaceutical powerhouse Pfizer. The company has logged more than 320 consecutive dividend payments, showing a long-term commitment to sharing its success with shareholders.
From older blockbusters like heart drug Lipitor to more recently developed medicines like neurological treatment Lyrica, PFE has a deep portfolio of drugs and a strong product pipeline for the future. That will ensure the already impressive history of payouts continues for years to come.
7. Walgreens Boots Alliance
While American consumers may be most familiar with simply the Walgreens name, WBA is a global pharmacy powerhouse with more than 14,000 locations worldwide. That includes 9,500 locations that operate in the U.S. under both the flagship Walgreens label as well as Duane Reade stores. WBA operates some 400 in-store urgent care clinics, and on top of that, nearly 5,000 Boots locations in the U.K., Norway and even Thailand.
Brick-and-mortar retail isn't quite what it used to be, but the reliable cash flow from monthly prescriptions coupled with a massive scale ensures that Walgreens Boots will hang tough for many years to come.
6. 3M Co.
Minnesota-based 3M is a diversified stock that has customers across a host of industries from transportation and health care to aerospace and consumer products. With products you can buy at the store like Scotch-branded tapes and adhesives and specialty chemicals and coatings for manufacturers, 3M offers a wide array of items that ensure it's not reliant on a single customer base.
This broad portfolio means consistency in revenue year in and year out during all kinds of economic ups and downs. That is a great thing for long-term dividend investors, and makes this industrial conglomerate an attractive buy if you prioritize income and stability above growth potential.
5. Chevron Corp.
Big oil stocks are another example of income investments that may not have breakneck growth ahead of them, but offer unmatched consistency thanks to baseline demand and an unrivaled scale. At $230 billion in market capitalization and $160 billion in annual revenue, Chevron is one of the world’s largest corporations and that makes it incredibly difficult to unseat.
Sure, fossil fuels are increasingly in the crosshairs amid attention on carbon emissions and climate change prompting energy efficiency and investment into renewable sources. But that transition cannot happen overnight and CVX will continue to pay generous dividends.
4. Verizon Communications
Another example of an established mega-cap stock is Dow component Verizon. This telecommunications company operates America's largest wireless network as measured by subscribers, as well as cable TV and fiber optic internet access for homes and businesses. Communications services like these are built-in to most budgets as regular expenses and remain consistent in both good times and bad.
Furthermore, the regulated nature of big telecom in the U.S. along with the incredible capital expenses necessary for deploying a competing network means the chance of completion is slim to none. That is music to the ears of income investors who prioritize consistency.
3. Exxon Mobil Corp.
Even bigger than Chevron is Exxon, a $300 billion global energy powerhouse involved with natural gas and renewable energy sources as well as crude oil and retail gasoline sales. And with $5 billion in cash on the books and $50 billion in total assets, the company is well positioned.
XOM stock has admittedly struggled to move higher thanks to the continued move away from fossil fuels, but like Chevron it has plenty of time and plenty of cash to deal with the transition – and continue paying generous dividends along the way. As the oldest member of the Dow, joining the index back in 1928, history shows that Exxon has staying power.
2. IBM Corp.
IBM is a little less attractive because of a slow and steady decline in shares since its 2012 peak as well as the perpetual threat of disruption that is inherent in the technology sector. However, there is a lot to be said for IBM's entrenched relationships with enterprise customers, including Fortune 500 customers and the federal government.
Case in point: IBM's Watson AI is used by media giant Buzzfeed to sift through resumes and optimize the hiring process, and IBM's blockchain technology will soon be used by the FDA to track the supply chain for prescription drugs. Sure, IBM has weaknesses. But, many faster-growing tech stocks don't have any profits to speak of, let alone a generous dividend like IBM.
It's perhaps fitting the top dividend payer in the Dow Jones Industrial Average is this specialty chemicals giant with roots going back more than 100 years. The stock is a recent addition after its spinoff from DowDuPont (DD).
DOW's primary subsidiary is the Dow Chemical Co., which makes assorted products from plastics to agricultural chemicals. Though shares have only traded since March and the dividend is based on a single distribution of 70 cents, Dow had a long history of payouts and will surely keep that up in the years to come. Chemicals aren't glamorous, but are always in demand, which all but guarantees consistent revenue.