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7 Best Dividend Stocks of the Dow


After last year's spectacular stock market rally, many investors have relearned this year that share price gains aren't guaranteed. That should foster a new appreciation for cash dividends—particularly among older investors, who will need rising income in retirement.

We researched the 30 blue-chip companies in the Dow Jones industrial average, looking for two investment features: a strong track record of dividend increases, plus a business outlook healthy enough to support continued dividend generosity and long-term stock price growth. That's the concept of total return—dividend income plus stock performance. Think of it this way: If you earn 2.5% a year in dividends, a modest 7.5% rise in the stock price means a 10% total return.

Here are our seven picks. They aren't the Dow stocks with the highest current dividend yields because those companies are typically ones with below-average prospects for earnings and dividend growth. Likewise, some of the best-known consumer stocks, including Coca-Cola (KO) and McDonald's (MCD), failed to make the list because they're facing intense competitive pressures.

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